As Mtgs. Thrive, Buyers Face Shrinking Lead Times
Elissa Hunter, Business Travel News, 4/23/2007
With the number of meetings increasing, a strong economy and the continuance of a hotel and meeting space seller's market, meeting buyers continue to see lead times getting shorter.
According to a recent Meetings Monitor survey of 160 corporate meeting buyers, 53 percent said that they had one to three months to plan a meeting of fewer than 100 attendees. An additional 19.4 percent said they had only one to three weeks. In total, 77.5 percent of those surveyed said they had less than three months of lead time to plan small meetings.
"Within the corporate structure, it's always been a small window," said Joan Eisenstodt, chief strategist for Washington, D.C.-based meetings management firm Eisenstodt Associates LLC. "It's the culture of how corporations operate."
The continuing health of the economy has contributed to an increase in the number of meetings held, which has in turn been a factor in the decrease of lead times.
"The value of face-to-face meetings is increasingly being recognized," said Catherine Chaulet, senior vice president of events at chauffeured transportation firm BostonCoach. "The economy is healthy, certainly for financial companies, and we tend to see more meetings organized when the economy is good."
The window is shrinking in part because corporations are taking longer to approve budgets and are warier of booking venues too far in advance in case they have to cancel and face huge fees.
The current seller's market also is contributing to the trend, as more hotels are using their upper hand in the situation to be choosier about the business that they take and are holding more firmly to their contractual agreements. "I think the hotel market is dictating some of what we have to do," said Eisenstodt.
"Hotels are looking at the value of each piece of business as they negotiate," said Cindy D'Aoust, senior vice president of strategic meetings management for St. Louis-based Maritz Travel. D'Aoust said she expects the seller's market to continue for the next two to three years.
"It varies based on the program and type of industry," said Paul Salvatore, president of events and meetings management for mega agency HRG North America. Salvatore, who in one instance had two weeks notice for a meeting of 400 people, said that in 2006, 15 percent of meetings for his company were with less than 30 days of lead time and 30 percent were two months or less.
A shorter lead time can be advantageous to buyers if hotels have last-minute openings that buyers can leverage for low rates. However, buyers may find themselves out of luck in locating a hotel that meets their needs on such short notice. Such situations can be like "trying to find a square hole for a round peg," according to Robin Buzzeo, director of corporate travel for Taro Pharmaceuticals. Only about 6 percent of Monitor respondents said that hotel expenditures typically were lower for meetings with less than 90 days of lead times than longer-term meetings.
There are several things that buyers can do to make sure short lead times can be used to their advantage. One is working with preferred vendors that will be more willing to negotiate and find space for a last-minute meeting. Rick Wakida, corporate travel manager for Foster City, Calif.-based Gilead Sciences, said his company has standardized agreement templates with preferred hotels that save time. "We're not starting from square one with an event that's going to be held locally," he said.
Maritz's D'Aoust recommended having a limited, educated sourcing process, such as looking at only a limited number of hotels in the choice destination, to streamline the initial search for space.
"The days of checking the world and continuing to source and resource are gone," she said.
Another way to increase lead times is to educate company meeting sponsors about the need for advanced notice. "It's up to the individual planners to educate and promote the need for better lead times," said Gilead's Wakida.
A company's set schedule of meetings that happen on a regular basis also can help with planning.
"For any client, you look at what their needs are and you know that some have long-term and some have short-term cycles," said Eisenstodt.
Some meetings that happen every year or every six months can be anticipated and prepared for long before the last details are finalized. Eisenstodt said that working with the procurement side of the business also helps to streamline and shorten the planning process.
Flexibility in location will help when planning a meeting on short notice. Being flexible about locations is necessary when working with short lead times, because as the date for the meeting gets closer, it becomes harder to get exactly what is needed, whether it be the location or price.
"If you are within a 60-day window, you do not have much leverage," said HRG's Salvatore.
Many hotels and conference centers have noticed the trend in short lead times and some have responded accordingly, in order to develop and maintain relationships with those planners.
"In each one of our properties, we have a staff who are dedicated toward short-term meeting requests," said Eric Terry, vice president of sales and marketing for Texas-based conference center chain Benchmark Hospitality International. "Being able to accommodate those on a fairly expeditious basis is really important to servicing many of our clients, and in many cases they're existing clients who already have other meetings planned with us. We're very focused on taking care of those short-term opportunities and making sure that we accommodate those, because those tend to build a relationship with the planners on a long-term basis."
While educating corporations about the importance of advanced notice can be helpful, there will always be industries that will have shorter lead times. Pharmaceutical meetings are often done later to keep the nature of the meeting under wraps for as long as possible.
The results of the survey reflect the continuance of short lead times for meetings, and planners last year said that limited hotel and meeting space was compounding the problem.
"It's the way we work today. Everything is very fast-paced, very last-minute," said BostonCoach's Chaulet.