Global meetings growth for 2006

The global meetings industry is expected to grow for a third consecutive year, giving a boost to hotels, airlines and convention centres.According to FutureWatch 2006, from Meeting Professionals International (MPI) and American Express, several key indicators including the total number of meetings planned and expenditures per meeting/event are expected to increase in 2006.

Client-side planners and intermediaries expect the number of meetings planned by their organizations to grow by seven percent and 21 percent over 2005, respectively.

Suppliers project a 10 percent increase in the number of meetings they’ll support. Planners, intermediaries and suppliers predict a seven percent, 14 percent and nine percent jump, respectively, in expenditures per meeting in 2006 compared to 2005.

Additionally, client-side planners expect to receive a larger share of their organizations’ budgets in 2006 than in 2005, with 42 percent predicting their budgets will grow as a percentage of their organizations’ total budgets.

Only eight percent anticipate having a smaller proportion.

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“All FutureWatch 2006 respondents expect to have more frequent, longer and larger meetings this year, suggesting that organizations are increasingly recognizing the value of meetings as strategic business tools that can achieve business goals,” said Colin Rorrie Jr., PhD, CAE, president and CEO of MPI.

“However, from what we’ve seen, cautious optimism seems to be the theme in 2006. While key indicators point to growth and increased meetings spend, concerns about the economy and rising oil and travel costs loom.”

Venue Demand Outpaces Supply / Increasing Lead Times

Expected changes in lead times, hotel rates and attrition and price concessions suggest that demand for meeting space and accommodations may outpace supply in 2006.

Meeting space lead time is projected to increase by 38 percent in 2006, from 29 weeks to 40 weeks on average. Meanwhile, lead time for hotel/support services is forecasted to jump 37 percent from 23 weeks to 31 weeks.

Additionally, 76 percent of client-side planners and 81 percent of suppliers expect hotel rates to increase in 2006. Finally, 31 percent of client-side planners, 28 percent of intermediaries and 24 percent of suppliers predict that concessions and flexibility will decrease in 2006.

“In the past few years, meeting professionals for the most part have experienced dramatically shorter lead times,” Rorrie said.

“In some cases, a meeting that took six months to plan now must be executed in three weeks. The fact that FutureWatch 2006 respondents are expecting longer lead times and higher hotel rates in 2006 suggests that the unusually active hurricane season of 2005 combined with the increase in the number of meetings being planned may be taking its toll on available inventory, especially in key tourist and convention destinations. Organizations may not have a choice but to plan meetings farther in advance.”

International Travel Slows

While meetings are on the rise, international meetings travel is slowing, as U.S. and European planners project little change in the use of international meeting destinations, and Canadian planners expect a significant decline.

Canadian planners anticipate only 14 percent of all 2006 meetings will be held internationally, compared to 23 percent in 2005.

While the United States remains the top international destination for Canadian planners, only 7 percent expect to hold their meetings there, down from 16 percent in 2005.

European planners expect international meetings to increase slightly from 26 percent in 2005 to 29 percent in 2006, with the US and Asia listed as top destinations at 12 percent and eight percent respectively. US planners predicted little change in international meeting locations, with Canada and Europe tied as lead locales at five percent each.

Planners Lead Procurement Process

Despite continued implementation of standardized meetings management processes and concerns about commoditization, meeting planners are still by far the most active participants in the buying process for meetings.

Eighty percent of respondents said meeting planners were always or often involved in the identification and contacting of vendors, 84 percent said they were always or often involved in the evaluation and recommendation of vendors and 78 percent said they were always or often involved in the final purchasing decision.

Meanwhile, only 13 percent of respondents cited that procurement was involved in any of the three phases.

“With the move towards standardized management systems, there was a perceived risk that meeting planning would become solely a cost-based purchasing decision driven solely by procurement,” said Julie Hylton, director of industry development for American Express Establishment Services.

“In fact, today’s data suggests that meeting planners lead the charge in identifying, evaluating and making the final decision regarding vendors. And, because the majority of respondents also indicated that procurement departments are involved at least occasionally in the process, it’s important that planners establish a dialogue and a productive relationship with their procurement colleagues.”

Meetings as a Strategic Function

Meetings are increasingly becoming a tool for furthering organizational objectives, with 71 percent of client-side planners indicating that meetings are recognized to a great or very great extent as a strategic function important to the growth and success of their organization.

Forty nine percent of planners said the perceived value of meetings has increased over the past year, while 62 percent predict it will grow even further in the next two to three years.

Additionally, 66 percent of meeting managers and 80 percent of directors are either being consulted when their organization is considering a meeting or are involved in driving strategy and establishing how meetings will be used to support organizational goals.

“Meeting professionals are increasingly operating beyond the logistical or tactical level and have the opportunity to strategically impact the organizations for which they work,” Rorrie said. “As this strategic role emerges, it’s critical that meeting professionals speak in the language of business, increase their influence and articulate the bottom-line value of meetings to all stakeholders and executive decision-makers.”

  Additional Key Findings

  *  While many organizations fully outsource their meetings function to
    intermediaries, survey indicators show a greater percentage of
    intermediaries are actually working in concert with an existing
    meetings function.  According to intermediary respondents, 42 percent
    of the time their main contact is within the meeting planning
    department, as opposed to the internal department that “owns” the
    meeting.
  *  The top five internal organizational trends affecting the meetings
    industry are workload, organizational budget changes, shifting
    organizational goals, organizational growth and shorter lead times.
  *  The top five external or environmental trends affecting the meetings
    industry include the state of the economy, travel costs, the rising
    cost of oil, changes in technology and increasing globalization.
  *  When asked about return on investment (ROI) for meetings, respondents
    indicated that discussions within their organizations focused more on
    cost savings and efficiencies than achieving the strategic goals of a
    meeting.  Just over one-third of respondents focus on the achievement
    of strategic goals when discussing ROI.
  *  Return on Objectives (ROO) has been discussed within 61 percent of
    planners, 71 percent of intermediaries and 55 percent of supplier
    respondents. ROI and ROO discussions signal that organizations are
    seeking a measurement model that provides a complete picture of how
    meetings drive business and reflect total benefit and total expense.

Defining The Meetings Profession
 

Rorrie added, “The management of meetings is a multi-billion-dollar industry which brings an enormous positive economic impact and generates millions of jobs globally.

According to the Convention Industry Council’s 2004 Economic Impact Study*, the meetings, conventions, exhibitions, and incentive travel industry in the United States alone generated $122.31 billion in total direct spending in 2004, making it the 29th largest contributor to the gross national product, yet it is not yet fully understood or viewed as a profession.

Meeting planners are still perceived as logistics managers or corporate party throwers instead of strategic contributors to a company’s success.


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