As we get a foothold into 2015, the feedback from the sharp end of the supplier market, the venues, points to more confidence and a busier year. Worldwide economies may still be fragile and event industry "leaders" point to a flat year in 2015 but in the UK and key European destinations, the suppliers who will make a difference to your bottom line spend are likely to be charging more.
Whilst competition for business is still strong in many areas, there is a definite trend that points towards rate increases. Although the very existence of "published" rates is debatable, many suppliers are looking at straightforward price rises, whilst others are simply applying a hardening of line and offering lower discounts.
For the first time in many years agencies and venues are reporting an increase in lead-in times for small as well as larger enquiries. Again the pattern is "patchy" and varies from agent to agent and venue to venue, but a long-term trend is definitely starting to change.
The indicators are not just confined to hotels but also across the world of management and training centres. Amanda Stacey, marketing manager at Conference Centres of Excellence, reports an upswing in 2014 of 184% in confirmed training business and venues looking at 5-10% rate uplift in 2015.
At the February Confex show in London which attracts a broad profile of UK venue suppliers our straw poll found 85% agreement that venues feel in a stronger position in 2015 with increased occupancy forecast, in spite of a general election. Increased growth means overall you could be asked to pay more.
So apart from increasing your own budget how will you continue to get the best value from your event spend?
Budget or strategic meetings management plan (SMMP) impact
Those already on the journey with an SMMP are used to seeing substantial year-on-year improvements in achieved rates, with effort concentrated on consolidating spend and asking for better rates. Anyone about to embark on an SMMP may need to temper their expectations from the savings they may have seen previously reported. Of course the majority of organisations do not run a formal plan — in which case you should keep a close eye on your budgets.
New tactics and flexibility will be the key.
So how to still get the best value?
The old adage is that "price is what you pay, value is what you receive". However when you are going to be judged on keeping the bottom line in check, I'd suggest a few avenues to explore that you may not yet have.
Be flexible on location
While high demand patterns are concentrated in some areas there is still over supply in others.
Keep your total spend in mind though and not just venue costs. Planners are often blind to this but, for example, 20 delegates travelling an extra 50 miles in their own cars could mean a £450 increase in mileage claims, that's £22.50 on your per delegate costs. Driving time is frequently dead-time unless your corporate responsibility policy encourages your people to be on the phone while driving.
You can also look at adapting your meeting practices to make other travel savings. If rail travel is a consideration, will different meeting start times or maintaining agendas with strict finishing times enable substantial rail fare savings? I've frequently booked open returns myself when attending a meeting assuming an overrun rather than a more cost-effective fixed return journey ticket.
Be flexible on dates
This is almost the first question that an agent or venue will ask when taking an enquiry. By the time you have reached the stage of contacting supplier the answer is invariably no. What influence can you have on the internal planning process though? If your organisation takes its responsibility to its shareholders seriously enough then cost management is a key driver and you can help educate planners.
I recently joined a key meeting with procurement and the learning and development team in order to look at what could happen with a clean slate. Learning objectives were of course key and some areas could not be changed, but by sharing the way in which venues look at pricing it was surprising what could be achieved.
Are your teams (or you) aware of the yield management or displacement models operated by venues? My working experience suggests the answer is "no".
Plan further in advance
Think of air travel and if you are flying to a destination served by very few carriers you would book that much further in advance than other journeys to guarantee availability.
Venue yield management
This month I've encountered an organisation with £400,000 worth of business to place and struggling to place it. Their reaction to this difficulty is one of astonishment because of what they believe the "size of the prize" — the value of their total spend — to be to any venue.
That £400,000 worth of business is actually comprised of a series of large one-day bookings blocking out only Tuesdays or Wednesdays during peak months and is a "prize" that venues don't want.
Is the following scenario familiar? Asking your agent or a venue why you cannot get your corporate room rate quoted for a group of 50? Surely 50 is worth more to the venue?
Let's examine these cases more closely.
Take the organisation with a series of one-day, middle- of-the-week bookings, one hundred people for the day and night.
A typical well-run venue in a good location has highest demand on Tuesday and Wednesday on both accommodation and meeting space and a historical record of booking patterns. So the venue might think
- Consideration one - Just to take any of the bookings is not likely as I am already booked and if I do have space I know I will sell it at peak rate.
- Consideration two - Not only do I know I will sell the space at peak rate, I know l will be able to sell the space to someone who will also take the space for a longer period of time. If a booking is hitting Monday or Friday I might consider taking it; if only Tuesday or Wednesday, I will hold on to my space.
- Consideration three - I know the quantity of rooms you need will effectively block me out and I am loyal to my regular client base and put a value on goodwill (venues will literally put a monetary value on goodwill in this calculation). This will also block out other smaller bookings and my booking history informs me that they will spend more in my restaurant and bar.
With regards to not getting your individual rate for a group rate, this will also be carefully worked out based on booking history and even putting your goodwill into the credit side of the balance, that individual rate is likely to be sustainable only for a small number of bookings, booked at shorter notice when it will top up my occupancy.
Obviously this is a very simplistic outline to try and explain the practice, but hotels and venues are sophisticated suppliers with a finite amount of supply.
So what else can you do?
Share this information with your event planners — perhaps they can't turn a one-day event into a two-day one, but if they can arrange one-day meetings towards Mondays, Fridays or sometimes even Thursdays this can help. The organisation quoted above ended up running one-day events but back-to-back which also saved on logistics and audio visual hire.
Do your own maths on your historical event spends. If you know your event has an additional bar spend of £25 per head, let the prospective venue know and offer that historical proof. This adds tangible value to your enquiry. Be as factual with figures as they are.
See if your agency can pair you with another client. If you are set on a Wednesday, do they have a client set on the Monday and Tuesday? Also cast your net wider and be flexible in the style of venue you will consider.
And finally — work with your agent.
You may have appointed your agency on the basis of buying power and price savings. Tapping into its buying power will not be enough on its own in this market, so don't sack them for not gaining historical levels of savings in the coming year unless you are able to take their advice on how you might work with them to achieve the savings. And honestly, believe them if they say a venue is sticking to their rates and credit them if your short notice booking takes them 20 calls just to place.
It's all good news really. Prices frozen for so long have meant that venues have not had enough money to invest back in their product. The uplift in rates reported by Conference Centres of Excellence is accompanied by £44m investment - so value in real terms will be achieved.