Budgeting for the New Normal

A panel of four industry experts shared tips for navigating budgets in a shifting marketplace.

Rising costs and shrinking budgets rose to the top of event organizers’ list of challenges in last year’s Convene Meetings Market Survey — and that was before a shift in trade policies and economic uncertainties like tariffs and inflation were part of the equation.

In late July, a panel of four industry experts tackled these latest financial pressures facing planners during the PCMA Institute webinar “Budgeting for a Shifting Global Economy”: Isaac J. Collazo, vice president, STR Inc., a division of CoStar Group, provided market data on the global hotel industry; Alexandra LaLoggia, area director of sales and marketing, IHG, offered the hotelier perspective; and on the planning side, Jerry Murphy, senior portfolio director, Smithbucklin’s event services team, and Bill Reed, chief event strategy officer, American Society of Hematology (ASH) shared what’s working for them and why. Here are some of their insights:

Jerry Murphy, senior portfolio director, Smithbucklin. Photo by Sam Edwards/CAIA.

The market has shifted. With the cost of everything — food, labor, energy — going up, Collazo said, margins on the hotel side are being affected, which will have longer-term impacts in terms of lower reserve funds and owners having less money for development. So, while it may be a good time “for the buying side,” he said, “it’s not great for the hotel and development side.”

LaLoggia emphasized that with hotels facing these rising costs, planners shouldn’t expect to pay what they paid last year. “We have to cover our costs as well,” she said.
“I think hotels trained meeting planners badly pre-pandemic,” Murphy said. “If you pressured hotels enough they would give in to you,” but that’s no longer the case. “Hotel margins are going down and they don’t have that flexibility. A lot of planners are suddenly surprised when they can’t get all these things that they used to get. I think it’s on us as planners to understand what has happened in the market,” he said. “We can’t continue working like we did in the past calling in favors all the time.”

Avoid a ‘hyperfocus on expense management and budget cuts.’ Reed cautioned planners against focusing solely on “addressing the expense side of a ledger” without balancing that against how to “grow revenues to counterbalance the increase in costs.” He said he worries about turning events “into the equivalent of the budget category airline — where there’s not a lot of thrills and no one’s going to want to come to an in-person meeting. If we solve a short-term budget issue, but really teach our marketplace to stay home, we’re going to be shooting ourselves in the foot.”

He said it’s a prime opportunity to get rid of some of the “sacred cows that cost you a lot of money and don’t bring any value.” Examples he shared in a follow-up email with Convene include “the proverbial black-tie dinner that past generations loved but current generations abhor,” and boring, long awards presentations ceremonies.

Reconsider your registration rates. At Smithbucklin, which manages 70-75 different organizations, “the uncertainty right now has caused a lot of anxiety around budgeting and managing budgets,” Murphy said. Part of the problem, in his opinion, is that organizations haven’t raised their registration fees in line with growing expenses. “And as they’re now anticipating lower attendance,” he said, “that margin of error is there. I think we’re coming to the fork in the road: Can we keep going like this?”

Manage internal and external stakeholders’ expectations. It’s critical to set expectations early in terms of market trends, rising costs, and “the driving forces at hotels,” Murphy said.

Lowering expectations and being realistic about what is possible “is not a bad idea right now,” Reed agreed. You should help exhibitors and sponsors “figure out what they should expect when they participate so it’s not a surprise to them when things cost more,” he added. Likewise, avoid presenting the budget “where the big numbers have escalated” without any forewarning — “I try to forward articles that I read and educate [internal stakeholders] along the way,” he said.

LaLoggia also stressed how early and frequent communication with your hotel can help your bottom line. “Hotels don’t have much flexibility when you’re telling [them] that your registration is down on your cutoff date and you’re in significant attrition,” she said. “Let’s mitigate some of that risk [earlier] and take some of those rooms back. That’s not something we always can offer but we’re always looking for partnerships, especially with the association community,” she said, adding that booking the venue for a multi-year contract can sometimes be an option that makes for more favorable finances for planners.

Bill Reed, chief event strategy officer, American Society of Hematology

Don’t overcorrect for a drop in international attendance.
Murphy shared that one of Smithbucklin’s medical association clients experienced a 15-percent drop in international attendance, but he advised against overcorrecting: “One year does not make a trend,” he said. Look at your existing contracts for next year and “understand your off-ramps,” including cutoff dates, attrition dates, and cancellation date for your hotels and AV company. And when booking out future business, he suggested evaluating whether you can reduce what you’re looking for or postponing entirely. “Do you have the flexibility with rates and patterns,” he said, “so that you could hold off right now until we get a better idea of what this new normal is?”

While Murphy acknowledged the international attendee is “the hot topic right now [affecting] a lot of our fall programs,” the impact has not been as severe as anticipated. It’s important to keep up communications with the hotel, seeing if you can adjust room blocks and whether you can take attrition out of the contract, he said.

Consider scenario budgeting and other forecasting strategies. Murphy said scenario budgeting has become the “new norm” at Smithbucklin. They are building a 15-, 20-, and 30-percent decrease in attendance in their budgets “and going through what the consequences of that are. It’s time-consuming but it’s now becoming kind of a standard and it’s helpful in [being] able to demonstrate if you’re at a 30-percent attendance [loss], then this [or that] has to go. You’ve only got X amount of money to spend here. So it’s not a big surprise to the board.”

And constantly make adjustments as you go along, he said. “We forecast right up to four weeks before the conference to look at where we can make adjustments, both positive and negative.”

Reed said to make “incremental cuts that no one notices,” i.e., expense reductions rather than complete eliminations. “One of the things we’ve done is try to manage the number of meals and type of foods throughout the week” — a phrase frequently heard at ASH HQ is “meatballs instead of lamb chops,” he said. At most events, “everyone’s there at the beginning, not at the end,” he said, so adjust your numbers accordingly and ask: Does everybody need to get breakfast?

“I have found most hotels, convention centers, caterers — all vendors — will tend to work with you on what items might be lower cost for them that they could pass along a lower cost to you,” Reed said, “but it takes dialogue and partnership.”

Be a Better Partner

Reed recommended that meeting organizers “save their negotiating chips” on the things that really matter when it comes to achieving “the primary objectives of your overall event,” he said during the webinar. “Let’s be realistic and work together on how we find a solution that’s going to work for everyone — because we need hotels to be profitable, we need convention centers to make some money or they won’t exist.”

And he called on planners to make an effort “to learn about the business models of our partners, our vendor community,” he said. “I don’t know that we’re doing a good enough job about asking questions to better understand how they are profitable or what impacts their financials to the same degree that they ask about our financials.

“When you’re on site visits with a partner, ask those curiosity questions — ‘Tell me, make me smarter on your line of business. Because if I understand that better, I’m more equipped to help you find a negotiation that will work for you that will also work for us.’”

Michelle Russell is editor in chief of Convene.

Learn more about CoStar and Tourism Economics’ revised 2025-26 U.S. hotel forecast, published in August, at bit.ly/STR-hotel-growth.

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