If there was a case for holding your event before the economic downturn, there is still a case for holding it during and after. By Allan Lynch, Sept/Oct 2009
There’s a saying on Wall Street that when America coughs, the rest of the world catches cold. That’s the ugly side to globalization. The great irony is that Canadians who have long embraced ROI and meaning to meetings paid a price for the cavalier behaviour south of the border.
It’s reminiscent of politicians who run on a platform of reducing expenses. Well, when did anyone say, ‘send me to Ottawa so I can spend more?’ When was this mythical time when budgets didn’t matter? Some have called it the ‘AIG effect,’ other simply refer to optics — a word we have come to hate. But while criticized for not acting business-like, the events sector has been pressured to make decisions not based on business and value, but optics. It doesn’t make sense, but the only option is to ride it out.
So where are we, what’s happening and where are we going? Much of what has happened is less trend and more reactionary fad — a do-something scenario to address the short-term optics versus the client’s long-term business objectives. Never mind that Canadians were still making money. We suffered because of the optics.
Happily, the one principle planners, hoteliers, suppliers and destinations agree on is that nothing will replace face-to-face meetings in terms of productivity, creativity and results. If there was a case for holding your event before this downturn in the economy, there is still a case for holding it during and after.
While the H1N1 virus continues to garner headlines, it doesn’t seem to have any impact on the Canadian meetings and incentive market. Where the virus has had an impact is the leisure market, especially in Mexico. Airlines cancelled over 2,000 inbound flights in the first half of 2009. This led to a near collapse of hotel occupancy rates in Mexico City (in April and May, it reached a low of 10 per cent). Royal Caribbean Cruise Lines credits the virus with a $119.8-million downturn in its final picture (a second quarter loss of $35.1-million versus an $84.7-million profit) due to cancelled cruises. In Canada, no planner, hotel, or destination reported cancellations due to flu fear. The only impact was a year’s postponement of a conference for front-line health care workers.
It ’s no surprise that Am erican business has all but disappeared, while the international market has softened. However, associations are keeping many places and suppliers and partners alive. And tiertwo cities haven’t yet faced any significant downturn. Calgary lost only one U.S. booking in 2009; otherwise, 2010 looks strong and the city has bookings to 2016. At the Québec City Convention Centre, which didn’t count on a big 2009 after its blow-out 2008 400th anniversary year, says the last half of 2009 is about the same as previous years; 2010 looks good and 2011 is when business returns to normal levels.
Montreal, which has a $3-billion-a-year meetings industry, says 2009 is ahead of 2008. However, its 2011 to 2013 bookings are a little soft, so it’s counting on the new shorter lead times to mine for as-yet unclaimed business.
Dave Gazley, vice-president for Tourism Vancouver, admits 2009 has been a tough year, but post-Olympics, “2010 will be a very strong year for us on the convention side and 2011 is shaping up to be one of the largest convention years ever in Vancouver.”
One bright spot for this year and the future is Newfoundland and Labrador. Brenda Walsh, meetings specialist for Newfoundland and Labrador Tourism, says, “Everybody is talking about what a dismal year it is and I’m sitting there and I’m afraid to open my mouth.
This is going to be a great year for Newfoundland in all sectors. It’s frightening. Our May-June was amazing.
July was a little soft, but July is not traditionally a convention month. In August, we had some really large groups in; September and October is looking healthy. We may be up a couple per cent.” Here is where optics and perception have paid off for Newfoundland — which has traditionally been under the radar to be both exotic and safe for the optics du jour.
Chuck Schouwerwou, CMP, president of Ottawa-based ConferSense Planners Inc., says some of his clients “are cutting back drastically and that, for independents, often means they’re moving their events
Even the larger shops have had to cut back. Dean Dacko, vice-president, travel solutions for Carlson Marketing, based in Mississauga, Ont., says Carlson reassigned staff or placed some on temporary layoff status for the summer, so they could keep access to the talent pool for when business returned — which could be soon, since clients are looking at 2010 and 2011. Both years are, according to Dacko, “much brighter.”
Nicola Kastner, CMM, CMP, business manager, Motivational Events, for Maritz Canada, says one of the new challenges the industry is facing is the greater involvement of Procurement in issuing RFPs and selecting vendors. The cost pressures companies are facing encourage them to want to take event budgets into the same costing sheets they use when they buy “widgets.” Additionally, there are often no budget ranges provided in advance, just some very loose parameters.
One planner who isn’t facing the same pressures is Winnipeg’s Jonathan Strauss, of Strauss Event & Association Management. While 2009 won’t be the best year for his nine-person shop, he’s confident about 2010. In one week in August, he signed two new clients and resigned an existing client, all for 2010. “It seems that now that we’re getting into the last quarter of the year, people are now making commitments for 2010.”
Strauss adds, “Our association clients are actually all growing. For our largest association client, we’re in the process of creating new professional-development opportunities. So our largest association client will have more meetings in 2010 than they have ever had.”
Many of his health care clients have travel budgets, but, because of optics, don’t have permission to travel. This creates a need for small, regional meetings.
Airlines, which are usually covered in the business press under headlines that sprout descriptions of “grim,” “bleak” and “gloomy,” are expected to lose over $11-billion in 2009, according to International Air Transport Association (IATA). Nonetheless, Canadian airlines aren’t yet down and out. Porter Airlines is cherry-picking routes and growing. WestJet says charters are still very much in demand. Air Canada is offering greater flexibility via its convention-booking feature that allows Tango fares to be included in groupqualifying counts. The company has also expanded pre- and post-conference travel windows (up to seven days, from three). And Cathy Pacific, which operates daily service between Toronto and Vancouver to Hong Kong and is one of the few airlines with black ink on its books, plans to be “less conservative” in courting Canadian group business.
Hoteliers started the year defending the integrity of their rate card. However, as the year progressed, desperate properties in the U.S., Caribbean and Europe discounted deeply. Guido Kerpel, Canadian vicepresident for Newcastle Hotels, says, “We see, in need periods, it’s all about cash flow. It is no longer about what is good business, it’s about making sure you can pay your bills and keep your employees employed and keep the bank away.”
Glenn Bowie, Newcastle’s area director of sales and marketing, says, “Associations are still meeting; there’s not a big change in anything that associations are doing. Corporations — that’s where the trick is. They’re combining two meetings into one. Groups that had five meetings a year will have three now and just try to cover more. They’ll cancel the final gala night, so that they save the price of that and the extra night’s accommodations. They are not meeting at resorts, even if it’s less expensive, because of the optics.”
Among the trends Kerpel and other hoteliers are seeing is a shift from high-end luxury brands to the next tier down, from five-star to 4.5 or four.
Where the two are concerned is the long-term harm these desperate short-term actions will have. Bowie says, “people are willing to offer contracts with little or no attrition, just to have a signed piece of paper. And they’re also offering very lucrative cancellation out clauses.”
Kerpel says, “The industry will get through 2009, but what we — as an industry — have to be careful with is the meeting planner who wants to book something for the end of 2010, 2011 and 2012 and expect us to price in a panic and provide them with rates that three years from now we cannot live with.”
That said, they, like their colleagues, are looking at a solid 2010/11. Mark Sergot, Toronto-based global sales vice-president for Fairmont Hotels & Resorts, says North American clients are sticking closer to home, favouring city-based properties. However, over the summer, the reluctance to commit for 2010 loosened up and they are starting to see “pent-up demand in a lot of organizations to bring their people together.”
Loren Christie, director of sales at the 1,377-room Sheraton Centre Toronto, says his biggest trend is the new, non-nonsense approach by clients. Given the lost booking time, planners, he says, “are getting down to brass tracks right off the bat. Clients want your best offer on the table right from the beginning.”
To paraphrase the Queen, 2009 has been our annus horribilis. And 2010, 11 and 12 can only be better.
— Allan Lynch is a New-Minas, N.S.-based freelance writer and regular contributor to M&IT.