Will Meetings Continue to Recover in 2012?

According to Smith Travel Research, group demand (measured as a percent of total demand) began to grow year-over-year in March of 2010.  Since then, the group occupancy rate has steadily increased, but has yet to reach the pre-recession levels observed in 2007 and 2008. While greater numbers of conventioneers may be seen roaming the lobbies, pre-function space, and banquet halls of U.S. hotels, operators and owners are telling us that negotiations with meeting planners are still contentious and concessions are being made to attract events to their hotels.

PKF Hospitality Research (PKF-HR) completed its annual survey of meeting planners in October of 2011. The survey was sponsored by ConventionSouth magazine. A total of 109 planners located across the country were asked questions about their 2011 and 2012 events in the southeast.

Activity Levels

The number of meetings and exhibitions organized by the planners is on the rise, but the rate of growth appears to be reaching a plateau. The percent of planners expecting a rise in the number of events they manage increased from 2011 to 2012, while the percent expecting fewer events next year declined. However, the vast majority of survey participants reported that the number of meetings (62% of planners) and exhibitions (80%) they will coordinate will remain the same in 2012 as they managed in 2011.

Growth in meeting attendance also appears to be tapering off, but to a lesser degree. Forty-three percent (43%) of the survey respondents stated that attendance will remain the same from 2011 to 2012, but 38 percent are expecting an increase.

Another indicator of the increase in meetings activity is the reduction in number of times hotels have had to enforce the attrition and cancellation clauses in their meetings contracts. Attrition and cancellation income received at the hotels in PKF-HR's annual Trends® in the Hotel Industry survey declined 51.3 percent from 2009 to 2010. We believe this trend carried forward into 2011, but to a lesser degree.


Ultimately it is the dollars spent by planners that are of the greatest value to hotels. Therefore, hotel managers should be heartened to learn that 44 percent of the planners in the survey have budgeted for an increase in meetings expenditures in 2012. This is greater than the percent of planners expecting increases in events, implying that the expenditure-per-event is on the rise.

The projected increase in meeting expenditures can be attributed to a combination of inflation, rising corporate profits, rising hotel occupancy rates, and the dissipation of the "AIG Effect". Fifty-seven percent (57%) of the planners are no longer concerned with negative publicity or feel compelled to book less conspicuous meeting venues. In addition, 76 percent of the survey respondents are expecting the room rates they pay in 2012 to increase over 2011 levels.

Some Austerity

Despite the overall rise in meeting expenditures, planners do not have an open checkbook. Seventy-two percent (72%) of the planners reported that they are still planning to cut costs in certain areas. This is up slightly from the 70 percent that reported some degree of expenditure reductions in 2010. Food and beverage (53% of planners) and off-site events (28%) remain the top targets for cost cutting in 2012. This is comparable to what we saw in 2011.

One quarter (25%) of the planners surveyed are hoping to curb their costs by reducing the amount they spend on guest rooms. To accomplish this, 41 percent are booking more economical destinations and venues. The good news for hoteliers is that eight of ten attendees are booking through the room block, as opposed to booking through other channels in search of a lower room rate.

It is interesting to note that 58 percent of the time, planners are still encountering hotel operators willing to concede room rates. While this is a significant number, it is less than the 71 percent occurrence rate reported in 2010.


When asked to rate the overall health of the meeting industry, one-third of the planners surveyed expected conditions to improve in 2012, but 59 percent believe the environment will remain the same. For hotel owners and operators, this means that group room nights and group room revenue will continue to rise, albeit at a more modest pace than observed from 2010 and 2011.

As for other group related sources of revenue, "the same" may be the best hotels can expect. Planners are realistic and understand the implications of the improved performance of the lodging industry. However, corporations and associations are still cost conscious, and hotel managers will face stiff negotiations for such revenue sources as meeting room rental, food and beverage, resort fees, and internet charges.

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About the author: Robert Mandelbaum is the Director of Research Information Services for PKF Hospitality Research (www.pkfc.com). Special thanks to Marlane Bundock, Managing Editor of ConventionSouth, for sponsoring the survey. This article was published in the January 2012 edition of Lodging.