2020 Meetings and Events Industry Forecast
Meeting professionals are optimists, and we have the numbers to back that up, courtesy of American Express Meetings & Events. Surveyed for the Amex M&E annual forecast, 70 percent of the 550 respondents ranked their level of optimism about the health of the industry at 8 or higher, on a scale of 1 to 10.
Industry forecasts give credence to this sunny perspective. Data from Amex Global Business Travel and CWT point to moderate increases for 2020 in areas like meeting spend, frequency and size. Growth will vary for different types of meetings in different parts of the world, but on average the projections are positive. Still, there are warning signs that shouldn't be overlooked.
A tremendous amount of economic and political uncertainty hangs in the balance as a result of escalating trade tensions -- particularly between the United States and China -- as well as the potential for a no-deal Brexit in Europe, a contentious U.S. election year and plenty of other political concerns. These issues could cause business confidence to wane, according to the Global Business Travel Association BTI Outlook Annual Global Report & Forecast, released in August.
"When business confidence declines," notes Jon Gray, principal with Rockport Analytics, who presented the report at the GBTA Convention in Chicago in August, "business-travel activity tends to follow within one or two quarters." Group business travel is typically most sensitive to the elevated levels of political and economic uncertainty we're seeing, he adds.
2019 Increase2020 IncreaseNorth America1.65% 2.54% Europe1% 1.8%Central/South America 1.4% 2.3% Asia Pacific 1% 2.3% Source: American Express Meetings & Events 2020 Global Meetings and Events Forecast
And yet, meeting professionals remain optimistic. "There's a lot of noise about economic trade wars and political tensions," concedes Gerardo Tejado, general manager of American Express Meetings & Events. But event professionals are generally able to shut out that noise. "Although some pockets of the industry are stronger than others," he adds.
Simply put, meeting professionals are confident in what they do. "Concerns about potential economic downturns were noted," the Amex GBT report reads, "but the overall picture for 2020 is one of a robust industry that is mature enough to weather any temporary storms."
CWT Meetings & Events shares the sentiment, predicting 8 percent growth for the industry globally in its 2020 Future Trends Report. "The need for live events is becoming more relevant than ever before, with up to 30 percent of marketing budgets expected to be spent on live events in 2020," notes Kurt Ekert, CWT president and CEO. "Face-to-face meetings are critical to establishing connections between brands and their customers, and employees and their companies, especially during times of uncertainty."Business Breeds Meetings
The economy remains relatively strong at present and will likely continue to drive the types of meetings being held, with incentives expected to account for 15 percent of all North America meetings in 2020, according to American Express. Up from 11 percent in 2019, the new figure is tied to the low unemployment rate; companies invest more in incentives to attract and retain talent.
Around the globe, product launches are expected to account for 14 to 16 percent of all meetings, and in Central and South America, Amex GBT is calling for a 6 percent increase in 2020 for conferences and trade shows.
Airfares are projected to climb 1.2 percent on average worldwide according to CWT.
Planners should expect small increases overall in airfare and hotel costs for the coming year, according to CWT Meetings & Events. Airfares are projected to climb 1.2 percent on average worldwide; the highest increase, 2.3 percent, is expected in North America. Western Europe is likely to remain nearly flat, seeing just a 0.5 percent increase.
A similar global increase is expected in hotel rates in 2020, jumping an average of 1.3 percent, per CWT. As with airfare, the forecast calls for a 2.3 percent rise in rates in North America. Latin America and the Caribbean lead the way in hotel rate growth, with a projected increase of 2.5 percent over this year.
Planners will need to watch additional costs: In North America, CWT projects the average cost per attendee per day to leap by 8 percent, from $234 this year to $253 in 2020. That figure includes not only transportation and accommodations, but also food and beverage, audiovisual, meeting space, entertainment and miscellaneous expenses.
Group hotel bookings are up 2.3 percent in committed room nights for stays through August 2020, year over year.
Lodging analysts downgraded their forecasts in August to reflect smaller projected increases in average daily rate and revenue per available room -- and, in some cases, decreases in occupancy -- for the coming year. Another downgrade is likely to come before year's end.
Whether that will translate to higher group rate increases is difficult to predict. As Freitag explains, STR's data can be interpreted in two ways: Either hotels will negotiate from a position of strength because group demand remains healthy and rooms will be harder to come by; or political and economic uncertainty will breed instability in pricing, which is already evident in lower transient-rate increases. It will depend on just how confident hotel salespeople are they can fill those rooms a year from now.
Increases are still being called for in terms of most hotel metrics, but forecasts have been downgraded as this year has progressed. Here’s a comparison of major hotel forecasts (STR/Tourism Economics; PwC Hospitality Directions, Aug. 2019; CBRE Hotel Horizons, Sept. 2019) as of mid-October, with estimated year-over-year changes for 2019 and 2020:STR/TE 2019STR/TE 2020PwC 2019PwC 2020 CBRE 2019CBRE 2020 Supply1.9%1.9% 2% 1.9% 2% 2.1% Demand2.1% 1.6%2% 1.9% 1.8% 1.3% Occupancy0.2% -0.3%0% 0% -0.2% -0.8% ADR1.4% 1.4% 1.1% 1% 1.1% 2% RevPAR 1.6%1.1% 1.1% 1% 0.9% 1.2%
Still, despite slower growth it’s worth noting that group rates are outperforming the other categories. "ADR for the nation is up 1.1 percent, but on the group side specifically, it's up 2 percent. It's flattening a little bit, but we still see more signs of life on the group side," says Jan Freitag, senior vice president of lodging insights at STR. "We'll probably see a slight deterioration going forward, but right now it's lifting the performance of the upper-end hotels."
Preliminary data show the advanced-booking pace is strengthening, according to the September North American Hospitality Review from TravelClick, an Amadeus company. Group bookings are up 2.3 percent in committed room nights for stays through August 2020, year over year, with a corresponding increase of 2.2 percent in group average daily rate. Group bookings for the second quarter of 2020 are up 5.5 percent. Group rates continue to outpace that of transient for 2020, thus far. "The latest results now indicate an underlying strength in advance group booking pace that is providing a welcome base of business lasting well into the second quarter of 2020," points out John Hach, senior industry analyst with TravelClick. That's welcome news for hoteliers; planners might need to wait a bit longer to gain leverage in the marketplace.Slow Growth for Trade Shows
The trade-show industry continues to show steady, if slow, growth. The Center for Exhibition Industry Research's Total Index of the exhibition industry's performance posted a 1.6 percent year-over-year gain for the second quarter of 2019, the latest data available. Drilling down into specific metrics, CEIR found gains in the second quarter in terms of attendees (3.7 percent growth year-over-year), revenue (3.8 percent) and net square feet (0.2 percent), although the number of exhibitors dropped by 1.3 percent compared to the previous year.
"The growth during the second quarter indicates that the exhibition industry is on track to register a ninth consecutive year of growth, albeit slowing growth, as was forecasted by our economist in the 2019 CEIR Index Report," said CEIR CEO Cathy Breden, CMP, CAE.
Attendees 1.6% Exhibitors 0.3% Net square feet 1.1%Real revenue 2.6%
Source: Center for Exhibition Industry Research’s Total Index, released April 2019
In that annual Index Report, released this past April, CEIR's forecasters pointed out that macroeconomic conditions remained generally favorable for the exhibitions industry even in the face of concerns about a trade war with China, volatile stock markets and slowing economic growth globally. With these considerations in mind, CEIR predicted annual year-over-year growth in the exhibitions industry would continue, but decrease each year in the near future, growing 1.4 percent overall in 2019, 1.1 percent in 2020 and 0.8 percent in 2021. They expect similar small-but-consistent growth when broken down by individual metric, forecasting 1.1 percent growth in net square feet by the end of 2019, 0.3 percent growth in exhibitors, 1.6 percent in attendees and 2.6 percent in real revenue.
Exhibition executives themselves expressed cautious optimism when polled prior to this year's Exhibition and Convention Executives Forum. More than half (52 percent) of the 201 respondents said they expected to see an increase in exhibitions in the year ahead, while 38 percent expected no change. Additionally, 46 percent expected to see an increase in profitability (though this was lower than the 52 percent who said the same the year before) and 47 percent expect to see attendance rise (an uptick from the 45 percent who said the same in 2018). Half the respondents predicted that sponsorship sales would grow.
CEIR highlighted trade-show organizers' concerns about the U.S. trade policy with China during its annual CEIR Predict Conference, finding that 56 percent of executives polled at the event reported facing trade-war-related impact on their U.S.-based trade shows. Three-quarters of executives said the U.S. trade tariffs have had a negative impact on the trade-show industry as a whole.