The rising costs of meetings and events

The rising costs of meetings and events

Soaring supply chain prices are pushing up the cost per attendee for meetings and events. Mike Fletcher assesses the global impact.

The cost per attendee for in-person meetings and events this year is around 25% higher than in 2019 and is forecast to rise a further 7% in 2023, according to CWT’s Global Business Travel Forecast.

Inflationary pressures and shorter lead times caused by pent-up demand have seen prices soar across all regions and most categories of spend.

Following an increase of 48.5% in airfares during 2022, flights are expected to rise by 8.4% in 2023.

Hotel prices meanwhile have already eclipsed 2019 levels in some areas, including Europe, EMEA and North America. They’re expected to rise across all regions by 8.2% in 2023.

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CWT states that hotel rate increases were initially driven by strong leisure travel in 2021. However, group travel for meetings and events is improving and transient business travel is similarly gaining a healthy pace, putting further pressure on average daily hotel rates.

Food and beverage (F&B) is another area that has seen high price increases across all regions, according to CWT. Alongside inflation, a desire to facilitate face-to-face networking, pulling out all the stops and an emphasis on sustainability appears to be driving up prices.

Asia Pacific and North America have seen the sharpest increase in catering costs, with the average F&B spend per attendee in 2022 up by around 120% and 70%, respectively, compared to 2019.

“Demand is unlikely to abate,” Beau Ballin, global head of market development at CWT Meetings & Events told travel news source Skift.

“To get the best value from long-awaited meetings and events and to mitigate against rising costs, corporations will need to plan further in advance, budget carefully, and adopt a disciplined approach to managing activity across the organisation.”

Where are budget cuts being seen?

To illustrate, according to a Meetings & Events Pulse Survey, carried out by Global DMC Partners, 60% of 237 planner respondents are now opting for venue locations close to where attendees are based, in order to offset travel and hotel price hikes.

Respondents also said that since the second quarter of 2022, they’d had to cut some programme costs in order to offset increasing prices. Some 70% however reported budget increases to try and combat inflationary pressures.

Meanwhile, according to Cvent’s Travel Managers Report: Europe Edition, published in June, 75% of the 519 corporate travel decision-makers surveyed said that volumes (defined as the number of hotel stays booked in a specified period) will overtake 2019 levels this year. Travel managers in Italy were particularly bullish, with 86% forecasting a sharp increase in volumes.

Nearly nine in 10 (88%) of those corporate travel managers surveyed by Cvent also source hotels for meetings and events. The regions where there is most crossover in roles are the Netherlands (95%) and France (91%).

To win business from travel managers who also plan MICE activity, hotels must understand the rate strategy buyers are likely to adopt and how negotiations might develop.

A rise in demand for dual-rate loading

According to Cvent’s report, travel managers have become more interested in ‘dual-rate loading’, with fixed and dynamic pricing in place for each property.

A hotel’s dynamic rate features a Best Available Rate (BAR) discount, so that in a volatile pricing market, travel managers will pay less if it dips below the static client rate.

A majority (62%) of respondents across all markets surveyed said they’re now requesting dual or dynamic prices during their 2023 RFP negotiations.

These strategies could make hotels more competitive, giving them the opportunity to vary pricing based on factors such as demand, availability, and customer loyalty.

What does 2023 look like?

Looking ahead to next year, a slowing global economy may apply some downward pressure on prices if companies hold off staging face-to-face events and return to hybrid formats, with larger virtual gatherings supporting smaller in-person meetings and events.

That said, CWT’s Global Business Travel Forecast observes that many hotels and venues in key markets are now fully booked for large groups until 2024.

Barring any severe geo-political risks or further tightening of Covid-related restrictions in 2023, prices will likely, therefore, continue increasing, just not at the incline observed in 2022.

While prices will remain at a premium next year, buoyed by continued demand, corporate budgets will need continued reassessment and expectations revised as the economic climate changes.

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Mike has been writing about the meetings and events industry for over 20 years as a former editor at Haymarket Media Group, and then as a freelance writer and editor. He currently runs his own content agency, Slippy Media, catering for a wide-range of client requirements, including social strategy, long-form, event photography, event videography, reports, blogs and ghost-written material.

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