Hotels are facing fresh challenges to their dominance in the corporate meetings sector, says Jonathan Hart
News from this summer's IMEX meetings and incentive travel exhibition suggesting corporate events have weathered the recession and are again on the upturn must be heartening for pressured meeting venues.
Probably less comforting are accompanying reports from the Frankfurt trade fair that external venues must adapt to miserly budgets plus a comprehensive new set of product, relationship and booking criteria if they are to be fit for corporate purpose in the foreseeable future.
Perhaps most challenged by these stringent new rules are hotels. Arguably still the favourite venues for company meetings, hotels can also be the least flexible to price negotiation or instant market adaptation owing to compromising factors including economies of scale, selling distressed inventory and incorporating differing staffing or distribution requirements.
For some properties, faced with impending cut-backs in public sector meetings, it can also mean competing afresh for private-sector business. For others, simply caught in the 'wrong' location with the 'wrong' product to meet stripped down buyer demands or fashions of the moment, it can spell total re-evaluation of, and re-investment in, their static meetings inventory.
"No question, hotels are facing stiff competition from potentially more cost-effective venues," says Glen Farmer, director of sales and marketing for the UK and Ireland at Dorint Hotels and Resorts.
The big trend towards improved management of in-house company meetings or renting dedicated outside office or meeting space is not the only competition, he says.
The growing use of virtual meetings technology or the type of facilities normally used by schools, libraries or football stadiums are also challenging the status quo.
"Larger and luxury hotels, in particular, are feeling the squeeze because it's harder to contain costs or be flexible to new parameters," Farmer says. Although hotels enjoy the advantage of offering on-site accommodation, they can no longer rely on residential demand in a market focused on smaller, shorter and more cost-conscious events.
Corporate meetings also now revolve around very specific content in terms of subject matter and facilitation, says Diana White, national accounts manager for site selection agency HelmsBriscoe.
"It's quality versus quantity," she says. "The devil is in the detail and the negotiation and delivery processes are far more rigorous." White dismisses the threat of virtual meetings as being confined to senior managers and says alternative larger venues are rarely suitable for core company meetings. "Hotels are still very much the most favoured venues provided they can respond to new demands and regimes," she says.
"Hotels can be flexible and responsive," adds Des Mclaughlin, managing director of meetings and event management specialist Grass Roots HBI. He says airport hotels in particular are making the most of the credit-crunch demand for fly-in, fly-out sessions.
Meetings industry suppliers, providers or finders generally say that being equipped to respond to short notice demands is the primary challenge for hotels, the consensus being that winning a company meeting was far simpler when lead-in times were longer and client satisfaction could involve little more than, say, a basement, flip chart and pair of magic markers.
When carousels ruled and Powerpoint was a dream, supplying such basic facilitation may not necessarily have been deemed the ultimate in professionalism or proficiency. Yet it held a ready-made space available monopoly at a time when alternative venue choice was limited and technology still in its mobile-the-size-of-a-brick infancy.
Back then, when procurement was a dirty word and today's army of meeting professionals was a mere twinkle in the industry's eye, hotel operators could also forget any notions of transparency or accountability for transactions in what then amounted to a largely invisible segment in overall business travel spend. Booking meetings would commonly be the preserve of an executive assistant or the contact direct, with negotiations cosy and contractual arrangements loose. The ultimate cost was deemed largely irrelevant to the buyer and buried somewhere under the heading of 'everyday company outlay'.
Occasionally, perhaps for an annual general meeting, the client's marketing department would also get involved to reinforce a theme, advise on layout preference or spice up a presentation. Yet all in all, it was a largely uncontrolled process - a transaction that could provide useful extra revenue for the hotel with dedicated or convertible space and that was no big deal for the mostly indifferent buyer, whether the nominated venue was just down the road or somewhere in Europe.
Fast forward to a still fragile post-recession 2010 and the humble company meeting, formerly dismissed as part of the essential daily working fabric, is a prime target for optimising spend and delivering corporate best practice.
Reckoned by the Institute of Travel and Meetings to account for up to 3 per cent of the average company's overall outlay, it is a segment that, along with air and rail, is consistently being redefined, reconstructed and fine-tuned, as well as priced to the nth degree.
The net result has been to elevate hotel meetings, along with the wider MICE sector as a whole, from the relative shadows into the full glare of heavily scrutinised corporate governance.
For hotel suppliers, this means adhering to a long list of musts beyond being in a convenient location, changing the decor or tinkering with day or residential delegate packages. Beyond investing in the latest on-site presentation equipment, ultra- flexible space, permanent breakout rooms, natural or enhanced daylight and elaborate food and beverage options, it also means incorporating advanced technology and distribution systems and employing professional supply chain practices, with strict terms and conditions attached to data reporting, risk management and liability protection.
As if these exacting new rules of engagement were not enough, together with the implementation of preferred supplier partnerships driving cost consolidation and client travel policy compliance, hotels are also expected to comply with the new mantra of companies to converge their transient and meetings travel spend.
Despite the Hotel Booking Agents Association predicting that most of its 80 or so members will have adopted online solutions to process both mandated meetings management and accommodation policies in the next three years, this remains a grey area.
Farmer says converging spend can be tricky for both buyer and supplier, however up to speed they are with compatible inventory availability and booking channels.
"Transient or FIT [free and independent travel] and meetings budgeting are two different disciplines and are difficult to marry," he says. White adds: "The type of traveller, requirements, budgeting and procurement procedures are all different. In practice, meetings need to be treated as a separate commodity."
Nonetheless, from the smallest teambuilding or training event to the occasional gathering of hundreds, each corporate meeting is now said to be judged on its necessity, content, quality and return on investment potential. Or, adds White, it must at least be seen to be so by a cash-strapped and cynical outside world still fuming at what has rightly or wrongly been viewed as corporate profligacy or mismanagement in recent times.
"Perception is everything and no company wants to be seen as wasteful or for its delegates to be actually enjoying themselves," she says. "This is one reason why company incentive trips are not so prevalent and why, for the time being, there is little call for resort or spa-type hotel meetings."
Overall, hotels are holding up remarkably well to new market principles, says Grant Appleton, accommodation services director at corporate events firm Zibrant.
"The trend has definitely been towards better servicing of internal meeting room stock before looking externally," he says. "But we don't see a significant move away from hotels to other types of venues."
This shows hotels are adapting to more stringent client demands, tighter budgets and the growing involvement of procurement departments, he says. Appleton cites major chains and specialist conference groups such as De Vere and Principal Hayley tailoring their products and prices to fresh corporate requirements. He says that if there is a general shift away from hotel meetings, it's not down to the recession but is more a long term trend as companies tire of the usual hotel formulae.
"That said, the hotel meeting market remains terribly fragmented and there is still a lot of confusion with distribution channels," Appleton says. "In some areas, there's still a strong element of the executive assistant getting involved in the process. This may or may not be a bad thing but in terms of streamlining communications with hotels it suggests the industry still has a long way to go."
Screen Rooms
Telecast suites are the latest weapon in hotel groups' meetings armoury, with Marriott and Starwood starting to install the high-tech suites in a number of properties. They use Cisco's Telepresence technology, which claims to provide more "real", "immersive", high-definition videoconferencing.
It unites remote delegates and speakers via TV.
Marriott is launching Telepresence this year in London, Frankfurt, Hong Kong, Shanghai, Sao Paulo, New York, Bethesda, Washington DC, Dallas, San Francisco, Denver and Atlanta, while Starwood has installed suites at the W Chicago City Centre, the Sheraton New York Hotel and Towers, Sheraton Centre Toronto and Sheraton on the Park Sydney. By the end of this year it will have added it at Westin Los Angeles Airport.
To date, few large corporations have installed the expensive technology in-house. With hotels renting out the facility by the hour, the value of the suites will increase exponentially as more rooms come on stream, says Mark Weidick, vice-president and general manager for Cisco's Telepresence exchange business unit.
Despite continuing issues with regional bandwith and compatibility, video-conferencing and web casting - supplemented by interactive social media applications - are also increasingly being employed for meetings, according to George P Johnson's 2010 Virtual Market Outlook report. It says 70 per cent of large companies run virtual conferences and 83 per cent participated in a webinar during the past year.
Technology will be one of the most powerful influences on meetings over the next few years, according to Bruce MacMillan, chief executive of Meeting Professionals International. He says that rather than going totally virtual, the meeting of the future will be a hybrid of a live event enhanced by virtual components.
Still, according to first phase findings of a Convention 2020 study of meetings by Fast Future, the physical will be preferred to the virtual over the next 10 years.
The survey found that three quarters of organisations (74 per cent) said they would maintain their investment in live events, with 76 per cent citing the quality of face-to-face networking as the biggest single draw factor. In contrast, 59 per cent of respondents felt their organisations would be investing in alternatives.