Meeting Mentor Magazine

December 2018

Cover Story

As Congress Delays, Some Uncertainty
Stays For Hotels, Meetings

The Congressional game of “Kick the Can” is wearing thin and keeping anxiety at a low simmer for hoteliers and show organizers.

After the fiscal cliff ended with a last-minute, short-term agreement, the debt ceiling piece of the triple deadline was punted down the road to May. Still looming are the sequester (automatic cuts in federal spending still due to hit the first week in March); and the continuing budget resolution (expiring March 27). “With Washington’s inability to come to long-term solutions by kicking the can down the road, uncertainty is ‘the new normal,’” said Jan Freitag, senior vice president, STR. Still, “we think the fundamentals of the U.S. hotel industry will not change drastically between 2012 and 2013.”

DLA Piper’s survey of hospitality industry executives suggests the same. While the respondents projected optimism for 2013, the political gridlock in Washington is one of the things tempering their enthusiasm.

“People are hopeful that there will be a resolution” to these issues, and that’s why the forecast for hotels overall in 2013 remains positive, noted Adam Weissenberg, vice chairman and U.S. travel, hospitality and leisure leader, Deloitte LLP. Even though occupancy rates are “leveling a bit, average daily rate is staying strong,” he added. “Opportunities for meeting professionals to get better deals are probably not getting better, as rates continue to rebound. People are willing to pay more for hotel rooms, which leaves less room to negotiate for meetings.”

Last year, hotels sold more rooms than ever, Freitag noted, a performance that was disconnected from the tumult of the election year and impending fiscal cliff. With very few new hotels in the pipeline, STR projects that hotels will sell even more rooms in 2013. Booking windows, however, will remain short, and “limited visibility into the future will erode some pricing confidence” of hoteliers, he cautioned. That’s not much negotiating help for meeting professionals.

Particularly worrisome for all are meetings with strong government sponsorship or participation, especially in scientific, engineering and medical research areas. “We do a fair amount of these and we’re definitely seeing a pullback, as well as a much more elongated approval process,” said Richard Green, vice president, association sales and industry relations, Marriott International, Inc. “More importantly, many of our national association customers are affected, with many attendees [in government] not getting approval until days before a meeting,” if at all. He cited the U.S. Army meeting last fall in Washington, D.C., with just 30 percent of its normal attendance. “Fortunately, this is just one component of meeting spending,” he added.

Although the growth is not huge, Marriott is still seeing corporations increase their spending on individual travelers and meetings, said Green, which “gives us some confidence on pricing.” And even where government is a component, meetings are continuing to book, he noted, because they don’t want to lose dates in first and second-tier cities.

Meanwhile, smart meeting professionals are leaving little to chance. “We made a strategic decision to push our sales cycle further out than ever before, and it has paid off, with meetings revenue currently at 70 percent for the 2013 events,” cited Terrence Arth, IOM, CMP, vice president, meetings and international programs, National Association of Chain Drug Stores, coming off the Professional Convention Management Association’s annual meeting. “With 30 percent to go, I believe we are in a very healthy position for this year.”

As a result, NACDS is “fairly optimistic” about 2013. Since his department is responsible for the majority of revenue for the association, “we take a cautious approach to budgeting, which allows the ability to course-correct as the numbers come in. Our database of numbers goes back as far as 1992, so we are able to see how uncertain cycles in the economy affected our meetings performance in the past. This helps us forecast fairly accurate numbers for current and future years.” — Maxine Golding


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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 2,500 corporations and associations through our 325 Associates globally. www.conferencedirect.com

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MeetingMentor, the leading publication for senior meeting planners, is circulated to the clients, prospects and sales associates of ConferenceDirect, which books more than 3.87 million room nights. www.meetingmentormag.com

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