23 Nov 2015

Meetings Outlook Fall Edition - Seller's Market?

The increasingly healthy industry landscape is creating a stronger seller’s market as well as an explosion of new opportunities. With that arise new challenges in managing the expectations of planners, suppliers and clients.

The Seller's Market

This time the quarterly Meetings Outlook research continues to build on the trends from the past issues. A clear shift has been emerging in the balance between suppliers and planners and now the study shows that the industry is again entering a "seller's market". As the meeting and event budgets are somewhat back, the sellers have more room to increase rates.

“The stabilized market ultimately places the power of supplier competition on value and quality, rather than price,” says Bill Voegeli, president of Association Insights, the company that conducts the research for MPI's Meetings Outlook. So it's not completely just about the rates. Suppliers are competing now with each other on the quality of the services and products rather than how low the rates can go.
 
Some of the trends are clearly the expanding lead times. In order to secure the venue of your liking, you need to plan well ahead. Suppliers seems to be able to already start picking the best customers and that can create challenges for smaller meetings. At the same time, it can prove beneficial for the planners that do secure those suppliers, as the focus can then be easier to put on the customer experience.

Many suppliers are now able to elect to shift the bulkof their business to target markets,” Voegeli says. “Suppliers who are able to constrain business with non-target customers and expand business with target markets are able to provide better experiences for their clients, thus the perceived value. These changes to ‘quality focus’ and ‘target sales’ represent a very different daily focus for suppliers.”

In some ways this is good news for the second-tier destinations, the ones that aren't automatically on your list of places to RFP. Since the big destinations and hotels seem to have the possibility to choose their target markets, those left outside of that category can get better value by turning to those second-tier options.
 
 

Risk Management

The current business conditions and the strong seller's market does seem to leave planners with few options for managing their risks. The expectations of budget owners and suppliers don't seem to be aligning.

“One of the most difficult dynamics to manage in the current stable, strengthened economy is budget owner expectations,” Voegeli says. “Supplier budget owners tend to expect increased net revenues comparable to increased pricing, and planner budget owners expect improved attendee experiences comparable to the increase in approved spend.”
 
Some panelists have also noticed that not all the terms and rates, that have been agreed on, are honored. Discussions about rates being increased despite of proposals stating them clearly. Some planners are still resorting to booking meetings later as a sort of risk management. The other side of the coin is to book early to secure the needed rooms. Be that as it may, making clear cancellation clauses in the contracts is of great importance.
 
Read more about on the Meetings Outlook Fall Edition.
 
MPI Europe Team
 

 

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