How are associations dealing with inflation?

Dasher Lowe

Acknowledge the challenge

No one can escape inflation, but it can be navigated and ameliorated, says Dasher Lowe, executive director of the Experiential Designers and Producers Association (EDPA).
“We are impacted like everyone else. You can’t shield yourself, but you can be fiscally responsible in everything you do so that the impacts can be managed.”

This can be achieved in something as simple as a slight increase in ticket prices, as was the case for EDPA’s annual ACCESS event.
“As a small association, EDPA runs very lean,” says Lowe.

“But we have been affected by higher costs such as insurance, travel, and supplies. For our annual ACCESS event, we needed to increase event
ticket prices moderately to cover higher costs of our
event such as food and beverage.”

Limor Cunia

Cut back

There isn’t an exact science to beating inflation but it’s essential to
understand where your members are willing to pay more.
Limor Cunia, VP of clients and operations at professional congress
organisers (PCO) Kenes Group, suggests first looking at where savings can be made.

“We’ve seen a sharp increase in hotel pricing, increased flight rates, and higher prices from suppliers and vendors in general,” she says.
“There are two main ways to tackle these factors, firstly, reduce your cost base and be more efficient – reduce staff travel, book flights in advance to save on costs, and carefully review and monitor the actual needs of the conference. Secondly, adjust your price level to
the new reality – such as increasing registration fees,
sponsorship package prices and marketing services.”

Amanda Millard

We still need flexibility

Increasing registration fees is exactly what the International Wool Textile Organisation (IWTO) has done to hit budget, but event manager Amanda Millard, knows this could have a negative effect on
numbers, ‘especially how many people may attend
from each organisation’.

IWTO is also seeking supplier flexibility to ease the burden of rising costs. “At venues, we will be needing flexibility on numbers more than ever as all our benchmarks have disappeared due to people’s behaviour,” adds Millard.

“This is especially relevant regarding travel, and with such drastic changes, it effectively becomes more difficult to predict how many people will attend events in different parts of the world. There is still an awful lot of uncertainty because of the pandemic and everything it
has triggered, as well as challenges linked to the Ukraine war and the energy situation, especially in Europe.”

Robert John Nesbitt

'No more Mr Nice Guy'

But meeting planners are finding it increasingly challenging to implement inflation-reflecting plans when the supply chains they work with aren’t playing ball.

“In the last two years, hotels have become sick and tired of being shifted around,” says Robert John Nesbitt, account manager for original events at Kenes Group. “A lot of them lost a lot of money
from cancelled events and now they’re taking the view that the pandemic is over, so it’s ‘no more Mr Nice Guy’ with the terms and conditions.”

But there are savings to be made with suppliers, he
says, if you know where to look. “I’ve learned a lot about how to save money on catering. The faculty dinner included a huge slab of red meat in the olden days, but people’s eating habits have changed. So instead of spending $110 on a steak, why not offer chicken or fish? I did a quick Doodle poll for my event and expected most people to opt for chicken but 70 per cent opted for fish. Not one single person grumbled at the lack of red meat.”

Stephane Dazet

Get into the detail

Stephane Dazet, COO at Congrex Switzerland, suggests looking at the whole picture in close detail. “If you start signing off deals without having the full picture, suppliers will catch you out. It’s better to spend time at the contract negotiation level thinking of all worst-case scenarios, than having those unpleasant discussions close to your
event. Fighting upfront at a negotiation contract level will lead to a smoother event.”

Nesbitt agrees: “Planners must go line by line over contracts and question everything because there are no shortcuts to saving money.”
Despite suppliers racing to recoup money, association meeting planners report experiencing the same cold shoulder treatment in supplier negotiations.

But Dazet insists there is always room to revise
a contract.“I understand they have to make money but if they’re not willing to be flexible for a 10 or 15,000-delegate event in their city, then I worry for them in the long run.”

Kenes Bulgaria director Julieta Trifonova says one way to ameliorate those diffcult conversations is by involving partners in your event story. “When they understand the reasons why you want, for example, to decrease quantities, they’re more inclined to be on your side and partner with you without being only focused on profitability.”

Antonio Guadagnoli

The grass isn't always greener

The temptation to continually renegotiate may be great but as Antonio
Guadagnoli, managing director of PCO MCI Geneva, recently experienced, it’s not always fiscally viable.

“I had the desire to renegotiate terms for 2023 for an association with a convention centre but was advised this would incur a six per cent venue hire inflation factor, 20 per cent increase in catering charges and 300 per cent increase in energy costs.”

Guadagnoli also notes that he was recently stung by an eight per cent increase in all F&B just two weeks before a major European congress
took place.

The venue’s reason: infation.

“This will result in the association seeing reduced surplus from their congress this year, the principal revenue generator for many societies.”

Rosangela Quieti

Cut your losses

Sometimes, your first-choice supplier won’t be the one you go with, says Rosangela Quieti, managing director of congresses at PCO, AIM
Group Italy. “If some services are simply no longer affordable, it is more useful, and in some cases necessary, to investigate different destinations or solutions, reduce the length of the event and optimise the allocation of the spaces.”

This is especially true when services that were previously financially viable become unattainable due to fluctuations in currency exchange rates – a symptom of inflation.

“It is an immediate risk factor for international business where you have budgets involving different currencies and international partners,” explains Quieti. “In the last 20 years, we were used to seeing
currency stability of one euro to one US dollar, for example, without significant fluctuation. Nowadays, the currency exchange ratio across three months can see countries collapsing up to 50 per cent of their
value. The impact on budgeting is astonishing!

“The effects are immediate and huge: Who will pay that difference? The final client? Associations? The agency or PCO? At AIM Group we suggest that the exchange ratio must be a risk defined and shared
with clients at all steps clearly and transparently.”

Diversifying revenue models

As a result of the pandemic, many countries still have travel restrictions. China, for example, is still a difficult country to enter and exit, but Nesbitt sees a revenue opportunity in these instances.

Ahead of the 2022 World Stroke Congress in Singapore, organisers Kenes Group suggested to the Chinese Stroke Association that they sponsor their members to attend the online congress. “For $50,000 we gave 57,000 members access to the online version,” explains Nesbitt.

“We send out a registration link and once those members are registered, they’ll receive an access code. That $50,000 covers the cost of our staff, IT, and live streaming equipment.”

There isn't a silver bullet

“Inflation is certainly going to have a challenging impact on budgets going into 2023, especially with index-linked salary raises at such unprecedented levels, as well as index-linked office rental costs,” adds Millard.

“If the 10 per cent they are predicting does become reality we will have to make some tough decisions. We have not yet passed on this level of inflation to our members but will have to consider doing so in future,
and that, in itself, is also a risk.” Inflation undoubtedly presents new challenges, but through negotiation, clear communication and carefully considered creative solutions, the association sector should prevail through these trying times.

The first step is to acknowledge it’s happening.