Balance of power to shift towards suppliers in 2016

Rising rates and reduced availability may mean suppliers hold all the cards in the negotiation war by next year.

Everyone's Talking About... A threat to the corporate throne
Everyone's Talking About... A threat to the corporate throne

We have all heard the one about the corporate being king - but is the balance of power slowly shifting? There are subtle signs that budgets are on the rise, albeit slowly, as is the number of events being held. This means increased competition for popular venues, and that results in rising rates and reduced availability.

Those good people at Carlson Wagonlit Travel (CWT) (disclosure: cheers for all our awards!) warn that planners who want to hold meetings in high-demand markets will find suppliers 'hold the control'. CWT's recent report states that hotels in high-demand markets are beginning to stop holding space when responding to availability requests, and warns that corporate planners should alert their internal decision-makers to this market shift.

Nice one, suppliers - you've had the squeeze put on you and now it's your turn. The gloves are off and negotiations over costs and contracts look set to get a whole lot tougher.

State of the Industry 2015: Supplier costs

Gone are the days when corporates could get away with holding multiple event spaces indefinitely, until internal stakeholders finally signed off the budget just two weeks out from the event date.

And it's not just venues that are enjoying the shift in power. Our own research on pitching reveals that 87 per cent of agencies have declined pitches between August 2014 and 2015. It's great to see that agencies no longer feel the need to respond to every RFP out there, and are picking the pitches that offer the best chance of a return.

Common reasons for declining pitches include excessive competition from other agencies, lack of transparency in the client process, short lead times and lack of operational resources. Agencies are increasingly finding that they simply don't have the resources to deal with last-minute pitches.

To be fair, some of the pitch processes and lead times that agencies have been expected to accept in recent years have bordered on the ridiculous.

We all know that lead times are, and will continue to be, shorter than pre-recession times, but it can't hurt to be a bit more forward-thinking. A bit more early planning at the top of the chain will result in corporates not only being able to attract the best agencies to pitch for their events, but also getting the venue and destination of their choice.

The corporate will always have the ultimate power; they do control the purse strings after all, but increasingly it will be the savvier ones that plan their events further ahead that will truly be king.

Everyone's Talking – tweets

More:

Suppliers will 'control' buyer/seller relationship in 2016, says CWT

Brand Book Live: The sectors to watch in 2016

UK hotels and air travel rates continue to rise, says AMEX

State of the Industry 2015: The Supplier View

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