Meeting Mentor Magazine

March 2024

Cover Story

Outlook 2012: Is the Glass
Half Full or Half Empty?

When the CEIR Index (which tracks industry metrics of net square footage, exhibitors, attendees and revenues) charted first quarter 2011 results, the numbers came in strong, boding well for the recovery. Preliminary estimates for the second quarter, however, were considerably softer, reflecting a sputtering domestic economy.

Still, the exhibition industry outperformed the economy in the first half of 2011.

So…is the recovery truly here? It seemed so for many attendees at the Center for Exhibition Industry’s “Predict” Conference in mid-September, who represented a wide range of domestic and international meetings large and small. They reported a good year to date and projected optimism for their 2012 face-to-face meetings.

Yet the economists speaking at the conference took a cautious approach in assessing what’s on the horizon. With the domestic and global economies closely intertwined, there is more of a chance that the U.S. economy may remain stuck in neutral or fall back into a double-dip. Factor in the prospect of country defaults (even structured ones), along with continued exposure among financial institutions and high unemployment, and their tentacles could reach deep into U.S. businesses — and consequently meetings.

“Most ‘net’ new jobs are created from new firms,” maintained Jeffrey Werling, Ph.D., Inforum, University of Maryland, Department of Economics. “We’re not seeing the birth of those new firms. The potential entrepreneur can’t get the capital.” The worst part, he added, is the employment to population ratio, which has dropped 10 points since 2000. “Elevated chronic underemployment is eating away at future prosperity.”

That’s why stimulating job growth is key to a turnaround, he said. Yet he didn’t think much improvement will come until after the 2012 presidential election.

If the economic slowdown persists, meetings could feel the pinch in attendance, which remains a leading indicator of recovery. In the CEIR Index, attendee numbers weakened in second quarter 2011, noted Allen Shaw, Ph.D., chief economist and president, Global Economic Consulting Associations, Inc.

Meanwhile, hotel forecasts are running up…and down. Key metrics for the U.S. hotel industry saw solid increases in August, reported Smith Travel Research: occupancy (+3.7 percent) and average daily rate (+3.4 percent). Because of hotels’ relatively strong performance during the first half of 2011 and with few new properties in the pipeline, PKF Hospitality Research (PKF-HR) has raised its 2011 annual ADR growth forecast to 3.2 percent, but lowered its 2012 target to 4.8 percent. By year-end 2012, all but one of the 50 markets in PKF-HR’s Hotel Horizons® universe are forecast to exceed their previous peak levels of demand. However, based on the updated economic outlook and long-term pricing trends, PKF-HR has lowered its ADR growth projection for 2012 to 4.8 percent. It cited negotiated corporate rates that are starting to rise, but meeting planners still using their leverage to counter group rate increases.

Meanwhile, the Hotel Industry Leading indicator (HIL), from e-forecasting.com, edged down 0.3 percent in August, following an increase of 1 percent in July. This composite indicator, on average, leads the U.S. hotel industry’s business activity four to five months in advance. The probability of the hotel industry entering into recession in the near-term registered 12 percent in August, up from 1.8 percent reported in July. Should this recession-warning gauge pass the threshold probability of 50 percent for a more than three months, the U.S. hotel industry will enter a recession phase in its business cycle. — Maxine Golding


Free Subscription to
MeetingMentor Online











Continue

About ConferenceDirect
ConferenceDirect is a global meetings solutions company offering site selection/contract negotiation, conference management, housing & registration services, mobile app technology and strategic meetings management solutions. It provides expertise to 4,400+ associations, corporations, and sporting authorities through our 400+ global associates. www.conferencedirect.com

About MeetingMentor
MeetingMentor, is a business journal for senior meeting planners that is distributed in print and digital editions to the clients, prospects, and associates of ConferenceDirect, which handles over 13,000 worldwide meetings, conventions, and incentives annually. www.meetingmentormag.com

Design by: Loewy Design