If recession is brewing, how will the meetings sector be affected?

While pent-up demand is boosting travel, meetings and events planners could face increased rates for hotels rooms and flights.

High levels of pent-up demand in APAC, which reopened slower than other regions, could buoy travel and meetings sector in the region.
High levels of pent-up demand in APAC, which reopened slower than other regions, could buoy travel and meetings sector in the region. Photo Credit: Adobe/THANANIT

Spending on business travel could remain strong, despite the very real threat of a global recession.

This is according to HSBC chief economist of Australia, New Zealand and global commodities, Paul Bloxham, who addressed an in-person and virtual audience at Flight Centre Corporate’s recent Illuminate event in Sydney.

Bloxham said the world was going to have a global economic slowdown in 2023 and that this was already happening in some parts of the world.

With inflation in the US of around 8.5%, Europe 10%, Australia about 7.5%, and Asia starting to feel the impact of western households reducing their spend on manufactured goods, as well as the higher cost of living expenses, most analysts are predicting an economic global downturn, if not a global recession.

Bloxham said the supply of manufactured goods had failed to keep up with demand during the pandemic and that consecutive interest rate rises in many countries was now resulting in people spending less. But the good news for the travel sector, he said, is that there are high levels of pent-up demand.

“A lot of people were saving money during the pandemic and now they are wanting to spend this on experiences, particularly travel,” he said. “They are no longer spending on a new television or computer but on experiences instead.”

Bloxham added that while this was positive news for airlines and hotels, those involved in meetings and events could be forced to reduce or slow their spend, particularly those based in Europe, with consumers and businesses impacted by the ongoing war in Ukraine and significantly higher energy prices.

“The economy is going to slow down [but] my sense is that some [money] will still get allocated to travel,” he said. “The local story [in Australia and Asia] is the consumer base hasn’t done much and they want to travel.”

He added that the high USD could also be a positive for Australia and Asia and could result in more travellers coming to these regions from the US.

APAC general manager of FCM Consulting, Felicity Burke, also speaking at the event, said that by the end of Q4 2022, there will be 15% less available airline seats globally than there were in 2019. Less seats, combined with higher fuel prices for airlines, will result in higher priced tickets. Burke added that hotel room rates are also expected to rise globally in 2023.

One potential counter to these higher prices could be a greater use of technology within hotels, according to Andrew Gallard, general manager corporate of FCTG Global Land Supply Division, who also spoke at the event.

He said hotels are already adopting automated services, which could help reduce costs, and there was the real possibility that this will grow in coming years.

“QR codes on menus, digital checkouts accessible on television screens, room service ordering on TVs – the opportunity for change is happening,” he said. “It will come down to customer choice and whether they want a completely touch-free experience.”

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