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In every major economy, 2009 was the year when executives sought to control costs by indiscriminately cutting meeting and business travel budgets, often with little or no consideration of the purposes for which face-to-face contact is still absolutely essential.
We all remember the so-called “AIG Effect” and the intense scrutiny that it brought to meetings. Programs were cancelled in large numbers, particularly in destinations that were seen as too frivolous or controversial. The result was staggering job loss in communities that depend heavily on the meetings economy.
At the same time, a tough economy meant less money for meetings…
… and less money for travel. Organizations were looking for any opportunity to cut costs, and meetings got caught up in the worst economic downturn since the Depression of the 1930s.
And that wasn’t all. The economic crunch hit home at just the moment when the rapid evolution of virtual meeting technologies was creating the impression—we know it’s a false impression—that no one should ever have to meet face to face.
There’s a reason that someone coined the phrase, “A Perfect Storm”, and in 2009, that’s what our industry lived through. We went into the economic downturn with too many clients who had an imperfect understanding of the value of face-to-face meetings. When it came down to the crunch, meetings looked like a budget line that would be easy to sacrifice.
One of the major takeaways from this presentation is that Meetings Deliver powerful business benefits to the participants who attend them and the communities that host them. Over the last year, the industry has adapted by embracing the economic shift and making a strong case for its own value and impact.
Documenting the value of meetings is very much a game of numbers. Here are some of the most significant numbers in the Meetings Deliver white paper: $12.50 is the value companies gain for every dollar they invest in business travel…
40% is the proportion of business prospects who are converted to new customers as a direct result of face-to-face meetings…
28% is the percentage of current business that would be lost without face-to-face meetings…
17% is the percentage of profit the average company would lose if it eliminated all business travel, and…
Three years is the time it would take for profits to recover.
95% is the percentage of respondents to one survey who said face-to-face meetings are essential for long-term business relationships.
But none of that was at the top of anyone’s mind in early 2009, when the economy was in serious decline and meetings faced the perfect storm that we talked about at the top of this presentation. Budget and travel restrictions led to an alarming number of cancellations, and many of the meetings that survived were scaled back. Incentive travel was particularly vulnerable, but meetings of all kinds faced questions about the carbon footprint associated with air travel and the potential to replace that travel with virtual meetings. In the end…
… 85% of all companies in the United States cut back their travel spending, and a share of that cut went straight to the heart of the meetings economy.
A year later, business executives have come to recognize meetings as one of the essential tools that will lead the economic recovery. Meetings are clearly seen as an essential tool for • Solidifying relationships • Closing business deals • Consulting stakeholders • Deciding policy • Setting strategy
Something very interesting and useful about the new research on the value of meetings is that it doesn’t build a business case for holding every single meeting in a face-to-face setting. The evidence points much more clearly to what MPI has been saying for the last decade: That there are times and places when there’s no substitute for face-to-face. And one of those moments is when it’s time to seal the deal…
Research by Oxford Economics for the U.S. Travel Association found that • 75% of customers prefer or require face-to-face contact • Executives say face-to-face is key to • Long-term relationships (95%) • Negotiating major contracts (82%) • Interviewing key staff (81%) • Listening to important customers (69%)
Research by Forbes Magazine gives us a value proposition for virtual as well as face-to-face meetings.
The research showed that it’s fine to meet online if you’re looking for a quick, affordable way to circulate a lot of information in a hurry. But for the important stuff—building relationships, building trust, interacting at a meaningful level—there’s still no substitute for face-to-face. And isn’t it interesting that two-thirds of executives expect participants to be checking email or multitasking in some other way while they attend virtual meetings.
93% of executives who responded to a Harvard Business Review study said face-to-face is particularly important if the purpose of the meeting is to negotiate or build bridges across cultures.
And while government meetings aren’t supposed to generate a return on investment in the conventional sense, Oxford Economics found that governments can expect a productivity gain of $4.60 or more for every dollar they spend on a meeting.
Then there are the unsung benefits that meetings deliver back to the organizations that host them. In the Forbes and Harvard studies, 80% of respondents recognized that face-to-face interaction leads to teamwork. 69% saw meetings as a place to consider critical issues. And once again, face-to-face emerged as the best way to build stronger, more productive connections with clients.
Many of the most memorable events are part of a broader brand marketing strategy. Incentive programs and consumer shows are facing the same challenge to deliver brilliantly creative programs on a tight budget, but the value proposition for marketing events is as strong as ever. Conference & Incentive Travel Magazine argues the value of face-to-face for • Bringing franchises together • Maintaining brand culture • Targeting potential buyers • Allowing customers to experience the product first-hand • Supporting a broader marketing strategy
And finally, it turns out that there’s a strong argument in favor of the incentive programs that received such harsh criticism in the wake of the Troubled Assets Relief Program, or TARP, in the United States. Business executives believe that incentive programs are more motivating and more memorable than any other form of recognition, and two to three times as powerful as the equivalent cash bonus… Large majorities of the executives who participated in the Oxford Economics study said incentive meetings • Deliver a 4:1 return on investment • Build employee morale, job satisfaction • Boost employee performance • And have the same effect as an 8.5% pay hike
And wider economic analysis shows that a 10% increase in business travel boosts the economy by 1.5-2.9%.
But the economic impact of meetings and events is only partly about the impact we create for participants. Meetings also deliver jobs and tax revenues— lots of jobs, and lots of tax revenues—to the communities that host them. MPI’s Canadian foundation conducted the first national economic impact study of meetings and events, based on a new methodology introduced by the United Nations World Tourism Organization. The original study gave us a snapshot of the industry in 2006, and MPI Canada has since produced updates for 2007 and 2008. Here are the figures for 2008…and an important finding is that industry volume held steady from 2006 to 2008, in spite of the early impact of the economic downturn. MPI is one of the partners in a U.S. economic study that is expected to conclude late this year.
And as the industry adapts to a shifting economy, we see steady improvements in meeting professionals’ own assessment of their future prospects. Business Barometer is MPI’s bimonthly review of the shifting business environment, based on answers to a survey of veteran meeting planners and suppliers. The first line on this chart gives you their sense of current business conditions compared to last year, while the second line shows their predictions for the immediate future. As you can see…In June 2009, only 13% of Business Barometer respondents said business conditions had improved compared to the previous year, while 74% said things were worse. By April 2010, the figures had just about reversed.
FutureWatch is an annual survey in which MPI asks its entire membership to assess the industry’s prospects for the year ahead. Here again, we see cautious optimism. FutureWatch stated that: “Meeting and event professionals are working long and hard to sustain existing business models while discovering new methods, markets, and best practices in response to an unprecedented range of pressures—financial, political, and social.” For 2010, they expect gradual industry growth, with 2.8% more meetings and 4.5% more participants than last year.
Corporate planners anticipated 3.6% more meetings and 11.7% more participants, significantly higher than the 4.0% attendance increase they previously predicted for 2009. But they said their meetings would feature fewer frills. And they expected closer attention to the results of each meeting. Average attendance at association meetings will hold steady, at just over 1,000 participants, and the number of meetings will decline by only 0.6%, compared to the 3.7% drop that association planners predicted for 2009. Association planners expect participants to be more focused on strong content. And they foresee stronger demand for sustainable meetings. Independent planners expected to see more events outsourced, with clients requiring meeting content and execution to align more closely with their broader objectives. Some suppliers expected that closer budget scrutiny will delay clients’ program decisions, leading to shorter project lead times.
While they did expect to see some business growth in the year ahead, FutureWatch respondents were “digging in and adapting to a new reality,” characterized by • Close attention to the value of each meeting • A focus on value, quality, and competitive pricing, with less emphasis on frills and extras • A larger share of meetings located closer to home • A continuing shift toward virtual and web-based technologies • Emerging opportunities for technology or technology service providers • Widespread emphasis on corporate social responsibility • A new concern about public perception of meetings and events
Once again, in the incentive market we see less accent on frills and extras, with much more emphasis on measurable results.
And here are some of the measurement criteria that planners are most likely to use to determine the return on the dollars their organizations invest in meetings. The top items on the list include: • Meeting cost relative to budget • Participant satisfaction • Achievement of meeting objectives • Acquisition of new customers/members • Increased customer/member revenue • Performance improvement • Direct revenue generation
Once again, the takeaway is that the meetings industry has shown how resilient and resourceful it can be. We’ve shifted to meet the demands of a changing economy, and we’ve done a good job of documenting the value we deliver when participants go onsite…
Thanks very much for being a part of this presentation. And now, it’s your turn to help deliver the message that meetings deliver . MPI has put together a how-to guide to help members join this campaign: through local chapters and local media, through your own company or organization, and through other organizations and professional networks. I have a few printed copies of the white paper and the how-to guide if you’d like them today, but you’ll find more resources on the MPI website (read the URL on the screen).
The Business Value Of Meetings and Events Presented by (your name here) (date of presentation)
Corporate • More value • Fewer frills • Greater accountability Source: FutureWatch 2010 Association • Steady attendance • Strong demand for content • Sustainability Independent • More outsourcing • Closer attention to client objectives Meeting Professionals’ Predictions Suppliers More scrutiny = shorter lead times