Finance

Strong Demand for Meeting Space Could Trigger 2022 ‘Compression’

It hasn’t taken long after the rollout of Covid-19 vaccines for industry experts to start using the word “compression” when referring to negotiations for future in-person meetings. With travel restrictions eased, travel demand picking up and planners signing contracts for future events, finding available space soon could become a difficult and costly endeavor.

“People are starting to become really concerned about compression,” Strategic Event Procurement founder Therese Jardin said last month during a roundtable session she moderated for an Event Leadership Institute online conference. “The events that didn’t get canceled for 2022 are still on the books, and then all of the 2020 and 2021 rebooks are getting pushed forward. It’s going to be super-important to get negotiations and space-hunting done now, or you may find yourself not able to get what you need when you need it.”

ITA Group event solutions director Erica White agreed that compression soon will be in full swing. “It’s going to be happening in 2022,” she said. “It’s busy, and it’s not just group, it’s because of the individual traveler. Demand is just so high. Rates are through the roof, and places are busy. [Venues] don’t have to be as flexible to get those groups in.”

Some believe compression it will happen even sooner. The first and second quarters of 2022 “absolutely are tight, and we are beginning to see that come to bear also in late quarter three, early quarter four [of 2021],” said VP of the Americas for American Express Meetings & Events Linda McNairy. “It’s starting to show signs, because the acceleration of demand is causing both the rebooking of meetings that were put on the shelf during the Covid period as well as [the] meetings canceled completely. But now people are returning to meetings, and the intersection of all that is driving this compression.”

McNairy added that even though some larger meetings are happening, meetings taking place generally are smaller because of the space requirements of Covid-related precautions and increased social distancing. “The ability to use space in a tricky fashion and flip a room for this or that is more difficult in this timeframe,” she said.

While planners continue to source fewer meetings for the summer and early fall compared with pre-pandemic levels, “it’s a lot better environment for meeting in August, September, October than three months ago,” said Cvent senior director of analytics Jeffrey Emenecker. “Planners are getting more comfortable having meetings late summer and into fall. It will be for smaller meetings, 100 people or less, but they are saying we can meet this year, we don’t have to wait until next year.”

Data and Rates

Cvent also has seen an increase in sourcing activity for the first quarter of 2021, more than would be typical during this timeframe, Emenecker added, based on data he collected in mid-June. “It’s hard for us to tease out how much is meeting space intensive, … but [the sourcing] is about 3 to 4 percentage points higher than is typical. There is more demand going forward for that period. That is an indicator.”

With higher demand, increased rates will follow. “What’s interesting in the rates we are seeing now and comparing them to 2019 rates, where we see the biggest year-over-year changes in a positive direction is for Q1 of next year,” Emenecker said. Normally, he added, typical price inflation would increase in a straight line, but “here we’re definitely seeing a spike for Q1 of next year, where the most bullish the hotels are feeling in terms of how much they can increase rates for 2022 over what they were doing back in 2019 for 2020 dates. That would certainly be another indicator.”

McNairy confirmed that she is seeing a similar pattern. “Booking a year ago, it was a buyer’s market. Everyone was so anxious to have the business coming back,” she said. “With the compression, the sharp increase in demand, rates are becoming less and less competitive and returning more toward 2019 levels at a pretty rapid pace.”

Location, Location, Location

As with the real estate axiom, location matters. States like Florida and Texas might have benefitted in site selection from dropping Covid-related restrictions before most other states, but that’s hard to prove, and with “more and more areas lifting restrictions and hitting better vaccination levels across the country, it is leveling off a little more,” McNairy said.

“Florida and Texas opened up so fast,” Emenecker said. “Florida was exploding from a group perspective in April and May. Surely that had something to do with loosening restrictions faster. But it’s also the time of year we are talking about, and those naturally would be places that people would want to meet at in the spring. It’s a conflating of things, not just the relaxing of mask mandates and stuff.”

When compared with pre-Covid times, Cvent data showed Southern California, Hawaii, Texas, Florida and the Caribbean now performing well, Emenecker said. “Those markets have been popping.” But over the prior few months, Chicago, New York and Boston have started to show signs of recovery too, he said.

Cvent also has noticed a burst of corporate meetings demand. “There was a pretty significant shift in the past six to eight weeks,” Emenecker said last month. “Related to that is the share of business to full-service hotels coming back. For quite a while, there was an over-indexing to lower-cost brand scales. Now we’re getting back to upper-upscale, luxury, full-service. They’re making a comeback relative to some of the lower-cost brands.”

Most Related Links :
Business News Governmental News Finance News

Need Your Help Today. Your $1 can change life.

[charitable_donation_form campaign_id=57167]

Source link

Back to top button