This year we’ve seen the earthquake in New Zealand, the earthquake and tsunami in Japan, and uprisings in the Middle East and Northern Africa. Yet amid tragedy and uncertainty, international travel is looking strong. Business travel bookings were up 30 percent in March 2011 over March 2010, according to The Pegasus View, a report from Pegasus Solutions, provider of hotel reservation systems. Monthly increases of 20 percent are expected through July.
It’s still a short-term world, however. “Lead times are shorter, and I think technology plays a big role in freeing buyers to plan last-minute,” says Kathleen Leuba, vice president, marketing, for Mondotels, a Division of DCI. “Even as the incentive market is returning to travel, cost is still a concern, so companies are taking a wait-and-see attitude before they launch a program.” Caroline Pidroni, director of sales and marketing, Switzerland Convention & Incentive Bureau, agrees. “We are seeing some incredibly short-term business. We just confirmed a 2012 meeting for an association. That is pretty short-term in theworld.”
But as demand returns, planners will have fewer short-term choices. “The world is slowly turning into a seller’s market,” says Fay Beauchine, president, engagement and events, Carlson Marketing Worldwide. Read on for more of her insights—and those of other industry observers.
FINDING VALUE: Locations for Lower Budgets
President, Engagement and Events
Carlson Marketing Worldwide, Minneapolis
“There is still value to be found in pockets throughout the world:
Mexico, in safe, major tourist areas such as Puerto Vallarta and Cancun, remains a good value.
Greece, Portugal, Spain, and Croatia are good value destinations in comparison to cities such as London, Paris, or Rome.
Second- and third-tier cities with easy access via train or regional airport and good meeting space. For example, if you are considering Amsterdam, you might want to consider The Hague or Rotterdam. If you are considering Brussels, think about Antwerp or Bruges.
Airport hotels continue to provide better value than downtown locations for meetings.
In Asia, Kuala Lumpur, Malaysia, has a good number of hotels and good pricing.
Mary Sue Leathers
President, ALTOUR Performance
“A destination with true value is Marbella, Spain, where you will find great resorts, great food, excellent inclusions, and perfect weather.”
ISSUES: Watching Costs
Phelps Hope, CMP
Vice President, Meetings and Expositions
Kellen Meetings, a division of the Kellen Company, Atlanta
“Costs are the first big challenge when looking to go offshore with a typically U.S.–based convention. Not only are traditional costs higher, such as airfare and F&B, but you’ll also incur new costs, such as customs brokers and visa application fees. Time is also a cost, and you increase your travel times by going offshore. Depending on the meeting location, you may need an additional night or two at the hotel, which costs the association more in staff room-nights and costs the attendee more as well.
“The biggest driver is your association membership. If you have a global membership and therefore potentially a different membership section to pull from than those who normally attend the conference, you may even find you increase attendance by meeting overseas. But for a primarily U.S.–based membership, there will likely be a drop in attendance due to additional costs and logistics, and therefore a budget deficit. You should have a strategic reason for holding your conference overseas that can justify the lower revenue or additional costs. I find costs increase from 20 percent to 40 percent when heading outside of North America.”
ISSUES: Meeting Room Rental
Vice President, Marketing
Mondotels, A Division of DCI
“For a few years, large associations were pressuring international facilities to negotiate aggressively for meeting space. Planners now understand that isn’t the most effective way. They have to look for economies in other aspects of the program. Some smaller organizations will opt out of convention center space for that reason, choosing cities with hotels that have conference space built in.”
Kent Allaway, CEM, CMP
Vice President, Meetings and Trade Shows
Produce Marketing Association
“My experience has been that the pendulum does not swing as actively back and forth between buyer’s and seller’s markets in many international destinations as it does here in the U.S., which is usually tied to where we sit on the roller-coaster ride of the U.S. economy.
“Asia and the Pacific Rim countries have not greatly altered the way they do business: Associations should expect to pay for meeting space rental, but there is room to negotiate on items such as per-person rates. European Union destinations are more receptive to negotiations on items like space rental and F&B.
“The U.S. dollar seems to go further in Mexico and Latin America, where [venues] are increasingly interested in getting groups to their location, rather than holding fast to published pricing.”
ISSUES: Demand Up
Vice President, Travel
Excellence In Motivation, Dayton, Ohio
“The challenges for international travel are the usual suspects: Some clients still have ‘perception’ fears, exchange rates are high, fuel surcharges continue, and there is also the unrest outside of the United States. And we are seeing rate increases and fewer concessions in 2012 and beyond. “That said, interest in overseas meetings is definitely increasing for 2012 and 2013.”
Tracy L. Norum, CMP
Vice President, Business Development
Fox Premier Meetings and Incentives, Oshkosh, Wis.
“The biggest current challenge for international meetings is rising flight costs. But even with those costs, interest is increasing, mostly within our incentive base. We’ve had a surge in international proposal requests for 2013 programs. Of course, not all of the programs will operate on international grounds; however, reintroducing an option at this point puts the destination back in the rotation of potential sites and initiates discussions on future international programs.”
BCD Meetings & Incentives, Chicago
“For BCD M&I, interest in overseas meetings has increased by 15 percent year-over-year, but is not back to the highs of 2008. Reasons for our clients choosing international destinations include:
1. Meetings budgets are firmly in place for 2011 and there is a consistent need for multi-national team members to collaborate face-to-face.
2. More responsibly planned meetings are taking place—in venues that make sense and with inclusions (or exclusions) that make sense.
3. Gaining internal agreement on the overall value and return on investment from such meetings has become somewhat easier—especially when combining face-to-face interaction for some with virtual attendance for others.”
Regional Director, U.S.
Singapore Tourism Board and Singapore Exhibition and Convention Bureau
“We definitely see a bigger share of groups coming to Singapore from the association market. In 2009 alone, Singapore hosted nearly 700 meetings and accounted for nearly 40 percent of all meetings held in Asia, according to the Union of International Associations. In a sense we see a shift in the entire ecosystem, as business meetings and associations are a big chunk of our business right here. In terms of seeing a trend, with the opening of the Asia economy, certification in many professions is just beginning to take hold. The West already has excellent certification processes. So there are a lot of educational reasons for associations to look outside the U.S. and not just for one-off meetings, but for a longer-term presence outside of North America. Many are exploring chapters in Asia and/or growing their memberships in Asia.
“We are getting a lot more competitive. It’s amazing how many Asian cities are setting up convention bureaus. Plus all of them are setting up financial incentives to entice meeting planners to move their meetings outside of the U.S., so the carrot is getting bigger and fatter. I believe the industry is poised for growth and there is enough business for everyone. However, this dangling carrot syndrome will not sustain growth over the long term.”
Vice President, Marketing
Mondotels, A Division of DCI
“We see financial enticements only in the association market, but we definitely see the trend growing every year to match what other destinations are offering. It has now become an expectation of many association meeting planners. We are also seeing a trend among the CVBs to standardize their offerings, to be more specific. So in order to receive free group transfers, for example, the group must meet certain criteria.
“In our sales outreach to the association market, we see the effort that associations now need to expend to demonstrate their relevance to their members. With all theand voice-over-IP services, members can easily connect with their international peers without waiting for the annual conference. As a result, the conference has to deliver an even higher quality of rich content and associations are expanding to new international regions in order to successfully serve their membership.”
Brad Langley, CITE
President & COO
Creative Group Inc., Appleton, Wis.
“Participants’ experiences on meeting or incentive programs can be much more enriching and inspirational when it comes to international experiences. Instead of simply speaking of how certain things are different, it gives participants the opportunity to actually experience and appreciate the underlying importance of those differences, and to develop a better understanding of its significance and application.
“The two largest challenges for companies [planning international meetings] are currency exchange and safety considerations. Both can be mitigated. Forward or futurecan be put into place to properly manage the currency risk associated with holding a meeting overseas. We consult with our clients and outline these options where appropriate to reduce their financial risk. As far as security, we have developed sophisticated methods to monitor and respond to any man-made or natural calamity. These sorts of things can just as easily occur in your own backyard, yet you cannot begin to experience the rich heritage, culture, and innovation that often accompany international programs.”
Senior Vice President, Event Management
ITA Group, West Des Moines, Iowa
“We have experienced a 15 percent increase in international incentives in 2011. Over the past three years, many of our clients significantly altered their incentive destinations due to either budget concerns or perception of extravagance. Travel incentives are the ultimate motivator, and companies are eager to regain lost market share or instill loyalty in their organizations through recognition and reward of employee or sales achievements. International locations have a unique appeal that motivates participants to reach or exceed their goals.”
Vice President, Marketing
Mondotels, A Division of DCI
“Access to worldwide travel is much easier for everyone now, so it’s challenging for companies to create experiences for their winners that are special and motivating. Decision-makers continue to seek ‘undiscovered’ destinations around the world.”
Director, Meeting & Incentive Sales
Monaco Government Tourist Office
“There are people who have already had many of the same [international travel] experiences, but there are also the dealers and the reps who are now retiring, and there’s a new generation, and that new generation perhaps has not experienced some of the same destinations the previous reps had.
“So I see some companies again making requests because they’ve got a new audience, and a younger audience. So perhaps the program design might be something different to have an appeal to this audience, but we’re seeing new interest in the destination, and there’s a great big world out there. If you look at the percentage of Americans with passports—and it has gone up in recent years due to new regulations for entry to Canada and Mexico—the vast majority of Americans don’t have passports. And people who might be tremendously successful at what they do are not necessarily the most sophisticated travelers, so even though they may have financial means, they may wait to go with a bunch of their peers because it gives them a comfort level.”
Regional Director, U.S.,
Singapore Tourism Board, and Singapore Exhibition and Convention Bureau
“Increasingly incentive programs coming to Asia include a business element. We see American-based companies planning incentives for dealers in China and India. Increasingly we see that shift. The decisions are being made in North America, but the company is shaping the program that’s going to be consumed by Asian customers. That has been the trend for three to five years.”