Corporate Meetings & Incentives recently hosted our first-ever Change Summit, July 21 at the Revere Hotel Boston. The group consisted of senior-level meeting managers and directors of meetings and travel, as well as their counterparts in procurement, many of whom are responsible for purchasing on a global scale.
In a pre-meeting survey, one topic was clearly on everyone’s mind, and it also dominated much of the conversation that day. In one word: Costs.
For the first time in a long time, hotel occupancies are way up in many markets. Chicago saw an average of 92 percent in June, and New Orleans saw its highest occupancies in a decade. 2012 profits are expected to increase 12.7 percent at the U.S. properties participating in PKF’s latest Trends in the Hotel Industry survey. A boost of more than 7 percent for North American hotel rates in February was the biggest year-over-year increase on record. Looking to 2013, Marriott International is targeting “high single-digit percentage increases” for corporate rates in North America.
The problem is that many of the people who attended our Change Summit are still working with budgets that are the same as they were four years ago. programs will grow in sophistication and maturity as companies gather data globally and combine transient and group rates to further leverage their spend.
This concern about rising hotel rates is also top of mind for the CMI 25, our annual list of the largest and most influential meeting and incentive management companies in North America.
“For the first time since 2007, we’re starting to hear that hotels are sold out,” said Scott Dillon, president of CMI 25 company SDI Incentives. “And we’re seeing that they are very quickly trying to get back to where they were in ’07. I think clients realize they have been operating with the same budget for a long time now and we will get a slight increase in budgets, but I don’t think we will get enough to compensate for the increase in hotel rates.”
As a result, he says, companies are going to start making more program changes, like changing the month of the trip, or sending fewer attendees. “There’s only so much you can cut from the trip itself,” he says.
As his client, Beckton, Dickinson and Co.’s Patricia Brennan put it, “It’s about figuring out what we can take away from a meeting that nobody’s ever going to notice.” You’ve been doing that all along—and now you’re going to have to do it even more.