Convention Trends Shaping the Meeting Industry

By Todd Ryan Director of Sales & Marketing, Sheraton Phoenix Downtown Hotel | September 01, 2013

There are many big picture trends that people who analyze our industry on a large scale and in great detail can outline in regards to conventions and the meeting industry. Recently, I have had several engaging conversations with colleagues about our industry's trends. After allowing these discussions to settle in my mind, I've decide to share a summation of these conversations with you from my perspective as one who deals with convention business every day.

According to Jan Freitag, senior vice president with Smith Travel Research (STR), here is what we can expect through 2014:

  • Transient business will continue to drive the industry's recovery. Jan suggests that transient demand is up 23.6% year-to-date through April 2013 compared to that same time period in 2007, the peak of our industry before the Great Recession. Over that same time period, group business is still down 2.1% to that peak time.
  • With limited supply in the coming months, there is potential for pricing opportunities in many markets as demand increases.
  • Rate will drive RevPAR increases in 2013 and 2014. In 2014, Jan predicts that there will be modest growth in occupancy with a 4.8% increase in average daily rate.

As a result of these short-term trends, Jan predicts that demand will be healthy and gains will be made mainly in the transient segment by a lot of hotels. In Patrick Mayock's blog on Hotel News Now, he asks, "Will Group Business Ever Return"? He notes data from the May 2013 TraveClick North American Hospitality Review that suggests group demand will continue to fall further behind transient and suggests that group recovery will remain slow and steady. I feel that a combination of this data and other external factors will shape several trends in the convention business for years to come.

Trend: Uncertainty Seems to be the Norm

Everyone has an opinion, every market is different and nobody has the answer. The stock market is trending up, but seems to be on a roller coaster ride. Nobody can agree about what the future holds. Pick up a newspaper or browse any online news source and you still here about the uncertainty relating to healthcare costs, the Federal Reserve's quantitative easing (QE) policies, the economy's overall health, and the impact of government regulations and policies. The following are headlines I found in various economy sections of online news sources on June 14, 2013:

  • U.S. Factories Continue to Struggle
  • Euro-Zone Risks Return to Fore
  • Inflation is Wild Card for Fed
  • Fed Likely to Push Back on Market Expectations of Rate Increase
  • Japan Growth Strategies Fail to Impress
  • Consumer Sentiment Dips
  • Banks Walk on Mortgage Balance Beam
  • IMF lowers its 2014 Growth Outlook
  • Manufacturing Remains Below Pre-Recession Levels

Some of these headlines are simply facts leading the reader into a report of the past. However, when you read or hear words like "wild card" as it relates to inflation, there is a little less certainty about what will happen in the future and this uncertainty impacts everyone. National media folks who are hawking at how the government spends money have not been friendly to our industry over the years. Remember the $18 breakfast muffin that turned out to be included in a continental breakfast package, not a single muffin? Now, you have the IRS spending "lavishly" on a meeting. What are the hotels that specifically target and rely on government business going to do as restrictions become even tighter? Companies are still being fiscally conservative. Though companies seem to be optimistic about the economy, they are still being cautious with how they spend their money. This impacts the association business. Unemployment is still high and consumer confidence is fragile. Discretionary income is used for leisure travel and for a number of SMERF events. All of these, in turn, impact associations. Who do you think makes up their membership and attends their meetings?

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