As I write this, if the BBC is to be believed, Armageddon is imminent. Stock markets all over the globe are plummeting to levels not seen since Sept. 11, 2001. The sky is apparently falling, economically speaking, and we are all doomed to a prolonged recession in North America and Europe.
Even allowing for the natural media tendency to make a drama out of the slightest crisis, it would seem that we should brace ourselves for a period of belt-tightening until our respective economies regain more optimistic momentum. This may take months.
I cannot escape a strong sense of déjà vu. I’ve been here before.
In 1989, the U.K. officially slipped into recession and, for about three years, everyone (including the government) stood around impotently whining as companies cut overheads, bankruptcies and unemployment soared, homes were repossessed and entrepreneurs ceased to take risks. I had been in business as an independent meeting planner for seven cheerful years at this point and was ill prepared for the pain.
Maybe it will be different this time round. I hope so, but it might be prudent to look at what happened last time and take some precautions—especially if you manage your own business.
In the meetings industry, an economic downturn has wide-ranging and sometimes unexpected impacts.
In the corporate sector, as profits fall, companies seek instant savings. Some have been known to fire their entire events departments. Others will cancel all but the most vital meetings or relocate them from Las Vegas or Miami to the hotel next door. Travel is an obviously vulnerable expense.
In the association sector, where meetings are a more discretionary spend, attendances fall as members cut back on all but essential expenses. Planners have to cope with reduced income from registrations, as well as reluctant sponsors and advertisers. Attrition is a constant concern.
As budgets shrink, events become shorter, leaner, less generous. Out go the champagne reception, the free shuttle and pillow gifts.
If the economic hardship persists, cities that rely on convention business may need to explore new markets and round up more short-notice events while also encouraging their hotels to become more flexible about price.
But it is the small independent agencies that potentially suffer the most when money is tight—especially if they rely on just one or two clients. Overnight, a full order book can become blank pages. Cosy relationships count for little when a finance director is looking for cuts.
But my bleak picture need not be a barren landscape.
For a start: we have been warned. Recessions don’t strike overnight, they creep up on you. There is time to take precautions.
Start with a look at your own operation, and trim away the fatty deposits that have accumulated during the good years.
It’s also time to get creative. Consider what industries thrive in the hard times (accountants and lawyers spring to mind) and those relatively unaffected by a credit crunch (such as law enforcement, governments and defence contractors) and target them.
Consider who will gain from our pain. The Chinese? The Brazilians? The Russians? Are they potential markets? It may be time for some research.
Or do what I did, run a series of local seminars titled “Winning through Recession” to boost cash flow during the lean months.
And what is MPI’s role when the going gets tough? I think its role is offering guidance and advice, mentoring the more vulnerable members and providing a network of support to those in difficulty. It could be our finest hour.
TONY CAREY, CMP, CMM, is a freelance speaker and consultant. He can be reached at [email protected] or www.tonycarey.info.
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