January 31, 2007 - Redefining the scope, size and influence of groups and meetings, PhoCusWright estimated that this $164.1 billion market would grow to $175 billion by 2008 and represent nearly one-quarter of all online travel bookings in the United States. Groups and meetings accounted for about one-third of the $247 billion U.S. travel market in 2005, the firm said.
Corporate meetings represent about 43 percent of the travel-related spend in this segment, while leisure represents 53 percent and associations 4 percent, PhoCusWright said. More than half of that corporate meetings travel, 53 percent or $19.8 billion, was booked online in 2005. By 2008, the online corporate travel market for groups and meetings will approach $24 billion, "for 60 percent penetration," according to PhoCusWright's "Groups and Meetings: Market Opportunity Refined" report, released this month.
Excluding conventions, trade shows and incentives that have traditionally been included in meeting sizing exercises, PhoCusWright instead zeroed in on corporate meetings, small social/leisure gatherings and some association meetings. Sizing the spend included air, hotel, car rental and other ground transportation, tour, cruise, meeting rooms, food and beverage, and audio/visual equipment.
Unlike other meeting studies, PhoCusWright identified "small, social/leisure gatherings" as the driver of the $47.2 billion leisure group segment today. By 2008, this segment is expected to reach $51.3 billion, of which $14.5 billion would be booked online. "Within the leisure group travel segment, the fastest growing component will be small gatherings (up to nine rooms), which heretofore have not been tracked or categorized as group business." PhoCusWright noted that it is not advocating that suppliers alter the discount thresholds used to define groups--typically 10 or more for airline contracts, hotels, etc.--but advises suppliers to redefine their marketing. The study was sponsored by two-dozen travel suppliers--including three targeting the leisure small group market--and the Hospitality Sales & Marketing Association International.
Online travel in the United States "is crossing an important chasm and will surpass 50 percent of the $260 billion U.S. travel market by the end of this year," and near 60 percent by 2008, PhoCusWright predicted. "One of the next frontiers and key competitive arenas for e-commerce is undoubtedly the groups and meetings marketplace because it represents one of the last major revenue streams to move online."
Dissecting online group and meeting bookings, PhoCusWright estimated that two-thirds of corporate meetings and one-third of leisure meetings are booked online. However, leisure meetings will be the fast-growing online segment, representing 37 percent of the market by 2008.
In terms of size, two-thirds of the corporate meetings spend involve meetings of 50 or fewer participants. PhoCusWright further indicated that 43 percent of corporate meetings involve fewer than 25 people. About one-quarter involve meetings with 50 to 200 participants, and the remaining 9 percent are those with more than 200 participants.
Within the $88.6 billion travel component of the $164.1 billion groups and meeting market in 2006, PhoCusWright estimated that hotel represented 37 percent, air 32 percent, ground transportation 9 percent, car rental 6 percent and "other" 15 percent.
While the study clearly documented increasing use of technology to book meetings, it also detailed the unique challenges in the group space to garner critical mass online: lack of centralized inventory, limited availability of technology solutions, lack of industry standards, fragmented technology environment and even a disconnect between sales compensation models and booking online.
Already booking a high percentage of meetings and related travel online, corporations will demand better "tools to analyze supplier responses to requests for proposals, the ability to create and submit RFPs online and the ability to book meeting rooms and guestrooms directly with suppliers."
"Professional meeting planners are seeking more sophistical technology tools, greater capabilities and improved efficiencies, yet suppliers are holding them back due to their technology constraints and their desire to maintain control, particularly in the areas of inventory management, pricing, qualifying and accepting business and contract negotiations," the study stated.
Consolidation of meetings procurement under "common management and reporting structure to leverage purchasing power, reduce costs and the number of meetings and events held" will continue to intensify within corporations and associations through 2008.
While the study forecasted only slight increases in meetings volume, it predicted major shifts in the "landscape dynamics and balance of power among suppliers, online travel agencies, professional meetings management companies and technology providers." In addition to consolidation, PhoCusWright expected hotels to move more offline processes online to stay competitive and provide more service to customers. It also expected professional meetings management companies to grow in importance as corporations outsource more procurement to these groups.
"The market players that will succeed in the new groups and meetings environment will be those that can extend what they are already doing offline to an online environment and capture portions of the group market from competitors," PhoCusWright wrote. While there will be some growth, "competitive opportunities will be mostly about share shift, not demand growth."
While PhoCusWright predicted nominal growth in the corporate meetings segment, Meeting Professionals International said that 441 professional planners polled in its
FutureWatch survey expected the number of meetings held by their organizations to rise by 7 percent this year, spending per meeting to increase by 4 percent and overall meeting budgets to rise by 18 percent.
Related resource:
"Groups and Meetings: Market Opportunity Refined" executive summary 
