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Growth of meetings sector uncertain in light of global financial challenges

Tuesday, November 27, 2012

Growth of meetings sector uncertain in light of global financial challenges

The future of the economic situation around the world is of great concern to both business travelers and the companies that employ them. Financial forecasts and economic analysis offer conflicting views of what the coming years will mean for the executive travel sector, and many organizations are treading carefully when it comes to making investment decisions. While serviced apartments and corporate housing are seen by many experts as a comfortable and reliable way for executives to approach accommodations on the road, other areas of the business travel may not weather potential economic storms as well.

Failing to meet expectations
One subsector of the business travel industry that is expected to suffer losses in the coming year is that of meetings and conferences. Business Travel News reports that, according to data from American Express (Amex), demand for meetings facilities is likely to decline in most regions around the globe. A notable exception to this forecast is the emerging markets in Asia.

Europe will see the most substantial reduction in demand, with analysts at Amex predicting a drop of 6 percent. Meetings and conference spaces in North America will not be hit as hard, but are likely to report a decline of at least 1 percent. However, Asia is projected to see an increase in demand of 4.3 percent in the meetings and conferences sector. Rises in business-class airfare, heightened competition for accommodations and cautious investment spending worldwide were cited as possible causes for the reduction in demand.

"To maximize the return on their investment, companies are highly focused on gaining clarity around spend, ensuring transparency as to why their organizations are holding meetings and who is attending them, and measuring the degree to which their meetings objectives have been achieved," said Issa Jouaneh, vice president and general manager of meetings and events at Amex, as quoted by the news source.

Companies who see the value of holding meetings with international clients may find that corporate apartments provide them with the kind of return on investment that Jouaneh mentioned. By offering superior service and competitive rates, this kind of accommodation could become an increasingly popular choice with savvy and budget-conscious corporate travel managers.

An uncertain future
While some economists have voiced their confidence in global financial recovery, others are not as optimistic. The New York Times reports that the Organization for Economic Cooperation and Development (OECD) recently revised its financial forecasts for worldwide economic growth in 2013.

Six months ago, analysts at the OECD predicted that the global financial market would grow by 2.2 percent next year. However, in light of the continued uncertainty in the Eurozone and the imminent threat posed by the fiscal cliff in the U.S., economists at the OECD revised their projections to 1.4 percent. The report indicates that unless action is taken in North America and Europe, many countries worldwide will slip into a deep recession during 2013 and 2014. This, in turn, could have significant implications for the business travel sector.

"The world economy is far from being out of the woods," said Ángel Gurría, general secretary of the OECD, as quoted by the news source. "Governments must act decisively, using all the tools at their disposal to turn confidence around and boost growth and jobs, in the [U.S.], in Europe, and elsewhere."

While nobody can predict how the world's economic stability will recover in the coming months, corporate travel managers will have to demonstrate remarkable ingenuity if their companies are to remain successful in light of such serious financial pressures.