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Global travel prices are predicted to continue to increase through the end of 2022 and throughout 2023, according to the 2023 Global Business Travel Forecast published by CWT, a travel management platform, and the Global Business Travel Association (GBTA).

Rising fuel prices, labor shortages and inflationary pressures in raw material costs are the primary drivers of the price growth. Next year, according to the forecast, airfare will rise by 8.4%, hotel rates by 8.2%, and car rental charges by 6.8%. This is on top of 2022’s increases of 48.5% for airfare, 18.5% for hotel rates and 7.3% for car rental charges.

The cost-per-attendee for meetings and events in 2022 is around 25% higher than in 2019, and it’s forecast to rise a further 7% in 2023, reports the GBTA. This is not good news for planners dealing with this new reality. However, experienced planners have been through inflationary periods before, and are digging deep into their toolboxes for contrivances to help mitigate these challenges. Here is a look at the business acumen they’re using to plan exceptional experiences in light of these rising costs.

“Rising costs are manageable if you can be flexible and, most importantly, creative,” says Martha Donato, founder and president of MAD Event Management based in Warwick, New York. “I was sourcing a photographer recently who quoted 25% over his past fees for the same work. Instead of agreeing to the higher price, I reworked the proposal and took out some nice-to-have elements in favor of necessary elements. Creativity is a necessary tool, always.”

Given the increasing costs across the board in the industry, flexibility is key. “We’ve always done it this way isn’t a strategy — it’s an excuse,” Donato says. Planning ahead as much as possible is important, she adds. “We are planners and are part of a larger ecosystem that relies on every layer to perform and deliver. We’re facing staff shortages and the loss of institutional knowledge and historical reference, so it’s important we stay laser focused and don’t lose sight of the event’s objective.”

A multipronged approach is needed to help alleviate the added costs of meetings and events, says Dana Toland, chief event planning strategist and sourcing specialist of IT Exchange Group based in Marshfield, Massachusetts. “For our clients, this is especially necessary due to the lower attendee numbers, as they are no longer receiving the ROI they once were on their spend,” she says. “One way to maximize their spend and market reach is to continue to host hybrid events, so they can capture and still engage with those attendees with budget restrictions and who are unable to attend in person.”

Meeting planners also need to work closely with the key stakeholders to determine the goals and objectives of the event, and how they have changed from prior years. Historically, one way to offset costs has been with registration fees, and sponsor and exhibitor dollars. With attendance numbers down, it is imperative that the planner sits down with sponsor and exhibitor key stakeholders to see what value-add the event can offer them to justify their participating in the event. One platinum sponsor could easily offset any pricing increases, however, planners must make sure the value is there for them to realize their goals and objectives. In the past, events were often focused on products and services, sales, market share and industry intelligence. However, as times have changed, people are now utilizing events to identify new employees and companies to partner with. Also, planners must engage more with attendees and potential attendees before the event to ensure event messaging and agendas are on target.

Take Advantage of Bundling

Another creative approach is for companies to contract for multiple events with one hotel or brand as well as with their suppliers. “As we all are, hotels and suppliers are anxious to get business on the books,” Toland says. “This was a strategy employed during the financial crisis of 2008, and planners were able to leverage the multiple events into reduced pricing, more lenient attrition, liability clauses and extra concessions.”

When starting the site-selection process, Toland reaches out to local convention and visitors bureaus (CVBs) or destination management organizations (DMOs) to send out the RFP to source hotels, special event locations and other needed local suppliers. “A majority of CVBs and DMOs are nonprofits funded by a portion of hotel occupancy taxes,” Toland says. “As hotel rates increase, resulting in increased tax revenues, the funds of these organizations increase and permit them to do more for their clients.”

She cites Experience Scottsdale (Arizona) and Visit Lake Charles (Louisiana) as examples, which are offering meeting groups that meet specific criteria incentives of up to $5,000. Experience Scottsdale will also pay for flights, hotels and other costs for site selection trips for qualified RFPs.

CVBs are also expanding into providing professional services. Discover Newport (Oregon) is offering complimentary meeting planning services to clients, while Visit St. Pete/Clearwater (Florida) will provide complimentary registration staff at the start of the conference. Visit Anaheim (California) is offering free marketing services to help increase attendance. “When you add all of these up across multiple programs, they will have a significant impact in offsetting some of the increased pricing,” Toland says. “The key to securing favorable terms and incentives is to reach out to the CVB at the start of the process. If you bring them in later, you could be disqualified.”

A strict RFP process is crucial to securing the best terms and pricing. Here, the CVBs and DMOs are invaluable because they have established relationships and working knowledge of area hotels and suppliers in the hospitality industry. “For hotels, we will do an in-depth analysis of up to five to eight properties in each city so we can rank each property in terms of overall costs and how it does or does not meet the client’s needs,” Toland says. “We also use this data to help us identify what trends are in that market, which we leverage in the negotiation process. For other vendors, it is our policy to solicit at least five bids when possible. This again helps us identify trends and negotiate favorable terms. It is also important to meet with each potential hotel and vendor to create a relationship and help them understand the program needs and how partnering with my client will be a win-win.”

Rely on Relationships and Creativity

Relationships take on added importance in inflationary times. It is best not to rely on only one supplier, even though planners may have an affinity for a certain hotel, A/V company, destination management company or caterer. They may be experiencing supply-chain or staffing issues of their own, so planners should have others to which they can pivot.

Creativity is another powerful way to offset rising costs. Jaki Baskow, CEO and owner of Las Vegas Speakers Bureau, specializes in helping meeting and event professionals create memorable experiences with world-renowned speakers, entertainers and businesses. She has more than 40 years in the speakers and entertainment industry, and has worked with some of the biggest celebrities in the world.

Baskow says it is important to remember that everything is negotiable. If a planner is hoping to get a certain speaker or performer for their gathering that will add pizzazz, go for it, she says. “I use negotiating power and my relationships to help planners. There have been times I have been able to book headliners for groups at a fraction of the cost, as I have piggybacked their performance to their residency in town,” Baskow says. “The bottom line is to negotiate, negotiate, negotiate. Especially in today’s current inflationary climate. If you do not ask, you will not receive.”

She does caution that there may always be add-on fees. It’s important to get a list of any additional costs there may be before signing the contract. “The bottom line is working within your budget by planning strategically and producing an amazing, memorable experience,” Baskow says.

A/V Through the Roof

As meetings and events proliferate post-pandemic, the cost of A/V has skyrocketed. One anonymous planner was irate about being quoted $75,000 for A/V for a three-day event that cost $25,000 pre-pandemic. How can these rising costs be combatted? Baskow recommends gathering several bids before negotiating with the in-house A/V team.

Larry Cooper, CEO of Meetings and Events, the company that produces THE EXPERIENCE Conference and Exhibition for the cleaning and restoration industry, agrees. He also suggests asking for an extremely detailed list of what is being done and for what cost when it comes to A/V.

Also, be sure to ask the hotel or venue if the property is union or has any new union agreements and, if so, how it will impact the budget if planners bring their own A/V company on property. Planners don’t want to pay for duplicate equipment costs or labor due to union requirements. As union hotels can double the cost of A/V, it’s always wise to have the preferred A/V provider contact the hotel directly to work out the details.

Lastly, some properties provide complimentary built-in A/V for breakout rooms. Also be sure to ask this upfront on the RFP, as projectors and screens can run well over $1,000 a day. Depending on the room size and lumens necessary for projection, it might be cost-effective to purchase your own projector. Sometimes, they can literally pay for themselves during the first event. Better yet, your salespeople can use them for their meetings when not in use for an event.

An increase in A/V costs is a domino effect, providers say. Because of supply-chain woes, they can’t get the gear they need, and, labor shortages are a real challenge. Add the pent-up demand of events, and that is a perfect storm. So, planners advise teaming up with the A/V supplier to create solutions to these issues together.

Martha Donato, founder and president of MAD Event Management, far left, says a creative approach to meeting budgets can keep costs down. Courtesy of Martha Donato

Don’t Overlook F&B Costs

Don’t forget to work with the chef, catering and F&B departments to keep costs down. Give the chef permission to be creative with fruits and vegetables that are in season, which will be cheaper than those that have to be shipped in. Also, be sure to order early.

Toland gives the chefs of her meetings and events complete autonomy. “We have always preferred to not order off of menus, but rather set pricing for each meal or event and give the chef full reign over the menu,” she says. “Chefs are artists at heart, and can be very creative with smaller budgets. We have always been pleased with this approach.”

Cooper uses coffee as a line item that can’t be overlooked. “Coffee can be extremely expensive. I have stopped serving hot water for tea and decaf as they cost the same amount as coffee and are usually barely touched,” he says. “I also notify the venue staff not to refill the coffee urn without contacting me. Today, it is more important for planners to stay on top of everything. Look over the items in your contract line by line.”

Remember, Cooper says, conference coffee can cost anywhere from $60 to $125 per gallon depending on where the meeting is being held, and can be a huge cost savings when negotiated properly.

In addition to worrying about their own catering costs and bottom line, it is also a good time for planners to think of others who are less fortunate. Many families have been hit hard by record-breaking inflation, and more than 12% of the population of the United States is food insecure. Planners should remember they can donate their leftover conference and restaurant food under the federal Bill Emerson Good Samaritan Food Donation Act of 1996. Most cities already have the infrastructure for the food to be picked up at restaurants and hotels, and delivered to area food banks, soup kitchens and shelters. An added benefit is that,in some instances, a portion of the donation may be tax deductible, helping to further decrease costs.

Consider Second- and Third-Tier Destinations

Smaller destinations are increasing in popularity for meetings and events as, in many cases, they are less expensive than major metropolitan areas. Plus, meeting groups convening in a smaller city are usually a “big fish in a small pond,” an opportune scenario that often results in planners having a more favorable ratio regarding the number of sleeping rooms required and the amount of complimentary meeting space offered. Planners report they are attracted to the affordability of meeting space, hotels, food and beverage, and entertainment in second- and third-tier cities.

“There is definitely a shift to seeking out second-tier cities with respectable airlift,” Toland says. “Many of them are taking advantage of rising costs by offering more competitive pricing and incentives to increase their brand and market share. This is especially true with boutique hotels competing with the major hotel brands. Incentives include lower room rates, rebates, free receptions, complimentary meeting rooms and 10% commission on sleeping rooms.” She adds, “An added perk of selecting a second-tier city is they are not experiencing the record crime rates as larger cities like New York City or Chicago. Post-COVID, employers and conference hosts are much more aware and concerned with the safety of their staff and attendees.”

Experience is What It’s All About

The bottom line is, there are areas to cut back in inflationary times, but one thing not to alter is the experience. The overall experience is what attendees will remember, whether planners are pinching pennies or not, they want it to be exceptional.

This is the time for planners to have an eagle eye. “Planners must do their due diligence when negotiating hotel agreements to limit their risks and liabilities, as well as secure favorable cost-saving measures,” Toland says. “Make sure all fees and pricing are fixed and spelled out in the contract.” C&IT