Technology can save time and labor. It drives out inefficiencies. “Faster, better, and cheaper” has been the mantra that has been driving sweeping technology changes in society and has made the U.S. the most productive country on earth. However, as this revolution more fully takes hold in the meetings industry in the next few years, several of our basic business models will be challenged on a national and international basis.
These changes will have a huge impact on society and the meetings industry in general.
One of the greatest impacts, however, is likely to be with meeting industry associations. This article will give several examples on how they could be impacted.
Hotels – Leaner and Much More Efficient
These past three years should have been an absolute disaster for hotels based on history. Hotels in the U.S. have experienced a 31-year low in occupancy in 2001, 2002, and 2003 (below 60%) and average daily rates have leveled since 9/11 according to the consulting firm Price, Waterhouse and Cooper. Yet, the meetings industry has had three of the most profitable years in history! Why?
There are multiple factors, but a key one is technology. Computerization and automation have lead to major increases in efficiency – or, in other words, fewer staff needed per occupied room.
Night accounting used to take a team of people in the early nineties; it is now done with a click of a mouse. Sales force automation has made it easier for fewer staff to manage the sales process. Hotel online databases can answer many of planner inquiries and streamline the communication process.
Technology has also allowed hotels to manage their room inventory more efficiently. Online bookings tools have driven much of the excess in the booking process. As with the airlines, commissions are being reduced or eliminated. It has allowed hotels to practice yield management allowing them to fill what were formerly empty rooms, although at discounted rates. The booking process is much more efficient that it used to be.
Fewer staff per occupied room and more efficient data processing have been significant contributors allowing hotels to remain profitable despite the abysmal business climate of the past few years.
What are the long-term impacts? There will be fewer staff needed to run and sell hotels. Hotels will continue to be profitable, but there will be substantially less “fat” in the system. Less fat and fewer staff could mean fewer industry association members, fewer attendees going to meetings and dwindling sponsorships available to support the meeting industry associations.
Commission-based 3rd-Party Planning Companies
Technology is driving down commissions in many industry sectors. We have seen the elimination of commissions for the airline industry for example. The increasing efficiencies of online booking tools for hotels are driving down commissions for hotel rooms as well. With lower commissions, there will be less profit to be shared with the many independent meeting planning companies making their livelihood on commissions from meeting block sales.
Procurement and Meeting Automation Lowers Meeting Spend and Staffing Required
Meeting consolidation and changes in procurement have yield corporate savings of 30% or more in meeting spend. The basic premise behind meetings consolidation is to bulk-purchase meeting services from fewer preferred vendors at lower costs.
Basic meeting automation tools, such as online attendee management, can achieve similar savings for all planners. There are a wide range of technology tools to drive labor and cost out of nearly every aspect of the meeting planning process.
As these initiatives are embraced, one can expect fewer vendors operating on tighter profit margins. We can also expect fewer planners needed to run a given number of meetings.
Again, with fewer companies, and tighter profit margins, there will be fewer members, attendees and sponsorship dollars that are at the heart of funding the meeting industry associations.
Meetings Standards May Drive out Extra Costs
Voluntary standards initiatives, such as APEX (Accepted Practices Exchange) from the Convention Industry Council (www.conventionindustry.org) will allow meeting professionals to digitize their business process. Very significant efficiencies in communication between planner and supplier will be created. This could yield labor savings of 30% to 40% or more – our current means of communication is very inefficient in many ways!
On the positive side, the tasks being eliminated will center on the clerical and proof-reading chores involved with paper-based data management. These increased efficiencies, however, translate to substantial automation. There likely will be fewer staff needed to manage meetings when fully implemented.
Virtual Meetings Will Eliminate Some Meetings
Since 9/11, web meetings and other forms of meeting online have blossomed. Although there will continue to be a strong demand for face-to-face meetings, there are many inefficient meetings that will be eliminated. The cost savings in terms of travel/time out of the office and the shorter turn-around time will be too great to ignore. Fewer meetings also mean fewer planners needed.
What does it meeting for meeting industry associations?
Future meetings promise to be much more efficient. Technology automation will likely lead to fewer staff needed to run meetings, fewer staff to run hotels, tighter margins on all sides, lower commissions for meeting block sales, and fewer suppliers in general. We will be able to do more with less – fewer staff and lower costs.
We are already seeing this in other industry sectors. The U.S. is one of the most productive countries on earth thanks to the substantial investment in the technology infrastructure. The “jobless recovery” from this last recession, however, is an example of how our industry will be run: more efficiently and with fewer bodies.
The impact to meeting industry associations could be substantial. Fewer meeting and fewer staff needed to run meetings could mean fewer planner members joining associations. Few staff needed to run hotels and fewer suppliers in general due to tightened competition could likely lead to fewer supplier members. Lower commissions and tighter margins could likely mean fewer sponsorship dollars from hotels, other suppliers and companies generating their revenue from hotel room commission sales.
Meeting industry associations such as MPI, PCMA, IAEM, ICCA, HSMAI, RCMA, SITE, ICPA, SGMP and most of the rest of the 143 associations linked in my online favorites file (www.corbinball.com/bookmarks) depend on member revenue, revenue from attendees coming to meetings and exhibitions/sponsor dollars provided by industry suppliers. Without these funds, most associations would not be able to support themselves.
We are already seeing a contraction in membership in some organizations. We are seeing others such as SITE and ICPA being turned over to association management firms to increase efficiencies. ASAE and GWSAE are merging, not only because it is a good idea, but because it is more efficient. Although many theses changes have, in part, been forced from a down economy, technology automation will likely exacerbate and increase these trends in the next few years.
I am not a pessimist by nature. I feel that meeting industry associations are invaluable for networking and education. The changes sweeping through business, however, could have a chilling effect on associations. As the fat is eliminated, as the frictionless economy continues to develop, the outcome could mean fewer members for associations and fewer funds for them to spend.
The pressure on associations will be to use technology to more efficiently manage members while giving a more personal, customized interaction. Tomorrow’s association will not be “your father’s organization.” They will need to reinvent themselves in order to continue to be able to provide the vital networking and educational services that they now provide.