US $300.00
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Groups and Meetings: Market Opportunity Redefined
January 2007
USD $300 CAD $306 GBP £151 EUR €191
The groups and meetings space is quickly becoming one of the travel industry's next major competitive battlegrounds, and given the dollars at stake, it should be. By the end of 2006, groups and meetings revenue was projected to reach US$164.1 billion. The market is projected to grow to $175 billion by 2008, with travel (air, hotel, car rental, ground transportation, cruise and tour) representing 54% of the total.
Information technology adoption in the groups and meetings arena tends to lag behind other travel industry sectors, but this is about to change due to a convergence of several factors, including a host of competitive activities and new market entrants, advances in technology and technology standards within the industry, and a growing disdain for the status quo.
In the latter half of 2006, PhoCusWright conducted extensive research on meetings and groups within the United States to better understand the current state and, more importantly, where this business segment is headed. The results of this first-ever research effort are presented in this report.
Report Overview
Table of Contents
Methodology
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Information technology (IT) adoption in the groups and meetings arena tends to lag behind other travel industry sectors, but this is about to change due to a convergence of several factors, including a host of competitive activities and new market entrants, advances in technology and technology standards within the industry, and a growing disdain for the status quo. As a result, this space is quickly becoming one of the industry’s next major competitive battlegrounds, and given the dollars at stake, it should be.
In the latter half of 2006, PhoCusWright conducted extensive research on groups and meetings within the United States to better understand the current state and, more importantly, where this business segment is headed. Specifically, its research goals were to size the overall groups and meetings market, to determine what portion would be driven by electronic commerce, and to establish an initial baseline for future tracking and monitoring.
The results of this first-ever research effort are presented in this report, Groups and Meetings: Market Opportunity Redefined. One key finding is that the size of the market opportunity is big – really big. By the end of 2006, groups and meetings revenue was projected to reach US$164.1 billion. The market is projected to grow to $175 billion by 2008, with travel (air, hotel, car rental, ground transportation, cruise and tour) representing 54% of the total. Non-travel expenses (e.g., meeting rooms, catering, audio/visual equipment) represent the remaining 46%. By 2008, 41% of all groups and meetings travel revenue, or $39 billion, will be booked online.
Given the overall size of the groups and meetings marketplace and subsequent online opportunities, many will find this space remarkably attractive and worthy of pursuit. As traditional suppliers, intermediaries and new market entrants vie for market share, there will be great shifts in competitive dynamics and the industry landscape as a whole, making this an exciting space to watch but a difficult one to navigate. Companies have found it difficult to develop compelling business cases with an articulated return on investment (ROI) for many technology initiatives supporting the groups and meetings space. This report should change that. It should also help hospitality, travel, and technology executives interested in the groups and meetings arena understand how the marketplace is changing, the market potential, and what sorts of actions are necessary to remain competitive.
Although developments in this market arena tend to be more evolutionary than radical, no one can afford to sit on the sidelines taking a wait-and-see approach. Given the tipping point this market is reaching, companies must be both proactive and agile and work aggressively to automate the entire distribution network and supply chain supporting groups and meetings or else risk ceding control of this space to competitors and/or new entrants.
Section One: Executive Summary
Section Two: Overview and Methods
Introduction
Purpose of Report
Defining What Constitutes a Group
Methodology
Sizing the Groups and Meetings Market
Section Three: Size of the Groups and Meetings Marketplace
Size of the Total Market: 2005-2008
Size of the Online Market: 2005-2008
Leisure
Corporate
Association
Section Four: Market Forces
Online Drivers
Online Barriers
Capitalizing on Market Opportunities
Capabilities and Perception Gaps
Corporate and Association Segment Opportunities
Supplier Strategies
Online Travel Agencies and Other Intermediaries: Strategies and Opportunities
Market Growth Trends
Future Online Outlook and Predictions
Small Groups and Meetings Lead the Way
Intermediaries Make Their Move
Travel 2.0 and Groups
Corporate and Association Segments
Industry Player Landscape
Disruptive Forces
Conclusions
Hotel Perspective: Overcoming Barriers
Hotel Perspective: Strategies for a Changing Environment
Hotel Perspective: Capitalizing on Market Opportunities
Appendix A: Definitions
Appendix B: List of Players
TABLE OF TABLES
Section Two
Total U.S. Online Travel Market as a Percentage of Total U.S. Travel Market
Research Overview: 350-Degree View of the U.S. Market Opportunity
Market Sizing Methodology
Section Three
U.S. Groups and Meetings Market, 2005-2008 (Total Market, Travel and Non-Travel)
U.S. Groups and Meetings Market, by Travel Component, 2005-2008 (Travel Only)
U.S. Groups and Meetings Market Share, by Segment 2005-2008 (Travel Only)
U.S. Groups and Meetings Market, Online vs. Total Market, 2005-2008 (Travel Only)
U.S. Online Groups and Meetings Market, by Travel Component 2005 and 2008 (Travel Only)
U.S. Online Groups and Meetings Market, by Segment 2005-2008 (Travel Only)
Leisure Group Travel Spend, 2005-2008, by Size of Gathering
Leisure Group Business Mix, by Size of Gathering, 2006
Leisure Group Market Online Penetration Growth, 2005-2008 (Travel Only)
Leisure Group Traveler Behavior
Sources to Plan and Booking Leisure Gatherings
Most Wanted Booking Capabilities for Leisure Group Site
Corporate Meetings Business Mix by Group Size, 2006
Corporate Market Online Penetration Growth, 2005-2008 (Travel Only)
Usual Method Used to Book Travel Components, Corporate Market
Distribution of Association Meetings, By Size
Corporate and Association Meeting Volume
Association Market Online Penetration Growth, 2005-2008 (Travel Only)
Section Four
Force-Field Analysis: Online Drivers and Barriers
Likelihood of Online Group Procurement and Booking
Multiple Market Players Seek the Online Small Groups Market
Evolution of Hotel Online Groups and Meetings
U.S. Groups and Meetings vs. Total Travel Market Growth, 2005-2008
U.S. Groups and Meetings by Segment (Leisure and Corporate)and Total Travel Market Growth, 2005-2008
To ascertain a comprehensive view of the groups and meetings marketplace that encompasses both supply-side and demand-side factors, a variety of research methods, both quantitative and qualitative, were used. PhoCusWright employed a 360-degree approach to ensure capturing all stakeholder perspectives: suppliers of accommodations and event space (hotels, conference centers, cruise ships, convention centers, ski resorts, casinos, airlines, and rental cars), meeting planners and buyers, consumers and meeting attendees, and technology providers/online intermediaries. In addition, PhoCusWright probed consumer/planner buying behaviors and preferences. Data collection techniques included telephone interviews, surveys, content analysis of various Web sites and a detailed review of the available industry literature. Size of the market estimates and forecasts, segment data, technology developments and key trends are based on this approach. All research was performed in the latter half of 2006 and underwritten by a number of companies that operate in the groups and meetings arena.
Suppliers
Between August and October 2006, more than 35 executives were interviewed from 24 companies about their current and forecasted volumes of groups business, technology initiatives, strategy and their assessment of and outlook for the meetings and group arena. The companies that participated represented a good cross-section of the industry in terms of size, market segmentation and travel sector focus.
Meeting Planners and Buyers
In September 2006, an invitation to participate in an electronic survey was distributed to over 2,000 meeting professionals and corporate meeting decision-makers via email (PhoCusWright’s Corporate Meeting Planner Survey). The focus of the survey was to capture data regarding corporate meeting characteristics and current and future usage of online tools to plan and book meetings and group events. Twenty participants from leading professional meeting planning organizations were then selected for follow-up telephone interviews to augment survey results.
Consumers and Meeting Attendees
In August 2006, two different consumer audiences were surveyed online to explore shopping and buying behavior, present and future consumption trends, needs and perceptions (PhoCusWright’s Leisure Group Traveler Survey). One audience consisted of adults who had planned at least one group gathering or meeting in the past year involving an overnight stay. The second audience consisted of a random sampling drawn from over 32,000 names of “registered planners” (i.e., people who signed up to use a group booking Web site). Over 1,100 responses were collected and used.
Technology Providers
Between August and October 2006, executives at 17 leading and emerging technology providers were interviewed by telephone to explore technology trends and developments in the groups and meetings arena. These executives represented a range of experience in online housing, online site selection/sourcing, meetings management technology, hotel forecasting and leisure group bookings.
Sizing the Group Market Space
Two principal goals behind this research effort were to 1) size the groups and meetings marketplace, and 2) determine at what pace this business would move online. To provide the best estimates possible for the size of the groups and meetings market and to forecast how quickly business would likely shift from offline to online channels, PhoCusWright took a very detailed approach and employed multiple sources of information. These included an analysis of the available industry literature, previous PhoCusWright research, and empirical research conducted as part of this study to assess both the supply and demand-side characteristics of the marketplace.
PhoCusWright built a sizing and forecasting model using these findings and industry data to aggregate estimates and compute final projections. Given that this study is the first of its kind and takes such a comprehensive view of the marketplace, sizing estimates and forecasts provide a baseline and set of directional measures that will be monitored and adjusted over time, just as PhoCusWright did in the early years of measuring and predicting travel e-commerce growth and trends.
Data represent the years 2005-2008; 2005 (actual) and 2006-2008 (projected).
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