Optimism Rising

As U.S. lodging industry performance has turned positive in 2010, so
too has the attitude of meeting planners, though not quite to the same
degree. While the temperament of association, corporate, government, and
independent planners cannot be characterized as exuberant, the
emergence of optimism provides hope for hoteliers that the group demand
segment is now on the path toward recovery.

According to a national survey of 148 planners, 43 percent of the
respondents felt that the general “health” of the meetings industry
will be better in 2011 as compared to 2010. This is a reversal from
three years ago when the same percent of the planners diagnosed the
industry as deteriorating. The survey was sponsored by ConventionSouth magazine and conducted by Colliers PKF Hospitality Research in early September 2010.

Volume Up
Of greatest interest to hoteliers is the
increasing number of planners that expect the volume of events they
handle to grow in 2011. Nearly one-third (32 percent) of the planners
surveyed stated that the number of meetings they will be responsible for
in 2011 will be greater than the number they are organizing in 2010.
Among exhibition organizers, 22 percent expect an increase in events
next year. These percentages are not overwhelming, so what may be of
more significance is the fact that the number of planners expecting
their meeting counts to decline in 2011 is half that recorded in the
2009 survey.

Attendance expectations are slightly more optimistic than the
outlook for the number of events. Thirty-seven percent of the planners
believe attendance at their events will rise in 2011. More importantly,
only 6 percent foresee a decline in attendance, down from 18 percent of
the planners that reported a
decline in attendance in 2010.

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Less Pressure
Corporate
and association budgets for meetings and exhibitions may not be
plentiful, but they appear to be growing. Just over one quarter (26 
percent) of the planners said they will be spending more per meeting in
2011, while only 10 percent expect to continue to cut costs.

Less budget pressure is further illustrated by the guidance given
to planners by their organizations. Thirty percent of the respondents
stated they will not have to cut any costs in 2011, while only 28
percent are having to consider secondary or tertiary markets in an
effort to save money. In fact, more than 50 percent of the planners
cited that the economy is no longer affecting their choice of
destinations and meeting venues.

A Disconnect
While the pressure to cut costs may be
diminishing, it has certainly not gone away.  Overall affordability was
rated as the most important criteria when selecting an event
destination. However, when focusing on the areas of cost containment,
there appears to be a disconnect between meeting planners and hoteliers.

In last year’s survey, guestrooms were ranked as the second most
frequent area for cost containment. In the current survey, room rates
declined in importance to number five as a cause for concern. While
meeting planners are becoming less compelled to negotiate room rates,
they believe that hotel managers are more than willing to do so. Almost
three-quarters (71 percent) of the planners surveyed identified room
rates as the number one item hoteliers are willing to concede.

Early Stages
According
to our survey of meeting planners, 2011 should mark the first year of
recovery for the group demand segment in the U.S. While the majority of
respondents believe the number of events, event attendance, and meeting
expenditures will remain the same as they did in 2010, the number of
planners expecting an increase in these measures now outweighs the
number expecting a decrease. By 2012, hotel managers will hopefully have
enjoyed tangible growth in group room nights, thus bolstering their
ability to be more aggressive with room rates.

Robert Mandelbaum is the director of research information services for Colliers PKF Hospitality Research (www.pkfc.com). Thanks to Marlane Bundock, managing editor of ConventionSouth, for sponsoring the survey.

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