Meeting News - December 17, 2007 - (Page 50)

Cover Story Oil continued from cover The reason behind the rise in oil prices is either strong demand and limited supply, or speculation over oil futures, depending on whom you ask. OPEC cut production by about 1.5 million a barrel a day at the beginning of 2007, according to analysts quoted by CNNMoney, despite an increase in worldwide demand by 1.3 million barrels a day this year over 2006. China’s growing appetite for oil to fuel its rapid economic growth is also credited for the rise in worldwide demand. But other analysts quoted by CNNMoney said the rise in oil prices is due to traders selling oil inventories in order to cash in on high prices, thus lowering reserves. Whatever the cause, consumers—and meeting planners—are feeling the pinch at the pump. Arranging ground transportation for attendees is becoming a bigger budget item. Related suppliers are implementing programs that help planners budget for fuel price increases, even if the sellers are still pushed to pass on additional costs. “Two phenomena are converging: Fuel prices are rising, and there’s a heightened sensitivity about eco-friendly travel programs,” said Jonathan Danforth, president and CEO of chauffeured car and ground transportation provider BostonCoach.“So, when it comes to group transportation, we are seeing some clients define their needs a little differently. We have clients, for example, who elect to use hybrid vehicles as well as our business-class vehicles, which facilitates ride-sharing. When shuttles are involved, we’re working with clients who decide to reduce the pickup frequency to be more environmentally friendly.” BostonCoach, like other ground transportation providers, has implemented a fuel surcharge that rises or falls along with gas prices. Using its matrix allows planners to budget what the surcharge would likely be at the time of their event, based on oil price forecasts. Oil prices are rising because of either demand or speculation—with expensive results. Several major airlines took a different approach in November, with blanket surchage increases. United Airlines put $5 increases in place, while American Airlines upped the ante $10 each way. German carrier Lufthansa followed suit by adding a €10 (approx. $15) fuel charge. Cruise meetings and incentives may be hit the hardest. Carnival Corp. will add a $5 fuel charges per passenger, per day, starting Feb. 1, 2008. According to the latest 2007 FutureWatch survey by Meeting Professionals International and American Express, respondents named the cost of oil and gas as the second most important external trend affecting the meetings industry, following terrorism. As the cost of travel goes up, planners are more likely to hold events closer to home and replace large, national events with smaller, regional activities. Hotels and resorts aren’t feeling the effect of high fuel prices as directly as transportation suppliers, but Joanie Flynn, vice president of brand marketing for Gaylord Hotels, noted they could lend a competitive edge to resort properties over hotels. “Having everything under one roof provides planners with a value-added service,” Flynn said. H JHTA OKs Energy Fee A Malibu Endures Third Major Blaze of the Year Thousands flee Thanksgiving firestorm, but meetings properties intact Malibu, CA—The Los Angeles Fire Department released information regarding the wildfires that ravaged a section of Malibu over Thanksgiving weekend. Sweeping across the city with the help of Santa Ana winds that gusted up to 60 mph, the fires charred 4,901 acres, destroyed 88 structures, and damaged 45. Most of the damage was limited to residential areas and did not affect city infrastructure or meetings properties. The flames shut down a section of Pacific Coast Highway and several major thoroughfares, as firefighters worked to put out the blaze and for subsequent cleanup efforts. Up to 14,000 people were evacuated from their homes. The Thanksgiving blaze was one of three major fires in the city this year alone. A brush fire in January destroyed 11 homes, while October’s Southern California wildfires (see Nov. 5 MN) also touched the city. This time, knowing the dry conditions and gusting winds could spell trouble for Malibu, Los Angeles firefighters had gathered in the area and were on alert. Still, the winds rapidly spread the flames, and it took approximately 1,750 firefighters, at least 45 fire engines, 23 water-dropping helicopters, and two fixedwing planes to battle the blaze. At press time, investigators were trying to determine the cause of the latest fires; human activity is suspected. —Elizabeth West 50 MeetingNews December 17, 2007 nnounced at press time, the Jamaica Hotel & Tourist Association (JHTA) has decided to support an occupancy surcharge intended to help its members combat the rising costs of energy on the island. As soon as Dec. 15, planners with programs in this popular Caribbean meeting and incentive destination may get a surcharge added to their nightly room rates, with the amount to be determined by individual properties. JHTA recommended a cap of $10 per room, per night. “We have been experiencing increases in the price of a barrel [of crude oil] of approximately 53 percent since January 2007 alone,” said JHTA President Wayne Cummings, recommending removal of the surcharge should oil prices decrease—but he did not say by how much. At press time the price of crude oil hovered around $90 per barrel, more than a $9 drop from its high of $99.29, over Thanksgiving week. www.meetingnews.com http://www.meetingnews.com

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Meeting News - December 17, 2007

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