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The skies may still be friendly, but increases in fares have also made them costly.

According to data released earlier this year, number crunchers at the U. S. Labor Department’s Bureau of Labor Statistics put the increase at 17.7% over last year. Airline tickets in the past year have outpaced the overall rate of inflation significantly.

There are multiple reasons for the increases, including higher fuel costs, decreased flights due to airline staff and equipment shortages and increased demand. That leaves meeting attendees with fewer options and few or no deals.

As significant as the increased pricing seems, costs are inconsistent across the board and aren’t hitting all destinations, attendees and programs the same way. The degree to which costs impact planners and groups is dependent in part on location and destination. While some planners may pivot from an international to a domestic event or choose a regional destination so that attendees can access the venue by car, others are finding ways to offset high flight costs with minor changes to programs.

We asked travel analysts, travel companies, planners, DMCs and CVBs across the country how or whether the soaring cost of tickets is impacting them. Here’s the input we have collected.

Changing Perspective

Executive Vice President, Public Affairs and Policy at U.S. Travel Association in Washington, D.C., Tori Emerson Barnes, points out that despite challenges, travel is back.

“About eight in 10 business travelers are planning travel in the next six months,” Barnes said. “This segment faces headwinds in the form of tight budgets, travel hassles, inefficiencies, plus a lack of workers in the office.”

“It’s important to note that while visitations are projected to recover by next year, business travel spending when adjusted for inflation is not projected to recover to pre-pandemic levels until 2027,” Barnes said.

The decrease in flights isn’t going to disappear overnight and will create a trigger-down effect globally.

“U.S. airlines have added thousands of new jobs in recent months, including pilots, flight attendants and mechanics, which has eased the shortages it had faced as it staffs up for strong demand ahead,” Barnes continued. “However, the FAA recently requested air carriers to operate with 10% fewer flights from major New York area airports as a result of the agency’s own shortage in air traffic controllers. Only 54% of these critical staff positions are available. Reducing flights at peak periods affects travelers across the entire air travel system.”

Senior Vice President of travel at AAA based in Washington D.C., Paula Twidale, noted earlier this year that airfares are about 30% higher.

AAA representative Andrew Gross addressed the issue of rising fuel costs, which affects both flying and driving and varying impacts.

“Gas prices vary depending on the region,” Gross said. “If a meeting is on or near the Gulf Coast, gas prices will be less expensive than on the West Coast or in the Northeast. The further one is from large oil production and gas-refinery operations, the more expensive it is at the pump due to the addition of distribution costs. It’s very difficult to predict the national gas cost average for more than a few weeks out, although experts think it could approach $3.80 before falling as driving demands tend to increase.”

Actual Impact

What is the actual impact to associations?

Global Director, Travel for Meetings, American Express Global Business Travel (Amex GBT) in New York, NY, Jorge Garcia Rojas pinpoints the vertical nature of industry changes.

“It varies across industry verticals and types of groups,” Rojas said. “Just like any other year, there are sectors going through transformational changes, focusing on their expenses, while others are in a process of expansion or trying to catch up on everything they could not do during the pandemic. This year, we are seeing some associations wanting to make up for lost time, combining two years of incentives into one and resulting in increased travel numbers.”

Rojas describes the changes and the global variation across sectors of the globe.

“We’re seeing recovery in demand for the Caribbean,” Rojas said. “Big internal meetings are taking place once again, with teams flying from around the world into one or two locations. And we’ve seen an increase in small and midsize meeting with teams meeting regionally and more frequently.”

He said costs at destinations can actually be more of an influencer.

“For lodging and venues, we’re seeing growth in popularity of non-mainstream meeting destinations,” he said.

And though domestic destinations have shown faster recovery than international destinations, he doesn’t believe that’s related to costs.

Rojas said, “We relate that pattern more to post-pandemic health and duty-of-care concerns rather than cost of travel as, in the past few months, we’ve seen popular international destinations in strong demand for future bookings. Some destinations in Asia and the Middle East have taken a little longer to ramp up.”

While it makes sense that planners and groups in the future wishing to reduce transportation costs at meetings and conventions might choose a destination where costs are less, Rojas doesn’t believe that’s the case.

“I think our clients are looking at transportation,” he said. “But for different reasons. They’re looking to reduce or offset their carbon footprint and that can come into play when making decisions. We’re increasingly seeing clients willing to pay a bit more to make their events sustainable. It’s always been about being cost effective, but nowadays the conversation is often being driven by sustainability practices and how to reduce the impact of travel. Associations recognize the value and importance of meetings but want to understand how to best reduce the impact.”

Which is not to say travel costs don’t matter. They are and have always been a key factor in meetings and whether members are opting to attend.

“Amex GBT clients are certainly aware of fare increases,” Rojas said. “However, since the pandemic, there’s been wider recognition of the value and importance of meeting in person. Face-to-face meetings with other association members are what matters. It’s also about how meetings and events support successful outcomes on many levels, including productivity, engagement, talent acquisition and building organization culture. Conversations are not about reducing meeting budgets but more about good program management, including planning ahead, controlling expenses, reporting and duty of care so that associations can make the most of the experiences they’re creating for their attendees, and translate that into growth for their association. Sustainability is increasingly driving the conversation, too, and is a variable that needs to be considered when taking decisions going forward.”

DMC Opinion

Catherine Chaulet, president & CEO of Global DMC Partners in Washington D.C., has also seen indications that planners are making changes to programs, including previously booked destination choice. According to the organization’s Q4 2022 Pulse Survey Report, 68% of planners report that rising airfare costs are affecting destination choice. It can also be a determining factor for attendees who simply cannot afford that kind of a trip.

Regardless of destination, Chaulet said groups want personal interactions.

“Our clients with a large remote-based membership are choosing to have more in-person meetings or regional meetings these days so that their teams can connect face-to-face,” Chaulet said.

While some groups are choosing more regional and/or domestic meeting locations in the future, that’s not the whole story. The report also showed that international destinations remain popular.

“We’re actually noticing a trend of U.S. planners favoring international destinations for their programs now that borders have reopened,” Chaulet said. “International destinations such as Europe, Latin America and the Caribbean are in high demand.”

Like others, Chaulet said that associations are maintaining focus on sustainability regardless of cost increases.

“Sustainability is top of mind for many meeting planners and their attendees, especially international planners,” Chaulet said. “According to the Q4 2022 Pulse Survey report, 73% of international meeting planners report that their organizations and/or clients have sustainability goals in place for meetings, events and incentives. Costs play a role but so does sustainability and the desire not to spend too much time in flight.”

Chaulet is also seeing that cost challenges aren’t just about airfare, and that destinations have issues, too.

“Going forward, it’s the lack of availability and high cost of the room block that has stopped associations from choosing certain destinations.” Chaulet said. “And where high airfare is caused by reduced flight availability, destinations are taking steps. We’re seeing more destinations working with airlines to open their market. Many Caribbean destinations in particular are starting to get flights back or increase their airlift.”

CVBs View

Most destinations are feeling positive about today’s economic challenges in spite of high fares. Many are seeing airlines increasing flights to and from their destinations while others believe their location and/or amenities are enough to offset whatever increased costs planners face.

Choose Chicago President and CEO Lynn Osmond echoes other industry execs.

“We’re hearing from our customers that the overall expense of doing business is up due to inflation,” she said. “But, even with these higher costs, there is still prioritizing for face-to-face events. This means that event professionals are increasingly being tasked to do more with less. We are well-positioned to succeed in this new world. We’re a hub for air travel for a multitude of different airlines, which keep prices competitive and ensures ease of access for attendees. Additionally, as the heart of the Midwest and within a day’s drive to nearly half the country, we continue to see a strong drive market for meetings.”

“Nashville benefits from being a traditionally high-drive destination thanks to its convenient geographic location,” Adrienne Siemers, chief sales officer, Nashville Convention & Visitors Corp., said. “Additionally, flight access continues to increase to our city.  Earlier this year, Nashville International Airport saw an increase of 32% in screened TSA passengers compared to the previous month.”

San Francisco, Miami, Las Vegas and Memphis also saw increased air travel.

David Whitaker, CEO & president, Greater Miami Convention & Visitors Bureau, noted that Miami International Airport recently garnered the top spot as the U.S.’s busiest airport in terms of international arrivals.

“This coupled with hundreds of direct flights domestically give us a tremendous competitive edge,” he said. “Supply and demand are clearly on our side and on the side of our attendees.”

San Francisco International Airport (SFO) served over 42.3 million passengers last year, up 74%, according to Nicole Rogers, executive vice president and chief sales officer, San Francisco Travel Association, and that number is anticipated to go up by another 8 million this year.

Lisa Messina, chief sales officer, Las Vegas Convention & Visitors Authority, said that Las Vegas welcomed just over 3 million visitors in February, up 17.8% from last year and that visitors easily balance increased flight costs with the city’s inherent value.

“Our tradeshows are reporting record-breaking numbers so far this year coupled with marquee sporting events and global chart-topping entertainers,” she said. “Planners are finding plenty of reasons to book Las Vegas.”

Memphis is another city with plenty of positives for planners, including expanded air service by existing airlines and the arrival of new airlines.

“Memphis also benefits being located within a day’s drive of two-thirds of the country,” Kevin Kane, president & CEO, Memphis Tourism, said. “We’ve always been a destination that serves visitors both regionally and nationally. Destinations like St. Louis, Nashville, Birmingham and Atlanta make for quick drives to Memphis. And visits to Memphis originating in markets like Dallas, Detroit and Philadelphia grew by 83% or more, compared to 2020.”

Seattle’s great airlift is a selling point for planners. The city benefits as a hub for several airlines, which increases competition and helps keep costs down.

Kelly Saling, SVP & chief sales officer, Visit Seattle, said, “We’re fortunate to be the hub for Alaska and Delta airlines with a large American Airlines presence as well. We have competition that shops this market versus a market that doesn’t get to have the variety of air lift. It’s one of our best features.”

Some cities benefit from having multiple airports nearby, including Long Beach, CA, and Washington, D.C.  With three airports within a short drive of the city, flight costs are not impacting meetings in the Long Beach area, according to Steve Goodling, president & CEO of the Long Beach Convention & Visitors Bureau.  That’s true of Washington, D.C., as well, which has Amtrak service in addition to three airports. Melissa A. Riley, senior vice president convention sales and services, Destination D.C, also said the city’s many free attractions provide substantial added value for attendees, and new direct routes to/from multiple cities is increasing air availability in the nation’s capital as well.

For some cities, it’s about location.

“Air tickets are still going up but Milwaukee is in a unique position,” Leslie Johnson, Visit Milwaukee vice president of sales, said. “Our benefit is due to our central Midwest location and proximity to so many major cities. We’re able to capture an audience that may have previously held their event or conference on the east or west coast. Since many companies are losing attendees due to the high travel cost associated with airfare, they’re now looking at the Midwest to capture an audience that can drive to the event. We’re seeing more and more interest in the drive market.”

Albuquerque is in the process of expanding their airport.

“The city is moving forward with improvements and expansion of its international airport, which will make it a destination for meetings and conventions from many other states as well,” Tania Armenta, president & CEO, Visit Albuquerque, said. “Albuquerque International Sunport is expanding its reach to a wide variety of national destinations this year. Southwest Airlines is starting nonstop flights between Kansas City and Albuquerque and is increasing the number of daily flights to Houston, Las Vegas, Phoenix, Los Angeles and San Diego. In addition, our airport is undergoing an ambitious modernization project. Future updates will include fresh local art installations, an open-plan food hall featuring eight local restaurants and a new mini shopping mall highlighting made-in-New Mexico products.”

Rising airfares, decreased flights, staffing and other challenges are a reality, but optimism also runs high. Destinations are savvy enough to push for improvements that will ultimately help level out travel prices, and planners are smart and creative enough to find ways to decrease other expenditures. Not everyone has the same approach, but everyone seems to agree on the commonality that face-to-face meetings matter and remain a value proposition regardless of transportation volatility. | AC&F |