2006 Global Meetings Industry Trends Florida Governor's Conference on Tourism Mark S. Andrew, CHA, CMP August 7, 2006

1. 2006 Global Meetings Industry Trends Florida Governor's Conference on Tourism Mark S. Andrew, CHA, CMP August 7, 2006 ©Meeting Professionals International 2006

2. Today’s Agenda • Business climate • State of our industry • MPI programs to help you stay ahead • Key takeaways to increase your strategic value

3. Changing Global Business Environment In the short-term: Economic Recovery/Improved Employment Rates Rising Costs of Fuel, Healthcare Ongoing Security Concerns Natural Disasters

4. Changing Global Business Environment During the next decade*: Macroeconomic Trends Global and regional shifts in economic activity Aging populations require greater public sector activity Increases in consumer spending (e.g., Hispanic and Chinese) * (McKinsey Quarterly, January 2006)

5. Changing Global Business Environment During the next decade*: • Social & Environmental Trends • Technological connectivity • Shortage of talent and labor (opportunity for developing countries) • Scrutiny on big business and ethics (leading to regulation) • Demand for natural resources * (McKinsey Quarterly, January 2006)

6. Changing Global Business Environment During the next decade*: • Business & Industry Trends • New global industry structures • Management moves from art to science • Access to information / knowledge production * (McKinsey Quarterly, January 2006)

7. Business Travel in North America • The Western Hemisphere Travel Initiative (WHTI) will require all U.S. citizens, Canadians and citizens of Bermuda and Mexico to have a passport or other accepted secure document to enter and re-enter the U.S. (www.travel.state.gov)      • Dec. 31, 2006 - Applied to all air and sea travel to or from Canada, Mexico, Central and S. America, the Caribbean, and Bermuda. • Dec. 31, 2007 - Extended to all land border crossings as well as air & sea travel.

8. Business Travel in North America • WHTI Update • In addition to extending the deadline for implementation of the Western Hemisphere Travel Initiative to at least June 1, 2009, it addresses issues such as the identification of acceptable secure documents, an aggressive public education program and the need to ensure appropriate technology, like card readers, is available at all land and sea border crossings. These key points are in line with TIAC’s recommendations in its submission to the Department of Homeland Security in October. • If the Senate passes the amendment, there is no certainty that the WHTI deadline will be postponed:  the Coleman amendment will face the same hurdles as the Leahy-Stevens amendment passed last week.  (See TIAC Talk Issue Focus, May 18, 2006) • Meanwhile, when asked recently about the U. S. security plan, President George W. Bush reiterated his support for the law requiring everyone entering the country to present a passport or a special border card, but indicated that he is committed to working with Canada to ensure the identification cards will be compatible and meet the needs of both countries.

9. Business Travel in North America • I cannot find anything definitive on any Canadian government or US government site, and the newspapers are strangely silent on the issue.  The only consensus is that the proposed amendment would push back implementation of the WHTI for 18 months, until June 1, 2009.  Counting backwards, that would mean that no, it would not roll back the January 1, 2007 date of implementation for air and sea.  My sources: • Canadian Border Services Agency: http://www.cbsa-asfc.gc.ca/agency/whti/2006-05-19-e.html • Windsor Star:  http://www.canada.com/windsorstar/news/story.html?id=d4919c8b-7b13-43c5-8ef7-0513c6366ccf • BTNOnline: http://www.btnonline.com/businesstravelnews/headlines/article_display.jsp?vnu_content_id=1002539506 • TIAC: An amendment approved by the U.S. Senate on May 17, 2006, has been widely reported in the media as signalling a delay in the January 1, 2008 implementation of the Western Hemisphere Travel Initiative. The amendment, which was added to the Senate’s immigration reform package, was a bipartisan initiative, moved by Democratic Senator Patrick Leahy of Vermont and Republican Senator Ted Stevens of Alaska.  The Stevens-Leahy Amendment, as it is known, seeks to delay implementation of the WHTI until June 1, 2009, by simply amending Section 7209(b)(1) of the Intelligence Reform and Terrorism Prevention Act to read “June 1, 2009” instead of “January 1, 2008”. While it is possible that this development could lead to a delay, there is by no means any assurance that one will be obtained, given the way the U.S. legislative system works.  • MeetingsNet Extra: In other travel-related news, the U.S. Senate voted last week to pass an amendment to a Senate immigration bill that would push back a requirement that people crossing by land into the U.S. from Canada, the Caribbean, and Mexico, must hold passports or border-crossing cards. The requirement, initially scheduled for implementation December 31, 2007, would go into effect on June 1, 2009, provided the amendment survives further immigration-reform wrangling between the House and the Senate. • American Immigration Lawyers Association:  Senator Leahy (D-VT) introduced an amendment (no. 4018) on behalf of Senator Stevens (R-AK) and others that would amend section 7209(b)(1) of the Intelligence Reform and Terrorism Prevention Act of 2004 to extend the Western Hemisphere Travel Initiative (WHTI) for 18 months, from January 1, 2008 to June 1, 2009. As background, this initiative requires all U.S. citizens, Canadians, citizens of Bermuda and Mexico, to have a passport or other accepted secure travel document when entering the United States by January 1, 2008. • The Leahy/Stevens amendment was agreed to on a voice vote.

10. Business Travel in North America Confusion…

11. Business Travel in North America • Worldwide Business Visa Center opened in July 2005 by the U.S. Department of State (www.travel.state.gov) • Purpose is to facilitate the issuance of visas for business travelers by assisting American businesses when they invite employees or current and prospective business clients and partners to the U.S. • Includes up-to-date details about wait times for interviews and processing times. • The Bureau of Consular Affairs will continue to maintain the list of "Upcoming Conferences" to be held in the U.S. and may also include a list of event participants when provided by the event planner.

12. Canada’s Economic Environment • In the PerformanceandPotential2005-06 report,the Conference Board compares Canada's performance with 23 countries across six categories: economy, innovation, environment, education and skills, health and society. • In 2003, Canada slipped from 3rd to 6th place in the economy category and to 12th place last year. Canada lost ground in innovation last year as well. • Contributors to Canada’s lagging productivity growth: • low capital intensity (rate of investment in machinery and equipment). • weak record in embracing and achieving learning and innovation. Canada invests less in training than the US or Europe. • weak venture capital investment. Canadian leaders tend to be risk-averse when it comes to investing in R&D and turning ideas into commercial products. • Ineffectiveness in competing for global trade and investment. * (Golden, www.conferenceboard.ca)

13. Top Trends in 2006 • Internal/Organizational • Workload • Budget changes • Shifting organizational goals/strategies • External/Environmental • Economy • Travel costs • Cost of oil and gas = • Europe differed slightly, including shorter lead times and focus on ROI (internal) and changes in technology and increasing globalization (external) as trends • expected to impact the industry.

14. Is there any good news? Absolutely!

15. Government Recognition of Meetings • National Meetings Industry Day in Canada • MPI, ASAE and PCMA joint statements on biometric passport legislation • In March 2005, MPI and ASAE met with the U.S. Labor Department about elevating the meetings profession in workforce • MPI contributed to first-ever Meeting and Convention Planners statement, 2006-07 Occupational Outlook Handbook published by the U.S. Bureau of Labor Statistics • MPI - affiliate member of World Tourism Organization • Florida Governor’s Conference on Tourism

16. Importance of Meetings • FutureWatch 2006: • Association planners say that their organization considers meetings to be a strategic function important to growth (45%) • Corporate planners were least likely to report this type of emphasis on meetings (29%) • During the next 2-3 years, 63% of respondents expect the importance of meetings to increase within their organization • Only 3% expect the importance of meetings to decrease • EventView 2005: • 96% of corporate marketing executives utilize events in their marketing mix. • 93% view the importance of event marketing to be constant or increasing. • 52% of survey respondents report meetings/events as a "lead tactic" or a "vital component" of the marketing mix.

17. Environment within the Meetings Industry • Continued growth/increased demand • Planners and suppliers are seeing an increased demand for meetings. • This creates a move to a seller’s market with demand outpacing supply. • Increased demand impacts: • Lead times required by suppliers • Price • Supplier flexibility and concessions • Availability in preferred cities and venues • Use of intermediaries and meetings services companies • Focus on demonstrating impact of meetings on business objectives • Procurement entrenched across corporations • External lack of awareness of meetings management as a profession

18. Each of the following organizations and studies have forecasted growth for the meetings industry in 2006: FutureWatch 2006, EventView 2005, the 2006 meetings Market Report (Meetings West) and HSMAI. • Industry organizations are predicting both an increase in the number of meetings they will hold in 2006 and an increase in the percentage of their organization’s budget they expect to receive. Growth in Meetings

19. The U.S. Bureau of Labor and Statistics reports: • As businesses and organizations become increasingly international, meetings and conventions become even more important. In organizations that span the country or the globe, the periodic meeting is increasingly the only time the organization can bring all of its members together. • Despite the proliferation of alternative forms of communication, face-to-face interaction is still a necessity. In fact, new forms of communication foster interaction and connect individuals and groups that previously would not have collaborated, which may offer the only opportunity for these people to interact in person. • Industries that are experiencing high growth tend to experience corresponding growth in meetings and conferences. i.e. the medical and pharmaceutical sectors, because of their high growth and knowledge-intensive natures, will experience large increases in meeting activity. Growth in Meetings

20. In FutureWatch 2006, respondents predicted: • Meeting space lead time will increase 38% in 2006, from 29 weeks to 40 weeks • Lead time for hotel/support services is forecasted to jump 37% from 23 weeks to 31 weeks • BTN Online reported that: • “Lead times over the past year have begun to lengthen at conference centers managed by Aramark Harrison Lodging, said Jeff Weggeman, vice president of sales and marketing, from an average of one month to three months to the current window of four months to six months.” • “Small meetings continue to be booked with short lead times, while lead times for larger events have begun to lengthen. Lead times also vary by property and location.” Impact of Increased Demand: Lead Time *(Dosh, BTNOnline.com)

21. 76% of client-side planners and 81% of suppliers expect hotel rates to increase in 2006 (FutureWatch 2006). • BTN Online reports that “Companies are choosing to pay higher prices instead of changing dates or locations, though suppliers said lead times may increase as cost-saving opportunities arise with longer booking windows.” (Dosh, BTNOnline.com) • Jan D. Freitag, V.P. of Hendersonville, Tenn.-based hospitality industry research firm Smith Travel Research (STR) “expects the growth rate of available rooms to come in at about 0.4 percent, well below the historic average of approximately 2 percent, ‘which is great news for the hotel owners but not so great news for the meeting planner who has to negotiate rates in '06 and '07.’” (Davidson, MeetingsFocus.com) Impact of Increased Demand: Price

22. 31% of client-side planners, 28% of intermediaries and 24% of suppliers predict that concessions and flexibility will decrease (FutureWatch 2006). • Some speculate planners will be making concessions in the current business environment. Tom Maguire with Eventcom International by Marriott indicated that ”Availability no longer is the only requirement, as buyers must meet revenue requirements to book hotel space.” Impact of Increased Demand: Concessions *(Dosh, BTNOnline.com)

23. Meetings as a Strategic Function • Meetings are increasingly becoming a tool for furthering organizational objectives • 71% of client-side planners indicate that meetings are recognized to a great or very great extent as a strategic function important to the growth and success of their organization • 49% of planners said the perceived value of meetings has increased over the past year • 66% of meeting managers and 80% of directors are either consulted when their organizations are considering a meeting or are involved in driving strategy and establishing how meetings will support organizational goals

24. Measuring the Value of Meetings • FutureWatch 2006: • 61% report ROI discussions within their organizations focused on cost savings, efficiencies and meeting spend, only 35% said discussions included achievement of strategic goals. • Discussions about ROI and ROO signal that organizations are interested in finding a measurement model that captures the organizational contribution of meetings. • While there are methodologies for demonstrating and measuring value or contribution, what matters is that planners measure how meetings mean business. • Eventview 2005: • 23% of marketing executives say events provide the greatest return on investment • 80% define event success as “enhancing the customer relationship” • Events are an essential tactic for generating new customers (17%) and keeping existing customers loyal (12%)

25. Measuring the Value of Meetings EventView ‘05

26. Procurement and the Buying Decision “…it has become vital for meetings professionals to learn the basic principles that procurement officials apply to the supplier selection process, whether the supply in question is paper clips, office furniture or hotel rooms. Knowing the process could well make the difference between a slashed budget and a cooperative effort to do right by meetings.” (Sturken, Meetings & Conventions Online)

27. Vendor Selection

28. Corporate planners expect to outsource approximately 11% of their meetings to intermediaries. Increasing use of Intermediaries

29. Facility Usage

30. Where Do We Go From Here? • Educate decision makers on meeting strategy & ROI/ROO • Why meetings should happen at all. • Educate meeting professionals in the essentials and prepare them for more strategic roles • Define the Meetings Profession • Continually present our own ROI • Why should Planners be at the Table.

31. How can meetings and events be used strategically to help businesses adapt to the following global business trends? • Greater distances (physically and culturally) within organizations and between organizations and their customers and partners. • Shifting demographics around the world (age, buying power). • Vast amounts of knowledge/information being produced paired with inefficient communication and mechanisms for sharing intelligence. • Greater reliance on sophisticated software, data and algorithms for decision-making, as management moves from art to science. • Change management, as organizational structures and management techniques evolve.

32. The Meetings Profession • According to the U.S. Bureau of Labor and Statistics: • In 2004, meeting and convention planners held about 43,000 jobs. • Employment of planners is expected to grow faster than the average due to growth of business, the increasing globalization of the economy, and increasing use of electronic forms of communication to bring people together. • Opportunities will be best for individuals with a bachelor’s degree and some meeting planning experience. • While demand for corporate meeting planners is highly susceptible to business cycle fluctuations, fluctuations are less pronounced for associations because meetings are generally a source of revenue. • Associations for industries such as health care, in which meeting attendance is required for professionals to maintain their licensure, are the least likely to experience cutbacks during downturns in the economy.

33. MPI: Building a Profession • Think about the HR profession (personnel): they used to be in a back room filing resumes • Think about procurement (purchasing): they used to be supply order-takers and invoice processors • Both now have seats at the table contributing to business decisions and driving organizational success With MPI Member Solutions, MPI is building a recognized profession that will ensure meeting professionals have this same seat at the table

34. MPI Programs to Prepare You for More Industry Change MPI Member Solutions – a Suite of products Skills Assessment tool • Targeted education programs and personalized career paths driven by Professional Pathways • 5 industry-first standardized job descriptions for each category: corporate, association and independent planners • 13 defined skills families and 160 skills to be successful as a meeting professional driven by the job descriptions • A self-assessment tool to evaluate against all skills and then compare those skills to a job description that best matches your current job or against a job you aspire to in the future • Outreach to governments, influencers, HR, faculty, students and business media about the meetings profession

35. MPI Programs to Prepare You for More Industry Change MPI Member Solutions – a Suite of products CultureActive Tool© The CultureActive Tool© is a Web based, integrated component within MPI Member Solutions that will enable MPI members and their organizations to foresee and understand how others communicate and interact based on their cultural influences. This business tool provides instant feedback on the characteristics and traits of over 60 national cultures with recommendations for personal and business interactions to develop successful relationships and minimize cultural collisions. • Provides effective and comprehensive education on global communication, business strategies and product deliveries. • Enables meeting professionals to increase their influence with senior management and leadership on conducting business globally. • Ensures that MPI continues to be the premier marketplace with greater depth and scope of cultural competencies.

36. MPI Programs to Prepare You for More Industry Change MPI Member Solutions – a Suite of products Resource Center MyMPI More… Research agenda to drive industry transformation GCCOE Platinum Series, white papers and toolkits MPI Foundation

37. Key Takeaways • Be proactive – communicate with senior management/owners about how meetings drive business • Scrutinize your business model to ensure efficiency and strategic effectiveness • Do not work in silos – collaborate with peers company wide from procurement to travel to marketing • Focus on strategic, not just tactical aspects of meetings • Become fluent in the language of business and know what to say when you get a seat “at the table”

38. Where Do We Go From Here? • Stay on top of what is happening in the world. • Understand the importance of ROI & ROO. • And Remember: • It is not a Buyer’s Market. • It is not a Seller’s Market. • It is a Partner’s Market.

39. Questions and Answers Thank you!

40. Resources Dosh, Corrie. "Hotels Seek Guarantees: Meeting Buyers Look To Secondary Cities, As Chains Demand Revenue Minimums." BTNOnline.com. 3 Apr. 2006. <http://www.btnonline.com>. Golden, Anne. " Opportunities Missed: Canada losing ground on economy and innovation." Conference Board. March 2006. <http://www.conferenceboard.ca>. Davidson, Tyler. “2006 Meetings Market Report.” Meetings West. Jan. 2006. http://www.meetingsfocus.com.