Event costs reach a tipping point

The event industry is no stranger to current economic conditions. Budgetary problems are accentuated by other factors such as declining attendance, rising airfares, reduced availability of hotels and event venues, or rising expenses throughout the supply chain, not to mention a shortage of qualified personnel.

Customer expectations continue to put pressure on event planners to maintain high service standards despite budget constraints and rising costs and inflation, a problem that is further compounded by a lack of understanding by clients and their pressure to maintain high service standards, a problem that is further compounded by a lack of understanding by clients and their pressure to maintain high service standards;n, a problem that is further complicated by customers' lack of understanding and their pressure to do more for less, according to the “MPI Meetings Outlook – Fall 2023” report.

But despite these expectations, many prospective attendees are choosing not to attend events for a variety of reasons, including flight issues, budget constraints, security considerations or the comfort zone of extended remote working.

However, these obstacles also create an opportunity for event professionals to reformulate their approach and create more relevant experiences for attendees. According to Michael Scott, president of MPI's Greater New York Chapter, “groups that want people to return to in-person meetings will have to rethink how they deliver content and focus on what's really important”.

High prices

The shortage of available venues and hotels has become a significant challenge in many destinations, driving up prices. Understanding these dynamics is crucial for companies and event planners to make informed decisions. The effects of the pandemic continue to influence the event industry with certain destinations softening their prices while others raise them due to growth in demand.

This is beneficial for planners managing incentive travel and less so for those organizing meetings and events in the city, as resort rates are rising more slowly than urban hotels, largely due to higher corporate demand. Revenue per available room (RevPAR) for resorts has seen a 5% increase compared to 2022, while hotels in major cities are up 15% over the same period.

Accommodation prices, regardless of scale, are up 12% compared to 2019 prices, with a 23% increase in aé rates and a 25% increase in food and beverage bills. Adding to these hikes is a 20% increase in worker wages in the hospitality industry compared to pre-pandómico levels.

 

As the budgets of many corporations across the country remain at the same levels as the previous fiscal year, decisions such as inviting fewer people, planning events with shorter durations or reducing experiences must be faced.

Creating an impactful event by creating something radically different involves a huge investment. In the end, it all comes down to an event's ability to create a ripple effect for the attendee and their network, making the investment worthwhile.

According to Forbes, 80% of marketers say that in-person events play an important role in the success of the companies that host them. In addition, nearly 70% of attendees report that B2B conferences and events are the best way to learn about new products and services, according to a report published by Bizzabo.

Strong events

Creating successful events in terms of impact and return on investment can often be a numbers game. If a large-scale, high-budget event fails to capture attention, time, money and effort are wasted. Casting a wider net by organizing smaller, more focused events can be an effective solution to contain costs.

To further mitigate risks, planners and their clients can leverage technology to expand their reach and reduce costs, including webinars. While virtual events were the únly feasible option for meeting during the pandemic, they remain a staple in the meetings landscape.

According to a report published by Splash, of the 670 event professionals who responded to the survey, only 30% said they focus exclusively on live events, while 43% said they work with a combination of the two.

The combination of event modalities offers companies the opportunity to increase visibility while taking a cost-effective approach and evaluating the best option based on a company's overall marketing strategy.

REFUGIO GARCIA
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