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November 19, 2008

MIA report highlights the real impact of the credit crunch

The UK Meetings Industry Association 2008 has released a report, Actual Impact of the ‘Credit Crunch’ on the Conference and Events Market sponsored by Confex, which provides an overview of the actual impact and experiences of the credit crunch on the UK conference and events and business tourism industry. The research was conducted and concluded prior to the collapse of Lehman Brothers on 15 September 2008 and prior to the significant fall of the FTSE, therefore the results need to be reviewed in this context.

While things are changing so rapidly that no amount of research can keep pace with it, early indications suggest that ‘year to date’, the events industry does not appear to be falling into recession as rapidly as other industry sectors, for example the banking and property sectors. There are similarities to the 1990s when business tourism and events was the last to feel the effects of the recession and, due to its determination to continue marketing throughout, was also one of the very first industry sectors to note a recovery.

The report details the actual and predicted increases or decreases in the number of events and current rates, staffing levels, lead times from initial enquiry to completion, revenue forecasts for 2009. It also captures comments from the various sectors on what they consider to be the most important factors and influences that the various industry sectors think the meetings industry should be considering, in the next six to 12 months.

Changing perspectives
This viewpoint does vary somewhat between venues, corporate buyers and conference agencies, for example; corporate buyers consider that the most important factors and influences that the meetings industry should be considering in the short term are: offering value for money and cost effectiveness. Many corporate buyers feel that due to current predicted recession, venues and other event suppliers should be more prepared to offer more flexible credit terms.

One such corporate event buyer, Randi Berild, director at TEFL training in Oxfordshire, says: “Delegate booking patterns are changing, so that for training courses, delegates are not prepared to commit to booking until the last minute.”

For this reason she feels that it would be beneficial if venues could be more flexible in terms of their cancellation policies and also more willing to negotiate on rates. Booking agencies also feel that venues need to be more flexible in terms of rates and valued
added items.

Zari Islam, director at Venuefind in London, adds weight to this: “Venues need to be more flexible and creative in terms of their pricing in these harder times.” She continues that venues could look at incorporating extra value items into the conference rates, for example offering complimentary audio visual hire or unlimited teas and coffees all day.

Virtual impact
She adds that some venues could utilise space better to entice customers to use them, for example using wedding marquees in the summer as a viable space for summer conferences. Corporate buyers also comment on the impact of virtual meetings through increased technology and the increase of awareness regarding environmental sustainability across the travel industry.

This idea is further reinforced by another corporate buyer, Shani Reynolds, communication and PR manager for Corporate Banking at HSBC London, who says: “The current economic climate together with green issues, have resulted in an increase in video conferencing. In our company, quarterly conferences are now becoming annual conferences.” She further comments that although the initial outlay for video conferencing, can be expensive – around £10,000 – compared with the high cost of running face-to-face meetings, it is becoming a far more cost-effective option.

The trend for corporate buyers seems to be the growing need to consider alternatives to the face-to-face meeting, and Charlotte Cresswell, events manager for Agresso, says: “Within the Public Sector, the so-called ‘credit crunch’, has brought about the need for delegates to justify the expense of attending meetings, particularly as many company travel policies now adhere to corporate social responsibility (CSR).”

CSR rising
According to Cresswell, this has resulted in an increase in web seminars and online forums. There was also a feeling from both corporates and venues that they need to be more aware of promoting CSR policies in line with event booking. This concurs with the findings of the 2007 MIA survey, where the results proved how important this issue had become, with over 41% of respondents across all sectors predicting that the importance of CSR and environmental issues would become a major influence over the next 10 years.

The venues flag the pressures in achieving their budgeted bottom line as utilities, payroll and all goods delivered by road increase and yet they are still expected to continue to maintain the standards with increasing pressure to reduce the rate.

Duncan Stewart, director from the Cresta Court Hotel in Altrincham, Manchester, says: “Although we have been carrying out an environmentally friendly service over the past five years, our customers’ CSR policies are now making it necessary for us to prove that we are delivering services and facilities in line with these policies.”

However, most venues have a slightly different view of the credit crunch and are concerned that talk about cut backs are resulting in a buyers’ market.

Alan Blenkinsopp, director of the Nike Group of Hotels, comments: “Both venues and agents need to be conscious of the pressures that are being put on the venues’ bottom line, for example with huge increases in payrolls, utilities and direct goods, there are occasions when it is not possible for venues to deliver an event at reduced rates without compromising on quality.”

While the report is intended to guide your business planning during this difficult financial period and not to make dictates the MIA would like to offer the following advice: ensure your prices are fair and offer value for money; do not slash prices; this will simply start a detrimental ’price war’; keep your marketing steady and your message consistent; and use all available resources at your disposal to attract business.

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