Meeting and event planners seeking bargains in high-demand cities will have to work harder next year as demand continues to outpace supply and hotels tighten cancellation and attrition policies, according to the 2016 Meetings and Events Forecast.
Hotel prices will increase 2.5 percent globally in 2016, but some regions will see sharper increases, including North America (4.3 percent), Latin America and the Caribbean (3.7 percent) and the Asia-Pacific region (3 percent).
F&B costs in the United States went up 2.9 percent in 2015, according to the Consumer Price Index, and will continue to put pressure on attendee costs in 2016, the report says.
Three trends will affect meeting planning and pricing, according to the report published by CWT Meetings & Events:
Hotels in sellers’ markets (rooms and event space in constant high demand) are eliminating or reducing planners’ flexibility in attrition and cancellation clauses, especially in large cities with major airport hubs, where upfront offers are in the 10 percent to 15 percent range now instead of the usual 20 percent to 25 percent.
Also in high-demand markets, hotels are cutting back on holding space on requests for availability. “Meeting owners should alert internal decision makers of this market shift, as the risk of lost space will increase and date flexibility will be crucial as events are sourced,” the report says.
Hotels are increasing their yield management on group rates.
5 tips for meeting planners in 2016
CWT recommended five steps that planners can take in 2016 to negotiate their best deals and manage their in-house programs:
1. Consolidate for cost savings. Bring all meeting managers across the entire business into a single department to save money and reduce financial and legal risks. Also, create a consolidated hotel strategy that aims to save meeting and travel money by looking at travel patterns plus key and emerging markets.
2. Plan farther ahead. As lead time for registration and venue contracts continues to shrink, build in extra lead time on larger projects for more negotiating power, especially in emerging Latin American markets, where buyers might have more flexibility.
3. Save money on F&B. Trade down on features that don’t affect the overall attendee experience. Examples: Substitute tap water for bottled water; reduce breaks.
4. Limit risk. Establish an addendum for desired cancellation terms with preferred hotel suppliers, using it as a baseline when negotiating. By rolling out preferred supplier programs and strategic partnerships — and establishing key performance indicators for compliance — you’ll get better terms and limit your risk.
5. Use strategic contract management. Streamline your process for managing all meetings-related agreements to get a broader view of commitments and supplier use across your organization and to bypass lengthy legal reviews for time-sensitive agreements. Also, align your company’s risk mitigation strategies to roll out or negotiate master service agreements with key suppliers. Develop customized negotiation strategies for high-volume markets to increase your buying power and ensure your rates are competitive.