Credit Crunch? What Credit Crunch?

Recently we were asked to propose an incentive travel programme based in one of three European cities – Prague, Lisbon or Vienna. Our client was expecting 80 or so globally based guests and wanted to run a four or five day programme; a real mix of conference, activity, customer visits and a little bit of entertainment thrown in too.

Another client asked us to pitch in ideas for a live event and wanted to downgrade from their usual five star property requirement to a four star in order to “save money and demonstrate to our people not only our commitment to communication but also an acknowledgement of the difficult economic times in which we our operating”.

The budgets for both, it is fair to say, were hugely challenging and both our clients knew as much. We knew, our clients knew, but boy I wish the hotels and properties we’d approached recognised as much (and that’s with preferential rates negotiated directly with both clients and made available to us too!).

“It seems as though only our clients and us are aware of the credit crunch,” I said to a colleague of mine. I was left wondering if anyone else was having the same problem, or were we experiencing small agency syndrome? To put it bluntly were hotels just not interested in doing business with us or were we not negotiating as well as the big boys?

In his opening piece this month Martin Lewis, Managing Editor of Meetings & Incentive Travel (M&IT) magazine said something similar. “Now it’s time for the venues to get real. If they are going to win business, they will need to be more flexible on pricing, more creative with their marketing and more proactive with sales activities .... Instead of the 24-hour rate, we need a Friday rate, a Monday rate and a ‘please-take-it-off-our-hands-it’s-Sunday-and-we’re-empty’ rate. That way you, the organisers, can get more bangs for your buck and the venues can hold on to more of the business, albeit at a lower yield.”

So, I’m not the only one. Phew! Heartened by this I called up my DMC in Prague to talk rates. “Well yes I understand the problem, but you have to understand in April we are very, very busy and I don’t have many properties able to accommodate you, let alone willing to negotiate with you.”

“I may have to go elsewhere,” I said. “The budgets are just miles apart and our client isn’t going to go for this at all. The budget is fixed. That’s it. That’s all the money they’ve got.”

“Well of course I’d be sorry to see you go elsewhere, but do think of us for another time and another event,” said our Prague DMC. It wasn’t quite the end of the conversation, but it was close!

Well, bad news for us and our client this time - but good news for Prague. Prague is officially busy in April and so it seems is Vienna. Lisbon is busy too they tell me, but either less so or just happier to negotiate and offer alternatives. So now we’ve got one happy client, one more recce booked in for before Christmas, and one more happy DMC who knows that there will still be some hard conversations taking place over the next few weeks regarding budget – but at least they’ve seen off Prague and Vienna this time around.

But what of the UK? What’s happening in the UK in terms of incentive travel, live events and the rest? Well depending on whom you talk to it’s either doom and gloom or not a problem at all. The one thing that does seem to unite both groups is that they agree that lead times are getting shorter ... and decisions are being put off until the very last minute.

“It’s not a question of not wanting to negotiate,” says one close contact and colleague from the hotel side, “it’s just a question of what our managers and sales people are saying and what our diaries are saying too. I’m happy to negotiate and in this climate business confirmed is business I want, and if I need to drop our rates to confirm the business then I will do, but I’m still hearing that some properties – and luxury ones at that - are struggling to find space for new enquiries. A colleague said to me recently that they were given an open brief; ‘look through your entire portfolio of properties and tell me what you can offer my group for the third week in January’. They had to go back to their client and say that they couldn’t offer them anything. They are solidly booked! Now you’re not going to get any negotiations off the ground whilst properties, collections and groups have problems like that to contend with!”

Hum. Nice problem to have, but still a problem. So, where do we go from here? We are where we are. We’ve got to look wider and consider properties that perhaps a year ago, or even less, we just wouldn’t have considered on our first approach list. We’ve just got to get on with it and work our knowledge, and those relationships, the very best that we can! Finally, we've got to ensure clients know what the situation is like out there. We may be at the start (or in the middle depending on who you listen to) of a credit crunch ... but quite clearly only some of us know about it.