Recovery in the USA
In the USA unemployment remains high (10%) and consumer confidence low, although the weak dollar has produced a strong recovery in US exports.
All segments of the US lodging industry struggled last year, especially the meetings/groups segment.
The combined impact of the recession and the demonising of corporate meetings resulted in a dramatic fall in performance by conference centres, with net operating income down 43.5 per cent compared to a 35.4 per cent drop in national hotel income. (Source: Colliers PKF Consulting USA).
Although market conditions remain volatile, business conditions in North America are more favourable in 2011 than they were a year ago. According to IMEX’s Index of Optimism, 52 per cent of US companies believe the worst is over.
In fact, the accommodation sector is recovering faster than the overall US economy. Occupancy in US hotels rose 6.7 per cent to 63.9 per cent in the third quarter of 2010, with average daily rates up 1.6 per cent to US$99.07.
International professional services firm PwC predicts the revenue per average room (RevPAR) will increase 6.7 per cent in 2011. In New York, 31 new hotels are to be built by 2012, adding another 7,500 rooms to the city’s inventory.
Business mix
Although 37 per cent of US corporates reportedly cut back on travel in 2010, 81 per cent are planning for the same or more in 2011.
Meeting attendance continues to improve. According to the Global Business Travel Association (GBTA), US-based meeting planners expect to plan 21 per cent more meetings in 2011, but spend 3.5 per cent less per meeting.
In terms of event profile, research by the Professional Convention Management Association (PCMA) in 2010 found that 51 per cent of meetings planned are for up to 100 attendees.
Hotels are the most frequently used venues (67%), followed by convention centres (13%) and resorts (12%).
Domestic corporate and association meetings are on the up, although government meeting activity is showing a small decline.
Events are of shorter duration, with short lead times of 30–45 days.
Inbound international meeting volumes continue to decline, especially from key European markets. However, inbound incentives are starting to return with New York leading the recovery.
Grass Roots’ own venue rate forecasts for 2011 are for reductions in some areas, but higher than average rises in key cities. A quarter of planners expect their off-site meetings budget to be cut.
Key trends
Research carried out by PCMA, AMEX and YPartnership shows general optimism about a growth in the volume of meetings beyond 2010.
31 per cent of planners expected the number of meetings they book in 2011 to increase
- Planners said they paid $7,600 in fees for meetings they cancelled, postponed or re-booked in 2010, yet predict only $3,500 in 2011. This compares to $81,000 in 2009
- US-based planners expected 80 per cent of their meetings to take place inside the US
A survey by Meeting Professionals International (MPI) suggests the number of meetings planned for 2011 is expected to rise by a higher percentage than the number of attendees, meeting buyers will shop around more and increase their spend per event on most buying decisions, the association believes.
Third party support filling the gap?
Strategic Meetings Management Programmes (SMMP) and outsourcing are significant US market trends, particularly among senior meeting buyers. Over half of this group outsources venue sourcing and other functions; 67 per cent either already have a SMMP in place or plan to do so.
Activity is returning. However corporate teams are unable to flex due to a freeze on headcount and therefore look to third-party support to ‘fill the gaps’.
The outsourcing model is still relatively new in many sectors and organisations have typically looked for part or fully outsourced solutions that offer a concierge-style service, including unique venues sourcing. Now with visibility of spend a key driver this picture is changing both in the US and in solutions for the Latin American market.
Demand for online meeting solutions continues to grow, while interest in mobile solutions and the use of social media as a communications tool has exploded. Delegates are critiquing speakers’ performances in real-time, while hotels in many major cities are monitoring guests’ social media to improve the guest experience during the visitor’s stay.
Visa issues
In December 2010 research showed that visitor visa issues to the US are impeding participation in conventions and acting as a barrier to trade. Visa issues stopped 116,000 international participants from attending US exhibitions, including 37,900 international exhibitors.
Canada
After a disastrous 2009, Canada’s hotel industry started to pick up in 2010, illustrated by investment in the sector increasing by 85 per cent (Source: HVS). Investors began buying hotels again, spending $695m compared to $375m the previous year. Occupancy and average rate both rose in 2010 and are only slightly behind US levels. Overall occupancy in Canada improved from 58.9 per cent in 2009 to 60.9 per cent in 2010. Toronto realised occupancy of 68.3 per cent.
However the highest room rates were to be found in Vancouver, an increase of 11.5 per cent on 2009.
Room supply in Vancouver also increased by 4.2 per cent, while the hotel communities in the other cities shrank slightly.
Canadian meeting buyers are optimistic for 2011, with the online Meetings Focus 2011 survey reporting 14 per cent fewer buyers being dogged by low budgets.
Meetings, convention and incentive business from the US is Canada’s second largest inbound market after American leisure travel and in 2009 the meetings industry was worth $305m to Toronto.
And after spending millions to dispel the perception that the country is breathtaking but boring, Canada now claims the world’s top country brand, taking top spot from the US, which now ranks fourth.
The success of the Vancouver Convention and Exhibition Centre (VCEC) as the Winter Olympic Games media centre paid dividends. By September 2010 the centre had confirmed 448 events for their year ending March 2011 and was gearing up for its largest ever convention year in 2011.
Latin America
South America comprises 13 countries and accounts for five per cent of world GDP. 2011 GDP growth rates are expected to be similar to those of 2010: Peru (6%), Chile (6%), Brazil (4.5%), Argentina (4.4%) and Colombia (4%).
Inbound and outbound activity is increasing rapidly in the region, especially incentives. This is as a result of the increase in direct flights from key European cities.
Brazil, Mexico and Argentina dominate the conventions markets in the region, with their purpose-built venues.
Argentina
Buenos Aires ranked the 11th busiest city in the world by number of events staged there in 2009 (source: ICCA). The city is seeing projects reactivated which had been halted when recession struck. Supply in the high-end market is expected to expand 14.7 per cent.
Brazil
Brazil’s strong domestic market helped the country emerge relatively unscathed from the global financial crisis and there were moderate increases in average daily rate (ADR). However, rate rises will undoubtedly influence arrivals from the US, Brazil’s second most important source market after neighbouring Argentina.
Brazil will add 7,400 new hotel rooms in 2011 and Accor is spending US$200m to add nearly 5,000 rooms in Rio de Janeiro.
Sao Paulo enjoys a good level of supply, but STR Global predicts that development in Rio may be curbed by the use of cruise ships for temporary accommodation during the 2014 FIFA World Cup and the 2016 Olympic Games.
Chile
Following the economic crisis and earthquake of February 2010, Chile had to embark on a major reconstruction programme. Despite this, hotel occupancy and rates have both risen slightly.
Mexico
Mexico’s MICE industry has new convention centres opening in Cancun and Queretaro and another facility is planned for Puebla in 2011.
Several emerging destinations such as Zacatecas, Queretaro, San Luis Potosi and Tampico have also added new facilities, while Puerto Vallarta, Mazatlan and Acapulco have all invested in their meeting infrastructure.
Mexico’s 32 states now boast 495,000 hotel rooms for conventions and 71 venues for conventions and exhibitions.
Peru
Peru’s meetings and conventions market is underdeveloped and meeting spaces are scarce despite heavy demand. In the capital Lima business tourism represents 80 per cent of the city’s hotel occupancy.
Puerto Rico
Serving the prime US market, Puerto Rico has not been immune to the market slump, however. In the 12 months to July 2010, the Puerto Rico Convention Bureau confirmed 400 bookings for 202,000 room nights, slightly down on the previous year.
Coupled with prospective business for 2011 this means that the Puerto Rico meetings industry now brings $97m into the island’s economy.
Any comments? Email conferencenews@mashmedia.net
