Make no mistake, meeting professionals face plenty of challenges for the coming year: An increasing percentage of planners say their costs are higher than expected, according to the Northstar/Cvent Meetings Industry PULSE Survey, and budgets might not be rising fast enough to keep up. Plus, many say a contentious election has affected the planning process.
Still, an unmistakable sense of confidence runs through nearly every industry report. Almost three-quarters of meeting professionals (74 percent) are optimistic, according to American Express Global Business Travel, and 85 percent of respondents to Northstar’s most recent PULSE Survey are at least as optimistic as they were six months ago. Two-thirds of respondents to the Amex GBT survey say their budgets will increase in 2025.
Driving that positivity is a strengthened belief in the value and importance of events, despite rising costs. More than half of planners (54 percent) say their organizations, or those of their clients, perceive events as significantly more valuable than other sales, marketing and business initiatives, according to the PULSE Survey, and more than three-quarters (78 percent) say events are at least somewhat more valuable than any other sales, marketing or business-development initiatives. The post-pandemic wave of support for meeting in person remains strong.
Hotel cost increases are moderating
The skyrocketing hotel prices seen in recent years are expected to slow in many popular meetings destinations in 2025, according to the American Express Global Business Travel Hotel Monitor, thanks to softer leisure travel demand and new hotel construction. Just how much of that you see will depend on your destination and meeting size, of course. New York City, for instance, is expected to experience a higher rate increase (4.7 percent) than most North American destinations, in part because short-term-rental restrictions are keeping hotel demand high. And India’s surging economy has increased lodging demand, which is driving rate increases significantly more than twice that of the global average.
In the United States, hotel-forecast updates from both STR/Tourism Economics and CBRE were adjusted downward in August due to softer leisure demand, and recent reports suggest the outlook could be lowered again later in November when the next updates are released. Planners should note, however, that the softening projections are driven in large part by weaker demand for leisure travel. While rates are dropping at the lower end of the chain scales, demand for upper upscale and luxury remains strong. And group business is increasingly driving revenue for those higher-end full-service properties.
Group hotel demand is strong
"We’re proposing that the change in revenue per available room for upper-upscale will be as strong next year as this year, and maybe even a little bit stronger," says Jan Freitag, national director for hospitality market analytics at CoStar, the parent company of STR. While STR does not separate out group-business data specifically, group and corporate travel analysis is largely based on performance in the upper-upscale segment. Year-over-year RevPAR growth in that segment is expected to be higher in 2025 than in 2024.
Meetings hotel construction still lags — for now
Record hotel construction figures still are driven by activity in the limited-service sectors, confirms Freitag, so there is no new supply in the group-friendly segments coming online that would ease demand. "There just aren’t as many hotels in the pipeline that have ballrooms and full-service restaurants, which are very expensive to build," he says.
"One factor that could be interesting to watch," posits Freitag, "is that because interest rates are now lower, construction interest rates are lower, which means it is now a little bit more feasible for hotel owners and developers to look at the plans they drew up five years ago for full-service hotels, before the run-up in interest rates. They might decide that maybe now is the time to break ground on a full-service hotel with ballrooms. A shift hasn’t happened yet, but I wouldn’t be surprised if we see some indication of that around late January of the new year."
Airfare increases should be minimal
Demand for air travel hit record highs this summer, but prices aren't forecast to rise significantly in the coming year. Fares for business travel are expected to increase just 0.5 percent in the United States and 0.6 percent globally, according to the CWT GBTA Global Business Travel Forecast, released in August. Recent variables eventually could have some effect on fares, however, such as a Boeing strike that will further delay deliveries of new aircraft, and capacity reductions announced by carriers such as Southwest and Spirit. Thus far, these factors don’t appear to be moving the needle much.
Working with strained budgets
While costs remain a top planner concern, planner confidence and optimism reflect the fact that meeting professionals have adjusted to working strategically within these parameters. An increased acceptance of the value of meetings helps, but planners will need to continue to demonstrate that value and the return on investment to maintain stakeholder buy-in. As the CWT GBTA forecast notes, corporate stakeholders in particular need to see meeting spend as an investment, not just an expense. Price increases aren’t likely to be as steep next year, but costs are going nowhere but up.
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