How Will Your SMMP Fare With Oil Price Spike?

I read a recent article in USA Today about rising airfares and the fuel surcharges that airlines are now imposing due to the rapidly accelerating price of oil in the marketplace.  I guess my “talents” as a fortune teller were spot on as a month or so ago I did several media interviews and a blog post about possible storm clouds on the horizon for hotel and other travel suppliers. The gist was that the cost of fuel was rising again and if history is correct, that would initiate demand management reactions from corporations -- as the total cost of trips/meetings would rapidly become a budgetary challenge. [more]

Higher Oil Prices = Higher Meetings Costs

Well, the day of reckoning is officially here, and companies are now faced with higher travel costs.  The multi-million dollar questions for suppliers include: Are you prepared for the next round of travel booking pullbacks?  Did you overplay your hand when negotiating with corporations for their 2011-2012 rates?  Will you have to re-negotiate if this next pull-back in travel spending lasts for months on end? 

And for the buyers; what will this do to your existing negotiated rates, terms and conditions? Has your company started to tell you that they may impose a travel pullback or a total freeze until further notice?  And what about meetings?  Are you going to cancel the internal and non-revenue generating meetings?  Can you examine your meetings booking pipeline to assist with that decision-making, or are you still in the dark?

Lots of churn and turmoil ahead.  I guess the only assurance here is that experienced travel and meetings managers have gone down this road before and know what to do, where to get their data and how to manage through yet another “recession” in travel and meetings.  Those who are still behind the eight ball in terms of establishing an SMMP and the enabling technology will find it difficult to navigate this round and any future rounds of demand management impositions.  As I said in earlier interviews and my blog post, the recent change in the balance of negotiating power between buyers and suppliers may be the shortest lived period we’ve witnessed.  Sorry to say, I was right!

If you haven't yet established an SMMP, check out this StarCite whitepaper that offers "seven steps" to creating one!

Kevin Iwamoto is vice president of enterprise strategy at StarCite. This post is syndicated from his blog, Strategic Meetings Management.