Is the Price Right for Your Next Meeting or Event?
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Rising prices continue to wreak havoc on the meetings and events industry. In the latest inflation report, consumer prices rose once again. The annual inflation rate in the United States was 8.3 percent in August. Added to this are nose-diving stocks, the dipping of the pound against the dollar, and a slump in oil prices.
High costs impact all aspects of events, with rising airfare costs altering the destinations for meetings and events planners choose.
The cost-per-attendee for meetings and events in 2022 is expected to be around 25 percent higher than in 2019, and it’s forecast to rise a further 7 percent in 2023, reports the Global Business Travel Association (GBTA).
Experienced planners have been through inflationary periods before and have ways to deal with these challenges. Staying on top of your contracts is more important than ever. You must look over every item line by line. Certain items can be eliminated, but don’t lose sight of the overall experience for your attendees. For example, you can stop serving an urn of decaf and hot water, but under no circumstance can you eliminate coffee. The overall experience is what your attendees will remember, and you can’t stop the essential things.
Some planners have adjusted pricing models to compensate for these rising costs. “Part of my role is to help clients create a realistic budget up front, which are now substantially higher than years past,” said Dana Toland, chief event planning strategist and sourcing specialist of IT Exchange Group. “When setting my fee, I evaluate what fees the program generated in the past. Instead of setting percentages on the current budget, I am using past fees with a modest increase (roughly 0-3 percent) depending on my own internal budget for the cost of running the program this year and how my costs have increased compared to past years. In reality, with the exception of negotiations, my workload has not increased too much. Therefore, instead of benefiting from my clients’ increased costs, I am simply charging them a price that I deem fair.”
Toland is doing this to deepen her relationships with her clients. “I feel it is important that both parties shoulder the bad times and prosper from the good together. One should not benefit from the other’s misfortune,” she said.
In her business model, Toland’s site selection fee is 10 percent of sleeping room revenues. Historically, this was always paid for by the hotel and credited to the client’s master account. In 2018, many of the big brand hotels limited the amount of commission independent planners were paid from 10 percent to 7 percent. Toland continued to charge her clients a flat 10 percent. During the site selection process, she analyzes each potential hotel and a budget for each. “On those hotels that lowered the commission to 7 percent, I added a 3 percent fee to my client’s bottom line. Historically in many instances, it didn’t matter. The clients would review the analysis and select the best hotel that met their criteria. Today, with conference hosts incurring double-digit increases in costs, that 3 percent is being more closely evaluated and impacting the overall decision,” she said.
Another way planners combat inflationary prices is by scrutinizing pricing structures. Corporate conference and meeting packages popular in Europe are also taking hold in the U.S. Combining meeting space, food and beverage, audiovisual, and more into a flat daily rate helps with budgeting.
Many hotels now offer full-day conference, morning, and afternoon packages, which have grown out of the European Plan approach.
Negotiation skills and flexibility are vital as well, adds Toland. “If a hotel isn’t too busy and has many dates open on the books, a planner can get an incredible deal even in this climate,” she said. “The rationale is hotels cannot afford to lose employees. Therefore, they must keep their staff busy. If they are not getting the hours, they will go to a property that will keep them busy to earn a decent salary. The key is for the planner to throw out a wide net to capture as many potential hotel fits as possible. During their analysis and discussions with hotels, they should be able to identify those hotels that need to place business on the books creating a win-win situation.”
