Meetings costs are soaring as in-person meetings and events begin to come back in full force. In fact, the cost per attendee is around 25% higher this year than it was in 2019 — and it’s predicted to go up another 7% in 2023, according to a new report by GBTA and CWT.
The cost per attendee is going up. In fact, it’s up about a quarter more this year than it was pre-pandemic, and it’s probably going to continue to rise next year by another 7%. These were among the topline results related to meetings and events of the 2023 Global Business Travel Forecast, released last week by travel management company CWT and the Global Business Travel Association. This is no surprise, as prices on everything from airfare to hotel rates to food and beverage have been soaring this year just as pent-up demand is fueling a return to in-person events.
The forces driving the increases in meeting costs also shouldn’t be much of a surprise: overall inflation, supply-chain challenges and staffing shortages across the board. The report says the steep rise in hotel meeting space costs is happening due to a confluence of the current high demand for in-person meetings with a reduced inventory of available space as some hotels that closed during the pandemic have not yet reopened. Another headwind, financially anyway, comes from competition with events that had to be postponed during the height of the pandemic that are now on the books for 2022 and beyond. And more companies that have shifted to remote work are now booking hotel space for in-person gatherings, further reducing the available hotel meeting space inventory, according to the report. The trend toward shorter booking windows — lead times are now one to three months, down from six to 12 months pre-pandemic — further exacerbates the issues.
Food and beverage catering prices, always a contentious cost center, has soared in concert with the general inflation consumers are seeing in their grocery aisles. North America and the Asia Pacific region are getting hit the worst when it comes to F&B catering increases, the report says. In fact, the average catering spend per attendee is up 120% for food and 70% for beverage from just two years ago. The report said not to expect these costs to come down much any time soon, citing the ever-increasing attendee expectation that they can have their choice of vegan, vegetarian, keto, etc., special dietary needs or preferences met. Other factors that likely will continue for the foreseeable future is the increasing interest in sustainable food supply chains and the move away from plated meals to self-serve stations.
Hotel average daily room rates also are climbing rapidly to record highs, driven by a surge in leisure travel demand. As group business continues to pick up, expect to see global ADR to rise by 18.5%, compared to 2021 levels, and go up another 8.2% in 2023. While rates in North America and Europe are already up 22% and 31.8%, respectively, the rest of the world should catch up shortly, with global hotel rates eclipsing 2019 levels in 2023, according to the forecast. But don’t think hotels are just getting greedy now that demand is back: Remember that costs, especially for staffing, also have risen dramatically since 2019.
Companies also likely will be spending more on incentives as they ramp up efforts to engage their workers and reignite corporate culture, the report says. Companies likely will be willing to spend more to provide unique experiences in destinations where they can make a positive impact.
Of course, this could all change as the global economy responds to downward pricing pressures, especially if companies rely on hybrid and virtual meetings to augment smaller in-person events. However, with many hotels and venues in key markets already fully booked through 2024, prices likely will continue to increase, albeit probably not at this year’s rapid pace.
Hot Spots to Meet in 2023
The report also listed the destinations that are predicted to be at the top of the corporate wish list in 2023. In North America, New York City tops the list, followed by Houston, Boston, Chicago, Minneapolis and Las Vegas. In Europe, London and Paris will be catnip for corporate groups, followed by Milan, Berlin, Stockholm and Barcelona. In the APAC region, the top five list includes Singapore, Tokyo, Port Douglas, Phuket and Brisbane. Groups looking to head to Latin American destinations put Sao Paolo at the top of their list, followed by Cancun.