The meetings and events industry is affected by many factors, and the global economy is a big one. Even if your events are held only in the U.S. or even in one region of the country, the global economy has an impact on your budget.

The global GDP (Global Domestic Product), is expected to grow 3.4% in 2017. Not all regions in the world are experiencing growth but some are facing a smaller downturn than previously expected. For example, in the America’s, Brazil’s recession is recovering faster than expected with a potential of positive growth by the end of 2017. However, Canada is feeling the impact of cheap oil prices and this is having a negative impact on its tar sand exports. The APAC region is doing well with Japan and China both experiencing new growth due to policy changes and BREXIT not impacting their growth as previously expected. EU/Middle East/Africa are all experiencing growth, roughly 2.2% for the year with a higher demand for domestic products. The UK is the only country in this region dealing with a large down turn because of their exit from the EU, and Russia continues to stay flat due to sanctions imposed from the Ukraine crisis. Africa and the Middle East as a whole are dealing with cheap oil prices and turmoil in countries like Libya, Somalia, Iraq, and others who are still suffering from crippled or corrupt governments.

Around the globe, hotel room rates are expected to vary greatly based on market-specific supply and economies, major industry consolidation, and investments in renovations and new construction. Major hotel mergers haven been front and center in the marketplace as hotel chains strive to increase their global footprint. This will not impact pricing today but some forecasters are predicting a noticeable increase in 2018.

Meeting technology is not immune to the consolidation theme, witnessed by the purchase and merger of Cvent by Vista Equity Partners, which also owns Lanyon, Cvent’s major competitor. This acquisition has some concerned that innovative technology in the global meeting arena may slow now that Vista has cornered the market. Regardless, the demand for event technology continues to grow globally and the marketplace is still fragmented enough for developers to devise new technology to better connect and integrate attendees with meeting content and activities.

Regarding event spend, a Bellweather report predicts almost a 10% increase in event spend for the remainder of 2017. Marketing budgets have nearly 25% of the spend allocated to events, which are seen as a highly effective marketing strategy.

One area that is having a major impact on meeting and event budgets globally is food and beverage. Price inflation is expected to outpace all other aspects of the industry, and contributing factors are as follows:

• The increased costs of production due to weather conditions – U.S. wheat exports are increasing due primarily to excessive rain in Europe. In Canada, corn and barley yields are down due to drought-like conditions. Drought conditions have also severely impacted rice production in Asia. Also affected by climate changes, environmental impact, and global demand are coffee, palm oil, sugar, chocolate, and vanilla.
• Increasing requests for special dietary options – gluten-free, low-carb, low-cholesterol, vegetarian, and vegan dishes all cost more to prepare. Requests for non-GMO and/or organic certified foods have also increased the costs. These requests have hurt some industries, like pasta manufacturers, where the low-carb craze has crushed sales.
• With an ever-growing global population and an increase in globalization of food production, specialty, more expensive items are in higher demand. Examples include kaniwa, a high-protein/high fiber seed, and soursop, a tropical fruit in South America.
• Beverages are not immune to these cost increases either, as a skyrocketing demand for craft beers and spirits is having a major impact on costs. No longer are Miller Lite and Coors Light the beers of choice for many. Trillium’s Four Point (a double hopped IPA) or Russian River’s Pliny the Elder are now the types of beer requested by attendees and their costs are typically double (if not triple) the big brewery costs. Driving cost factors for these new, innovative beers are production volume and ingredients. Hops, a main component to beer production, are imported now from around the world. Whistle Pig, Bullit, and Rutherford to name a few are now common requests for spirits, as Maker’s Mark, Jack Daniels and other large distilleries are not the “IN” for this new, more sophisticated palate.

For better or worse, the global economy impacts our industry. The savvy planner will be able to take advantage of all the upswing this economy has to offer while avoiding the areas that could negatively affect their meeting budgets.

Article written by Mark Steinmetz, National Account Manager at IMS.

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