Successful Meetings - August 2008 - (Page 39)

Negotiation Trends CRUDE AWAKENING How to negotiate anything in times of soaring oil prices By Corrie Dosh corrie.dosh@nielsen.com It’s official: Oil prices passed the “insanity” mark right around the start of the summer. Now, the price of everything that depends on fuel at some point in the supply chain (airline tickets, food and beverage, and, well, pretty much everything) is skyrocketing faster than planners can catch their breath. Hoteliers, destination management companies, transportation providers, and other suppliers are feeling the effect of high oil prices as well (edging past the $140 a barrel mark at press time.) Everyone in the meetings industry is looking for a break, even a small one, to help reduce the final bill. A closer look at the trends shows the importance of negotiations in meeting planning. The airlines have successfully raised rates nine times so far this year, and industry leaders say fares need to rise another 20 percent to offset the crippling fuel costs. Most major airlines have also announced capacity cuts in the double digits for the fourth quarter, and that translates into fewer options and fuller flights for flyers. The cost of filling up an ocean tanker has risen 87 percent in the past year, leading to higher costs for consumer goods. Gas prices are up almost 38 percent from a year ago, averaging over $4 a gallon nationwide. For every SUCCESSFUL MEETINGS AUGUST 2008 penny hike in the price of gas, consumers pay an extra $1 billion a year. One bright spot for planners: The steady increase in hotel rates seems to be leveling off, as leisure demand drops and corporate travel weakens, according to the latest monthly statistics on average rates by Smith Travel Research, which showed ADR growth in May dropped to its lowest level in at least three years with a rise of just 3.7 percent year over year. CRUNCH TIME Even F&B costs have been indirectly affected by high fuel costs. Transportation expenses are skyrocketing for shipping food items, and more farmers are diverting cropland to crops intended for ethanol production—also driving up prices. If you haven’t seen costs rise significantly yet, it was because suppliers were hoping to ride out increases without having to pass them on to customers, but the industry can’t wait any longer, says Darlene Baldearena, vice president of Circa Destination Management Co., the in-house DMC of The RK Group, the Texas-based behemoth of full-service catering and event logistics. Though concerns over fuel prices have been high for at least six months, oil prices have hit the San Antonio market even PHOTO: DON SALKALN mimegasite.com 39 http://mimegasite.com

Table of Contents Feed for the Digital Edition of Successful Meetings - August 2008

Successful Meetings - August 2008 Contents Editor's Note Industry Trends Industry Events On the Record Technology Calendar Websites of the Month Personal Success Technology Talk Food & Beverage Pre-Event On Site Tools of the Trade Pre-Event Crude Awakening Oil’s Well Betting on Development The Stuff Dreams Are Made Of No Spa, No Dice New & Improved Bean Counting Places & Spaces Cleveland Palm Springs, Desert Resorts Midwest Meetings San Antonio Yucatan Peninsula Gurus

Successful Meetings - August 2008

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