Meeting Mentor Magazine

October 2020

Cover Story

Meeting Demand Continues Rebound
Despite High Fuel Prices

High fuel prices do not appear to be inhibiting meeting bookings.

“I am pleasantly surprised with what we’re seeing from group bookings on the hotel side,” said Scott Berman, principal and U.S. industry leader, hospitality & leisure, PwC US. “If we had this conversation six months ago, it would have been different. Meetings have rebounded much faster than anyone expected, favorably impacting hotel occupancy, but groups are spending less on fewer frills.”

Lodging will continue to improve at a solid pace in 2011, both in average daily rate (ADR) and occupancy, reported PwC US in its quarterly lodging forecast. That will carry into 2012, on the heels of stronger GDP growth the second half of this year. “Gas price spikes do have an impact on hotel performance, but mostly on the leisure ‘select-service’ segment — economy and mid-priced properties,” said Berman. “And it tends to be momentary and psychological.”

While rising transportation costs (gas and airlines) could stall occupancy and rate gains, Smith Travel Research projects that demand for hotel rooms this summer will continue to climb, with ADR and revenue per available room (RevPAR) rising 4.1 percent and 5.9 percent, respectively.

Meeting professionals, however, are definitely concerned about spiking fuel costs and airfare increases. The percentage of respondents saying so jumped from 5 percent previously to 21 percent in the April edition of Meeting Professionals International’s Business Barometer. Still, 64 percent cited better business conditions this year, while 24 percent reported no change.

The increase in fuel prices is not having an impact on air travel demand, maintained American Airlines spokesperson Mary Sanderson. “In fact, our group and meeting travel is up year-over-year, as is travel from small and medium-sized businesses,” she said. The economy’s recovery is the major driver of this increase in demand, she cited, while fuel price increases remain more of a cost issue for the airlines.

However, Berman noted, “the psychology of the airline business can have a forward-looking impact on hotel performance.” He pointed to continuing concern that the simple economics of fewer seats and higher demand will translate into higher fares that ripple through the system.

Fuel prices are having “a direct impact on transportation of equipment (to and from our warehouses) and shipping from our depots,” said John Patronski, executive vice president, Global Experience Specialists (GES). At this time, the company is looking at and evaluating its business costs for 2012. — 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 4,400+ associations, corporations, and sporting authorities through our 400+ global associates.

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.

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