Skyrocketing Costs Squeeze Event Budgets

Event organizers are feeling the pinch as industry suppliers, venues and transportation companies rebound from the pandemic. Travel costs are rising due to strong demand (led by the leisure sector). Following are considerations gathered from industry media, meetings market surveys and anecdotal reports from Velvet Chainsaw Consulting clients.

1. Event venues are raising rates for basic services like electrical, internet, trash management and catering. Some of these expense increases are due to labor issues, supply chain and pressure to restore revenue by venue owners and cities to at least pre-pandemic levels.
2. Hotels are raising rates for both leisure and group business as they are currently experiencing strong demand in many markets. “Despite projections of persistent inflation and a moderate economic recession, CBRE’s forecast calls for a close to 6% increase in rooms revenue per available room (RevPAR) in 2023.”
3. Expenses for exhibitors at association trade shows have increased significantly while corporate marketing budgets have remained flat. According to a recent survey by The Exhibitor Advocate, exhibitors are seeing increased labor rates and material handling and shipping costs between 20-30% since 2017.
4. Last month, VCC facilitated a session for an association of its major exhibitors. Some key takeaways: Due to increased logistics expenses (material handling, labor, utilities, etc.), exhibitors are funding these higher expenses by sending fewer staff, opting for smaller booth space and/or decreasing their sponsorship investment.
5. Transportation providers from airlines to shuttle bus providers to shared ride services and taxis are all raising fees. As the cost of jet fuel and gasoline increases those costs are borne by the meeting organizer. Ride-share companies are employing surge pricing and other tactics that result in increased costs impacting event attendees.
6. Meeting audiovisual equipment and labor are increasing rapidly according to a recent MeetingsNet article. AV and production companies have not been wholly successful in replacing their labor force with skilled workers and the dramatic increases in expense reflect the dearth of qualified and experienced technical workers supporting events. This is becoming an extreme pain point for organizers.
7. Virtual event providers are seeing dramatic changes in experienced staff, supply and demand and company ownership/investment. Recent consolidation in the business means uncertainty for event organizers in securing quality solutions at reasonable costs. The ability of some providers to follow through on promises and commitment is, in some cases, very concerning.
8. As food-and-beverage costs increase for venues, those expenses are passed directly to event organizers. Some of our clients are experiencing up to 30% increase in prices over 2022. Reasons given are labor costs, inflation, supply chain and costs of staple items like eggs.
9. Global attendance is compromised for many associations due to increased travel expenses, difficulty in securing visas, safety concerns and time out of office.

More Survey/Industry Sources

A January 2023 blog post by Cvent identified expense increases as a top concern for event organizers. “Rising inflation, combined with high demand and increased event costs, will mean organizations will need to increase their event spending. The need to control costs will also place greater emphasis on proving event ROI.”

A 2022 CWT report estimated the cost-per-attendee for meetings and events to be “25% higher than in 2019, with this set to rise by another 7% in 2023.”

According to the 2023 Global Meetings and Events Forecast, American Express Meetings & Events survey, overall meeting spend is expected to be up 7.4% in group hotel rates, with a 7.8% increase in group air rates, in North America.

The October 2022 Dashboard (Survey) from the Professional Convention Management Association’s Convene: “What do you believe will have the biggest impact on your events-related business in 2023? The largest percentage of planners — nearly 3 out of 10 — said travel and budget policy restrictions, followed by inflation and supply-chain issues (27 percent).”

A quarterly survey of 200 meeting professionals by GDP shows higher costs are the #1 challenge for planners. 88% report that budgets have increased due to inflation/higher costs and this percentage has increased from 68% in Q2 2022.

The Bottom Line

These cost increases are impacting your ability to produce effective events. Planners should have back-up to present to leadership to help explain the price hikes you face.

Guest Blogger:  LISA BLOCK - https://www.guibertvacances.com/112337/skyrocketing-costs-squeeze-event-budgets