F o u r t h A n n u a l I N C O N S u r v e y o f t h e G l o b a l A s s o c i a t i o n C o n f e r e n c e M a r k e t

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1 INCON Survey2012_Layout 1 15/05/ :12 Page 1 GLOBAL PARTNERSHIP IN CONFERENCES & EVENTS F o u r t h A n n u a l I N C O N S u r v e y o f t h e G l o b a l A s s o c i a t i o n C o n f e r e n c e M a r k e t

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3 INCON Survey2012_Layout 1 15/05/ :12 Page 3 Contents PREFACE FOREWORD PART ONE: BUSINESS OUTLOOK FOR 2012/13 1. Appraisal of 2012 business business projections i. Attendee Numbers ii. Exhibition Revenue ii. Sponsorship Revenue iii. Housing Revenue 3. Sources of Revenue 4. Procurement & Pricing a.cost Models b. Pricing i. Audio Visual ii. Catering iii. Housing iv. Venue Hire c. Supplier Response 5. Employment Levels 6. Competition in the Marketplace i. Local PCOs ii. Core PCOs iii. In House Providers iv. Non PCO companies 7. Range of Services 8. Business Model 9. Social Media i. Platforms ii. Measurement iii. Resourcing & Manhours iv. Mobile Apps 10. Hybrid Events PART TWO: MARKET TRENDS 1. Emerging Trends from 2011 Survey i. Perception of Value ii. Budgeting iii. IT & Technology 2. New Trends for 2012/13 PART THREE: KEY SURVEY FINDINGS

4 INCON Survey2012_Layout 1 15/05/ :12 Page 4 Preface May 2012 Dear Industry Colleagues It gives us great pleasure to present the Fourth Annual INCON Survey of the Global Association Conference Market, which reflects the opinions of 27 managing directors from INCON partner companies. The survey captures the status and trends of the global association conference market in 2012 and looks ahead to predictions for The one thing that the INCON survey confirms year on year is that our industry is constantly evolving, which brings fresh challenges and new business opportunities for INCON partners and the entire meetings industry. Some of this year s findings include: 44% of survey respondents confirmed that their business levels remained on par with 2011 with 15% reporting a decline; Significant increase in competition from Inhouse Providers of PCO services in 2012; INCON Partners companies continue to provide increased range of services; Increase in conference ownership and/or guaranteed conference revenue responsibility being placed on INCON Partner companies; Budgeting, Content Capture/Distribution and Strategic Meeting Management Services are the top trends for 2012/13. The survey identifies budgeting as the number one trend likely to influence the association conference sector in the coming year. We are finding that conference budgets continue to be scrutinised and planners are seeking value from their events. We must be ready to respond to this pressure and work towards delivering better prices and demanding more value from suppliers. INCON s goal is to set the standards in the meetings industry by providing leading conference, event and destination management and by sharing best practice among all stakeholders. We hope that this survey serves in part to achieve this goal and in turn provide interesting insights as we all strive to improve services and respond to the evolving meeting market. We would like to thank Roger Kellerman of Meetings International Magazine for partnering with INCON on the publication of the survey again this year. Please take the time to review this year s survey and provide us with comments or observations. Inge Hanser & Roslyn McLeod INCON Co Chairs

5 INCON Survey2012_Layout 1 15/05/ :12 Page 5 Foreword INCON It s not about the money, money, money? Following on the musical theme of previous years ( Move on up in 2010 and Back for Good in 2011) this year s tune is Jessie J s infectiously catchy It s not about the money money money. Except, of course, it is! If there s one vocal line soaring higher than all the others in the symphony/cacophony of viewpoints on the current state of the Association Market it s the one that contains the word Budget. Amongst some puzzling, inconsistent results in this year s INCON survey on many questions half the respondents say yes while the other half says no one outcome is unequivocal: the key trend for INCON partners as we look into 2013 is budgeting. When you look behind some of the other key finding of the survey this trend is ever-present, sometimes like a ghostly shade, sometimes in three dimensions; up-front and centre. While the overall business outlook reported is, at best, flat there s a definite drop in positive sentiment when compared with 2010 and This trend is reflected too in MPI s April 2012 Business Barometer which attributes the drop in confidence to austerity in the Eurozone and high fuel costs in the US. MPI states planners are aggressively finding ways to control costs. INCON partners and their clients clearly share this core focus on cost control and acknowledge that suppliers are reacting effectively to market pressures on pricing to help them confirm business. Key trends from previous years have, indeed, come to pass. The strong desire to Move on up the food chain, central to the 2010 survey, is taking shape with the robust focus on Consulting / Strategic Meeting Management both as an on-going trend and, perhaps more importantly, as the most popular description of the present value proposition of INCON members. So where are we now? Are those dreaded dreary rain clouds of austerity replacing the freakish ash clouds of 2011? Perhaps. But all challenges bring opportunities too, and as one Meetings Industry Leader recently commented, it s not when business is coming back, it s where the business is.

6 INCON Survey2012_Layout 1 15/05/ :12 Page 6 Part One: Business Outlook 2012/ Appraisal of 2012 business Business levels on par with 2011 When asked to rate 2012 business levels against 2011, 44% of survey respondents confirmed that their business remained on par with 2011, 41% reported improved business levels year by comparison with 2011 while 15% reported a year on year decline. For the majority of respondents business levels remain the same as in 2011 but there has been a sharp fall in the number of partner companies reporting improved business levels. In 2011 this figure stood at 62%, which was marginally higher than the 60% scored in 2010, in 2012 it is significantly lower at 41% Business projections for 2012 Survey respondents were asked to consider their business projections for 2012 across a range of revenue sources including Attendee Numbers, Exhibition, Housing and Sponsorship and how these revenue forecasts had changed since

7 INCON Survey2012_Layout 1 15/05/ :12 Page 7 Part One: Business Outlook 2012/2013 i. Event Attendance Event attendance is expected to remain the same this year as last year with a majority 41% of survey respondents forecasting no change in attendee figures at 2012 events compared to This figure reverses the findings of both the 2011 and 2010 surveys when 50% of each group of respondents forecast improved delegate numbers compared to previous years. Of the 33% of 2012 respondents who forecast increased attendee numbers in the coming year, 11% expect the increase will be realised with growth of 0-10%, 11% anticipate 10-20% growth while another 11% think growth of 20%+ is likely. 22% of this year s survey respondents expect delegate numbers to drop by up to 10% in 2012 compared to 17% of 2011 survey respondents. ii. Exhibition The number of survey respondents who expect revenue from exhibitions to grow in 2012 (37%) equals the number who anticipate no growth in the coming year (37%). While those who anticipate growth in exhibition revenue is 4% higher than last year, the real change is evident in the rate of growth. In % of respondents forecast growth of between 10 and 20%, this year that figure has increased to 19%. In addition, 11% of the cohort anticipate exhibition revenue growth in excess of 20% in the coming year, in 2011 the equivalent forecast was zero. iii. Housing Findings match those for exhibition revenue forecasts with the number of respondents who expect housing revenue to rise in 2012 (37%) polling the same as those who anticipate revenue remaining on par with 2011 (37%). By comparison with 2011, 9% more respondents expect housing revenue to drop in the coming year and 8% are less optimistic this year about housing revenue forecasts. As in 2011 the rate of growth is largely anticipated to be less than 10%. One quarter of respondents expect a decline in housing revenue to be the most likely scenario in 2012, a worsening of both the 2011 and 2010 findings of 16% and 20% respectively. The anticipated rate of decline in 2012 is also worsening with 7% expecting it to more than 20% iv. Sponsorship Respondents were evenly divided between those who expect sponsorship revenues to remain unchanged by comparison with 2011 levels (37%) and those who see this revenue source declining throughout 2012 (37%). Findings are not as positive as those of 2011 survey when 42% of respondents forecast increased levels of sponsorship revenue, that figure has dropped to 25% in Of those who do anticipate growth in sponsorship revenue, the rate of growth is more encouraging compared to last year with 7% anticipating growth of 20%+. In 2011 none of the survey respondents forecast an increase greater than 20%. 3. Sources of Revenue Tying for first place in the rankings of most important revenue sources are Accommodation & Housing and Consulting/ Strategic Meeting Management Services each polling at 22%. DMC services including tours, transport and social programmes, are the next most important revenue stream. Slipping from its number one ranking in 2011, Delegate Registration is identified as the third most important source of revenue in 2012 and shares this position with Exhibition & Sponsorship which also slips down the rankings from second most important source of revenue in 2011.

8 INCON Survey2012_Layout 1 15/05/ :12 Page 8 Part One: Business Outlook 2012/2013 Less important sources of revenue for INCON partner companies in 2012 are Abstract Management, Content Capture/ Distribution and MarComm services, both traditional and digital. 4. Procurement & Pricing a. Cost Models Partners were asked to identify the most used cost model in their businesses. Resulting information confirms that no one cost model is consistently employed. Instead a combination of two or more of the following pricing structures is most frequently engaged; Management Fee Per Delegate, Fixed Management Fee Per Conference, Percentage Mark Up On Entire Conference Revenue and Profit Share While this information is consistent with 2011 survey findings, significant change can be noted in the weighting attributed to each cost model e.g. The Combination Of Any Two of the pricing structures noted above, while remaining number one choice, reduced in popularity from 67% in 2011 to 41% in The difference may be attributed to a rise in the use of Fixed Management Fee per Delegate pricing (from 8% to 19%). Also, the practice of Percentage Mark Up On Entire Conference Revenue almost quadrupled in usage to 15% in

9 INCON Survey2012_Layout 1 15/05/ :12 Page 9 Part One: Business Outlook 2012/2013 b. Pricing Respondents were asked a series of questions about suppliers and how rates and pricing for Audio Visual, Catering, Housing and Venue Hire in 2012 compared to i. Audio visual & IT A majority 56% of survey respondents think pricing is the same this year as it was last year, 30% consider it more expensive in 2012 compared to 2011 while 15% think pricing is less expensive than last year. Interestingly just 4% of 2011 survey respondents considered Audio Visual and IT pricing to be less than it was in ii. Catering While the trend of parity pricing also extends to the Catering sector where 41% of those INCON partners polled think pricing remains the same as 2011, 37% consider prices are more expensive in 2012 and 22% think the price of catering has reduced year on year. iii. Housing Rates and prices for Housing in 2012 show considerable increase on 2011 levels. 52% of respondents noted an increase in the cost of delegate housing compared to 2011 which continues the trend of more expensive housing noted in the 2010 survey. 33% think housing costs have not changed in the past year, a figure which has reduced from the majority 50% of respondents who last year thought the cost of housing had remained unchanged against % of INCON executives consider housing costs less expensive this year. iv. Venue Hire As is the case with pricing for Catering and Audio Visual, a majority of the survey respondents (48%) consider 2012 pricing for Venue Hire to be on par with 2011 but this represents a drop of approx one third on the number of respondents to the 2011 survey (67%) who felt pricing remained the same as % of respondents think the cost of venue hire has risen since 2011, one third more than the number of respondents who considered pricing more expensive in 2011 than the previous twelve month period.

10 INCON Survey2012_Layout 1 15/05/ :12 Page 10 Part One: Business Outlook 2012/2013 c. Supplier Response When asked if suppliers are doing enough or reacting quickly enough to market pressures on pricing, responses were very positive in terms of the support they receive in order to confirm business. An overwhelming 78% think suppliers of audio visual services are responding effectively, 59% indicated that suppliers of both catering and venue hire are reacting favourably to market conditions while 48% felt providers of housing are adjusting their pricing in favour of buyers. 5. Employment / Staffing levels When asked to comment on 2012 staffing levels and forecasted employment levels into 2013, the feedback from survey respondents was generally positive. 33% of INCON company executives reported that changing business levels had caused them to increase headcount in their organisations in the previous twelve months and 56% expected this number to increase in % of partner companies have reduced headcount since 2011, 7% expect this pattern to continue in the next year while 37% anticipate no change in staffing levels. 37% of respondents agreed they are working harder to retain existing talent, 4% have outsourced some key functions but none reported increased employment of freelance staff. Interestingly it appears that the positive projections of the 2011 survey did not completely materialise in actual new hires. At that time 71% of partner companies surveyed confirmed that they expected to employ more staff in 2011 compared to 2010 but the above results show less than half (33%) actually did

11 INCON Survey2012_Layout 1 15/05/ :12 Page Competition in the Marketplace Part One: Business Outlook 2012/2013 In order to gauge the level of competition in the association conference marketplace, INCON partner respondents were questioned about their competitive set and asked to define whether local PCOs, Core PCOs or In House Providers represent the major focus of competition i. Local PCOs Survey respondents were evenly split between those who say they are competing against the same number of Local PCOs (44%) and those who think there are more Local PCOs in their marketplace (44%). Findings would indicate a rise of 6% in the number of Local PCOs compared to the 2011 survey data. ii. Core PCOs 63% of respondents think they are competing against the same number of Core PCOs for business in 2012 compared to While this is a dramatic increase by comparison with 2011 data (38%), it repeats the trend of the 2010 INCON survey report when a majority 70% of those companies then surveyed stated that they were competing against the same number of Core PCOs. iii. In House Providers Noticeable change also recorded in the numbers of In House Providers competing for business with INCON Partner companies. In % reported an increase in the number of In House Providers operating in the competitive marketplace. In 2012 that figure is 78%. iv. Non PCO companies For the first time in the survey history, respondents were asked to comment on the competition they face from non PCO companies. The majority confirmed that Destination Management Companies (DMCs) are their main source of non PCO company competition closely followed by Marketing/PR Companies and Travel/Tour Operators. Other sources of non PCO competition include Convention Centres, Convention Bureaux, Meeting Management Companies and Publications Companies.

12 INCON Survey2012_Layout 1 15/05/ :12 Page 12 Part One: Business Outlook 2012/ Range of services INCON company executives were surveyed on the range of services which they provide to the association conference marketplace this year compared to A majority of 70% confirmed that service levels have increased year on year while 26% regarded their current service level as the same as last year. While the number providing an increased range of services is lower than 2011 (88%), overall this data supports the findings of both the 2011 and the 2010 surveys when respondents forecast that the level of service provided by their companies in 2012 and 2011 was likely to increase by 88% and 63% respectively Business Model In an effort to understand the business model/ service offering of INCON companies, executives were asked to rank a number of models in terms of their individual company s offering. The majority (46%) reported that a Consultative/ Strategic Meeting Management approach most accurately described their service offering. 27% nominated the provision of Logistics/Commodity as a most accurate description of their business model, 15% regarded their business as being geared towards Sponsorship/ Marketing Services and 15% chose Technology Solutions as the business model most representative of their PCO business.

13 INCON Survey2012_Layout 1 15/05/ :12 Page Social Media Part One: Business Outlook 2012/2013 Given that Social Media is now embedded in the meetings industry and impacting the lifecycle of a conference programme, INCON executives were surveyed on the social media platforms which they typically use when promoting and operating association conferences. i. Platforms 65% of survey respondents nominated Facebook as the communication channel most frequently used to promote conferences. LinkedIn was recorded as the second most important choice of social media with this channel engaged by 41% of respondents. Twitter was ranked third most frequently used platform. Less important social media tools used by INCON Partner companies are YouTube, Blogs, Skype, FlickR and Podcasting. Overall this findings mirror the results of the 2011 INCON survey which also ranked Facebook, LinkedIn and Twitter as most frequently used social media platforms. The value of LinkedIn and Twitter in promoting conferences appears to have declined year on year. ii. Measurement While INCON company executives are actively using the various social media channels to promote their conferences and events, the majority of those polled (59%) confirmed they have not yet managed to effectively measure the results of their social media activity. iii Resources and Manhours 52% of INCON executives surveyed have not allocated a dedicated social media resource within their organisation. Less than 10 hours per week is the average amount of time which a majority 52% of respondent companies are devoting to social media activity. 33% of companies spend between 10 and 20 hours per week on their social media activity, 4% assign between 20 and 30 hours weekly. 11% of the organisations surveyed devote more than 30 hours per week to social media.

14 INCON Survey2012_Layout 1 15/05/ :12 Page 14 iv. Mobile Apps Part One: Business Outlook 2012/2013 Conference and event technology continues to advance with technology products becoming more efficient, more accessible, more cost effective and more user friendly. Innovative solutions in mobile technology are increasingly available to help planners work faster, better and cheaper at all stages of the conference lifecycle assisting in areas such as event registration, attendee analytics, content capture and distribution of data. Findings from the 2011 INCON survey revealed that respondent executives recognised the value of engaging with mobile applications for conferences. When asked if they had used or intended to use Mobile Apps for client events, 42% of respondents confirmed that they intended to do so survey findings would indicate that these projections have materialised with a marked increase in the numbers actively engaging Mobile Apps this year, 59% from 33%. Also interesting to note is the number of respondents who last year reported no plans to use Mobile Apps has contracted dramatically, from 25% to 11%. 10. Hybrid Events As technology expands to facilitate meetings and events which combine face-to-face and virtual attendee experiences, INCON company executives were surveyed on the number of hybrid meetings which they organise. 81% confirmed that hybrid meetings represent less than 10% of their current event portfolio with the remaining 19% reporting that hybrid events constitute between 10 and 25% of their events.

15 INCON Survey2012_Layout 1 15/05/ :12 Page 15 Part Two: Market Trends Trends Results of the 2011 INCON survey indicated that the top three emerging trends which were likely to impact on the association conference market that year were; i. IT & Technology (50%) ii. Green Meetings (46%) iii. Perception of Value (46%) 2. Trends for 2012/13 This year, INCON partners were once again asked to identify what new trends they thought would influence the 2012/2013 association market. The emerging trends identified are; i. Budgeting (76%) ii. Content Capture/ Distribution (67%) iii. Consulting/Strategic Meeting Management Services (50%) i. Budgeting Firmly back on the agenda for survey respondents in 2012/13, the issue of budgeting was identified by INCON company executives as the number one trend likely to influence the association conference sector in the coming year. While acknowledging that the cost of Audio Visual, Catering and Venue Hire largely remains unchanged year on year and that the price of Delegate Housing is increasing, it appears that conference budgets continue to be scrutinised and planners are seeking best value in negotiating the highest level of event income. ii. Content Capture/ Distribution Advances in technology make it possible to maximise opportunities for learning and information exchange during and after conferences. Perhaps it is no surprise that Content Capture/ Distribution was ranked second most important trend in the 2012/13 association conference market by 67% of survey respondents. Technological developments in conference capture and data distribution, such as speaker video, audio and visuals over the web in real time and on demand after the conference, enable conference professionals to extend the reach and lifecycle of their meetings and expand the learning exchange to more people. In an article entitled Web 2.0 Technology as a revenue stream for associations published in November 2011, INCON Co Chair Inge Hanser examined the hidden treasure of digital content not just as scientifically valuable material for longterm use in continuing online education but also as a sustainable source of revenue for associations.

16 INCON Survey2012_Layout 1 15/05/ :12 Page 16 Part Two: Market Trends iii. Consulting/ Strategic Meeting Management Services Providing strategic advice and consultative guidance to association clients is another trend identified by survey respondents. By sharing best practice, their industry and professional knowledge as well as their global and local expertise, INCON executives can help associations to increase effectiveness through the analysis of existing challenges, identification of new opportunities and development of insightful strategies. iv. Other Emerging Trends for 2012/13 Green Meetings/Sustainability remains an important consideration as associations and planners are challenged to integrate socially responsible initiatives into their conference processes and programmes. Social Media is a key component of the conference communication strategy. The Provision of DMC Services As A Core Competency is also noted as an emerging trend as PCOs seek to enhance their client offering and competitive edge. Also identified as an important trend is an Integrated Partnership Approach to Destination Marketing e.g. The Glasgow Model, as developed by the Scottish Exhibition & Conference Centre in collaboration with the Glasgow City Marketing Bureau to effectively go into business with their clients, share in the risk/reward on attendance numbers and event revenues with the aim of building long term client relationships for the destination. When asked if a trend towards conference ownership and/or guaranteed conference revenue responsibility is their local experience, 67% of INCON partner respondents confirmed this is the case. Regulatory Control and Codes of Conduct are also hot topics impacting on the conference business of virtually all (96%) survey respondents.

17 INCON Survey2012_Layout 1 15/05/ :12 Page 17 Part Three: Key Survey Findings The Key Findings from the Fourth Annual INCON Survey of the Global Association Conference Market 2012 are as follows; Business levels remain on par with 2011 Event attendance remains unchanged year on year Housing revenue expected to grow at rate of less than 10% in 2012 compared to % of INCON Partner companies forecast growth in Sponsorship revenue and at a higher rate than in 2011 Accommodation/ Strategic Meeting Management services are the most important sources of revenue for INCON Partners Cost of Audio Visual, Catering and Venue Hire is the same in 2012 as in 2011 The cost of delegate housing continues to rise Suppliers are reacting quickly and effectively to market pressures on pricing The positive projections for staffing increases noted in 2011 findings did not materialise to the levels anticipated Half of INCON Partner companies expect to increase headcount in 2012 Significant increase in competition from Inhouse Providers of PCO services in 2012 INCON Partner companies continue to provide increased range of services Facebook is the most frequently used social media channel in conference promotion The majority of INCON Partner companies devote less than 10 hours per week to social media activity Increasing levels of engagement with Mobile App technology Hybrid meetings represent less than 10% of their current event portfolio for majority of INCON Partner companies Increase in trend of conference ownership and/or guaranteed conference revenue responsibility being placed on INCON Partner companies Budgeting, Content Capture/Distribution and Consulting/ Strategic Meeting Management Services are top new trends for 2012/13

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20 INCON Survey2012_Layout 1 15/05/ :12 Page 20 P a r t n e r s W o r l d w i d e