Another year of strong, steady growth awaits the meetings industry, say prognosticators, and we have the economy to thank for that. The global economy will remain strong into 2019, according to the Conference Board's Global Economic Outlook for 2019.
While we might be nearing the zenith of the global business cycle, we're not there yet: GDP growth is forecast to be 3.2 percent in United States next year and 2.4 percent globally, with the uptick gradually slowing over the next four years.
a surging economy generally means a robust meetings outlook, planners will face significant challenges in the year to come. Demand could climb by 5 to 10 percent around the globe, notes the 2019 Meetings & Events Future Trends report from Carlson
Wagonlit Travel Meetings & Events.
"Demand for meetings far outstrips supply of venues and hotels as the number of meetings and budgets increase in North America in response to the strength of the economy," says Tony Wagner, vice president,
Americas, for CWT M&E. That will undoubtedly lengthen the necessary lead times for booking, and push planners to consider a greater variety of destinations and venues. CWT also calls for a whopping 14 percent increase in group size for North American
meetings, only intensifying the race for space.
Also rising: meeting budgets. However, the increases are not likely to keep pace with higher costs, according to the 2019 Global Meetings & Events Forecast from American Express Meetings &
Events. In North America, budgets are expected to rise by just 0.8 percent, in tandem with a group hotel rate increase of 2.4 percent and group airfare hike of 2.11 percent. Strategic cost management will be an increasingly crucial component of the
business-event planner's skill set.
Two other notable developments were revealed in Amex M&E's research, says Milton Rivera, vice president of global business development and strategy for the organization: a flood of new meetings technology hitting the market, and the growing importance
of personalization for attendees, which will drive smart use of meetings data.
"Focusing on personalization to help find ways to engage attendees is a topic that came up again and again with both planners and suppliers," notes Rivera. Privacy
restrictions haven't curtailed those efforts just yet, he adds, but he expects such concerns to escalate as the ramifications of the Global Data Protection Regulation are better understood.
On the tech front, some innovations of the past
few years are becoming better able to scale, thanks to the efforts of some big customers. "When large organizations take an interest, the technology quickly matures," Rivera says.
Read on for more about the specific challenges planners will
need to navigate in 2019.
HOTELS: Sustained Growth, Slower Pace
Hoteliers in North America continue to ride an unprecedented wave of success, even if that wave is shrinking just a bit. "There are issues like rising labor costs, but the macroeconomic environment remains favorable overall," says Amanda Hite, president
and CEO of lodging-data provider STR. "The industry's record-breaking run should continue through at least 2019, even with softening in overall growth." STR and Tourism Economics revised their forecast to reflect a lower-than-expected demand in Q3
of this year.
Nevertheless, STR expects lodging-demand growth to again outpace supply in 2019 -- though not by much. Demand will increase by 2 percent and supply by 1.9 percent.
Not all analysts are in agreement on that point:
PwC flips those projections, with supply growth outpacing demand growth by 2.1 percent vs. 1.9 percent next year, according to the consultancy's November 2018 edition of Hospitality Directions U.S.
Occupancy will likely flatten or even decline, as PwC anticipates, but rates will still climb in the U.S. -- by 2.6 percent overall this year, says STR, and another 2.3 percent in 2019. PwC expects average daily rate to rise by 3 percent in 2019. The
upshot: Analysts agree that growth in revenue per available room is likely to dip below 3 percent next year, while hoteliers will keep enjoying strong business, especially for full-service properties favored by business travelers.
good on the hotel side," notes Jan Freitag, senior vice president of lodging insights at STR, "that it may not be great on the group side. What I mean by that is that back in 2010 and 2011, you used to be able to book in the quarter for the quarter.
Hotels were not that busy on the group side. Those days are gone, unless you're willing to pay transient room rates. On the group side, you have to look out, maybe even a year out, to get the day pattern you want in the hotel you want in the market
That situation isn't going to change any time soon, adds Freitag. "When I look at the hotel pipeline, I see we have 190,000 rooms under construction, and over two-thirds of those rooms are limited-service hotels that don't have
ballroom space. We're not building ballrooms or meeting space -- not that much, anyway. That's good news on the hotel owner and management side, and not so good if you're a planner hoping for a lot of competition."
For these reasons, group
rate hikes might be a tad higher than the overall ADR increases. American Express M&E foresees a 2.41 percent increase in group hotel rates in North America, with softer hikes in Europe (1.61 percent), Asia Pacific (1.11 percent), and Central and
South America (0.96 percent). Global hoteliers surveyed by Amex M&E are predicting a 2.29 percent increase across all regions.
The scramble for space -- as well as an increasing trend favoring unique experiences -- will continue to drive
planners toward nontraditional meeting facilities, as both the American Express and CWT forecasts point out. Demand for mid-tier properties also is on the rise, according to Amex, more so than for any other property-type segment.
also are increasingly concerned about the changing commission structure of the hotel industry. When asked about how hotel mergers and consolidation affect their jobs, more than two-thirds (68 percent) of planners in North America referred to lower
commission rates -- compared to just 14 percent in last year's survey. With Hyatt Hotels joining Marriott, Hilton and IHG in slashing the rate to 7 percent come February 2019, that number is likely to further increase in the
coming months. The change is affecting planners globally, with at least half in every region expressing concern.
"The change in commissions has increased the cost for our clients to operate and deliver meetings," asserts Issa Jouaneh, senior
vice president and general manager of Amex M&E. "For planners, this increases the importance of relationships and the ability to give business to suppliers that offer flexibility and value partnership." – MICHAEL J. SHAPIRO
AIRLINES: Rising Fares, Fuller Planes
Capacity increases are planned by the major U.S. carriers, but rising fuel prices could well lead to those plans being scaled back, according to CWT Meetings & Events. Capacity increases that do occur around the globe likely will be eclipsed by a rise
in passenger volume, cautions Amex M&E -- meaning there could well be decreased availability along with rising fares.
Fare increases could be modest but will vary based on location and flight requirements. Globally, average fares are expected
to go up by 1.8 percent next year, according to CWT M&E, and just 1 percent globally per BCD Travel.
In North America, says BCD's forecast, intercontinental economy fares are expected to remain flat, with intercontinental business, regional
business and economy increasing by just 1 percent. Europe could see greater increases, with regional fares in both business and economy class expected to rise by 2 percent; regional business class in Asia could likewise see a 2 percent bump. The only
greater fare hikes called for by BCD are in the Southwest Pacific region, where regional economy tickets could jump by 2 percent and regional business-class fares by 3 percent.
Amex is calling for slightly steeper rises in group fares on
average, with planners in Europe and the Americas both looking at increases of about 2 percent. Amex-surveyed group air specialists and air suppliers, meanwhile, predict an average increase of 2.6 percent.
Anticipated spikes in passenger
volume could be of more concern to planners looking for seats. The Amex report suggests significant volume increases of 3 percent or more for North and Central America, as well as Eastern Europe, and in excess of 2 percent in many other regions. There
will be increased incentive to book flights as early as possible. – M.J.S.
TRADE SHOWS: Strong Sales, Moderate Growth
The trade show industry continues to grow, though not all that fast. For example, the Total Index -- the benchmark measurement calculated by the Center for Exhibition Industry Research -- was up by 1.6 percent year-over-year in the second quarter, which
meant it was growing but still underperforming compared to the macroeconomy and real GDP growth.
CEIR executives believe the pace is picking up enough in the second half of 2018 that we should see a 2.1 percent Total Index increase for the
year. While that moderate growth is good, it falls short of the 2.5 percent the organization had previously projected.
"We really need sustained growth of 3 percent," noted CEIR's CEO, Cathy Breden, CMP, at the CEIR Predict Conference held
in September of this year. "Once we see that, we can all feel a little bit better."
Still, exhibition executives can take satisfaction in the fact that the numbers are heading in the right direction: Attendee figures and real revenues both
were up by 1.9 percent in the second quarter, and net square footage was growing at a 1.8 percent clip. CEIR is currently calling for 2 percent overall growth in both 2019 and 2020.
Another bright spot: This past August, the number of trade show executives reporting growth in exhibit space reached a four-year high. Nearly three-quarters (72 percent) of organizers surveyed said that exhibit sales grew for their most recent event,
according to the 2018 Benchmarks & Trends in Exhibit and Sponsorship Sales, which was conducted in conjunction with Exhibit Sales Roundtable. For each of the previous three years, less than two-thirds of organizers reported exhibit-sales growth.
than half (52 percent) of exhibition organizers polled expect their event's profitability to increase next year by an average of about 8 percent, according to the ECEF 2018 Pulse Study, released at the Exhibition and Convention Executives Forum in
May 2018. That's slightly less optimistic, however, than last year, when 59 percent expected their event's profitability to increase. Only 9 percent in the most recent study expected a decrease in profitability, though, compared to 10 percent the
Not surprisingly, organizers increasingly are looking to new technology solutions to drive the success of their shows. They commonly named both predictive analytics and 24/7/365 platforms that connect attendees and exhibitors
as the solutions they were most likely to incorporate. In each case, some 50 percent of respondents to the ECEF Pulse study planned to add their preferred solution within the next 18 to 24 months. – M.J.S.
INCENTIVES: Bigger Budgets, More Qualifiers
Incentive travel trends for 2019 will closely mirror those of the past few years: larger budgets and more qualifiers. Findings from the Incentive Travel Index, a joint study by SITE, the Incentive Research Foundation and Financial and Insurance Conference
Professionals, revealed that more than half (54 percent) of those polled said their budgets will rise in 2019, with median spending per participant at around $4,000.
Corporate buyers representing the financial and insurance industries reported
even larger budgets. However, many told M&C during FICP's recent annual conference that the extra funds won't cover the expected increase in expenses, such as air and F&B.
The index also found that nearly two-thirds (65 percent) of programs
will have more qualifiers. Reasons for this, according to John Iannini, president, the SITE Foundation Board of Trustees, and vice president, business travel/meetings and events Americas, Meliá Hotels International, include healthy global economies
and ongoing mergers and acquisitions.
Rising participant numbers can be attributed to companies including nonsales employees in programs. Iannini says that many firms are realizing how much their service and support teams contribute to the
organization's overall value and are including them in programs, accordingly.
Incentive destinations trending well in various studies include the Caribbean, Western Europe, Costa Rica, the Bahamas, Malta, Morocco, Croatia, St. Lucia, South
Africa, Thailand, Puerto Rico and, in a more exotic realm, Bhutan, Namibia, South China and Bordeaux, France.
Other program trends spotted for 2019 and beyond, based on Incentive Travel Index findings, are wellness, CSR and sustainability.
– LISA A. GRIMALDI