MPI’s World Education Congress (WEC) is headed for Toronto June 15-18, and with that comes even more focus on how planners can navigate the demand for experiential events.
MPI’s WEC theme, shared experiences, harnesses the insights and expertise of scientists, artists and business leaders through educational sessions, networking and even F&B. Health and wellness is an underlying subject, and attendees will find many ways to share these experiences, whether meditation or mindfulness sessions, in the Mindfulness Lounge.
Last year, SocialTables Founder Dan Berger explored future trends and their possible impacts on the MICE industry. The following edited excerpt (originally published on Planyourmeetings.com) touches on these topics. Let us know in the comments below how these trends, i.e., Berger’s “seismic shifts” have touched your events this year.
The industry we’re in is changing in front of our eyes. The hospitality powerhouses are going after the industry’s third rail: commission. We’ve seen, just in the last few weeks, pretty much the three largest hotel groups with a 1,000+ hotels in their portfolio, cut commissions by 30 percent. At the same time, we’ve seen some chains increase their commissions.
Red Lion just went from 10 percent to 11 percent on group commissions. So, they’re seeing an opportunity, it’s really interesting to see that. Also, other chains have renewed their commitments to third parties. Hotels themselves have been investing in direct booking technologies, so they’re saying we don’t need these third parties necessarily, because we can take that money we’re paying for booking and invest it in technology or invest it in our own sales force.
On the buyer side, American Express GBT, just bought the sixth-largest demand side planning group. On the vendor side, PSAV bought Hargrove, they’re a GES kind of competitor. And on the tech side, Cvent just announced another acquisition of QuickMobile. So, they bought Matthews CrowdCompass, a few years ago and they just bought QuickMobile because they wanna make sure that they have a stranglehold on the mobile application category.
Prices will increase due to consolidation, as more hotels consolidate, as more hotel chains buy out one another, as more private equity firms buy hotel operators, you’re gonna have prices continue to increase because there will be less competition, so prices will only go up. Some chains will drop commissions for group business even further, I think that 7 percent is only the beginning, I think they would ideally like to get to a much lower number. But did you know that actually, hotels charge commission if a corporate chain gives a group lead to a hotel property? They charge them commissions sometimes, much lower than 10 percent, but corporate charges commission for leads they source, and that’s sometimes around 4 percent.
I think some chains will double down on the third-party relationships and say, “You know what, my money is more worthwhile going to a third party to outsource all my group business, as opposed to me investing in my own marketing strategy,” so that might happen too. This is something that we haven’t seen yet, but I think private equity, the really big players when it comes to money, will start moving into the events industry and I think we’ll see consolidation happening with event planning firms.
So, we’ve seen that happening in the DMC world, right? Allied PRA, and other DMCs have purchased small DMCs and consolidated, that hasn’t happened in catering so much because catering is super local, but I think it can happen in event planning firms. So, when you have somebody’s wedding and event planning company, somebody’s meeting planning profession, they can buy that, that’s happened in doctor’s offices, when you go to doctor’s offices, it’s most likely owned by a group of financial investors, not just by the doctor anymore.
All this means that there will be seismic shifts to our industry’s structure. Generally speaking, when seismic shifts happen, they happen because of business model shifts, not because of other things. So, we’re seeing the business model shift, where different people are caring more about the money than they used to.
New ways to travel are changing behavior. [Referencing chart] Airbnb is much cheaper than a hotel, so it’s not surprising that it’s competitive, and it’s not just competitive in the United States, it’s competitive all around the world.
By the end of this year, we should see over 50 million Airbnb listings. So, the way you think about it, that’s 50 million additional sleeping room in the world, right? When just 10 years ago, that supply, that sleeping room supply wasn’t available.
And then we’re also seeing another interesting trend: luxury managed departments. There’s a company called Sonder and they essentially do Airbnb, but they actually take the lease, so they’ll lease the apartment, give you a hotel like experience in an apartment. So, more and more interesting business models are coming online, creating more inventory.
So, what does that mean for meetings and events? Well, I think one thing that it means is that remote destinations will compete with traditional ones, you’ll suddenly be able to go to a city that had didn’t have the number of sleep rooms that you needed, but now it does because it has another 100,000 sleeping rooms, thanks to home sharing. And home sharing will add inventory in every corner of the globe, so you can have meetings in places you didn’t think about having them before.
Get the full scoop of MPI’s WEC 2019 here.