If you plan events or incentive travel programs or you hire someone else to do that for you, you should expect fairly steep price increases. Don’t assume you can hold a program similar to last year’s unless you have more money to spend.
Why do I say that cost increases will be significant? First, salaries are increasing both for planning staff and suppliers. In Ontario, the minimum wage increased almost 25 per cent and even job categories like liquor servers that have a lower minimum wage saw a similar growth. In California, wages are legislated to increase annually until the minimum of $15.00 USD is reached in January 2022. Even Mexico, with its historically low wages, gave its workers a 10 per cent increase last December. In many jurisdictions, employers will need to charge more just to pay their staff.
We believe meetings mean business and incentives drive success. Why, when we are certain we provide a valuable service to our clients, are we unable to explain the financial reality?
At the end of last year, Smarter Money projected airfares would rise by 1 per cent in 2018 and accommodations by two per cent. Statista projected an even larger hotel rate increase of almost four per cent. And in April, CNN blamed higher fuel costs for an above average increase in air costs. Food and beverage prices are going up because of the higher cost of labour and distribution.
Now add in the decrease in hotel group commissions that will either reduce the profitability of agencies if they kept commissions or force higher prices if the commissions were shared with their clients, and you compel the planning community to adjust their price structure accordingly. Agencies have never had large profit margins, so no one should expect they can absorb the higher outlays.
Don’t assume you can hold a program similar to last year’s unless you have more money to spend.
When I was a third-party planner, one of my frustrations was that clients would expect us to be able to deliver programs year after year with the same budget. In many cases, the “program owners” had their budgets approved by their senior management team long before they engaged the companies I worked for.
We believe meetings mean business and incentives drive success. Why, when we are certain we provide a valuable service to our clients, are we unable to explain the financial reality? The hospitality industry needs to do a better job sharing more information about the costs involved in running a meeting or incentive to the larger business community. I know sales people generally dislike delivering “bad news”, but agencies cannot continue to do business if they cannot ensure all program elements are properly explained (and funded). Its time for all of us to be proud of what we do and justify our costs by open and honest explanations.
~ Les Selby has been a corporate, independent, and third-party event professional for more than 28 years. He has earned both his Certified Meeting Professional (CMP) designation and his Global Certification in Meeting Management (CMM). Inducted into Meeting + Incentive Travel Magazine’s Industry Hall of Fame in 2009, Les is an active member of Meeting Professionals International (MPI). He served on the Toronto chapter’s Board, was the 2000-2001 chapter president, and currently serves as a member of the MPI Foundation Canadian Council. In 1997, Les was recognized as Planner of the Year by the MPI Toronto chapter, and received the President’s Award for 2009. He can be reached at email@example.com.