As drivers prepared for holiday travel last month, many of them found something to be thankful for at the gas pump. In early November, the average price for a gallon of gas in the United States dropped to $2.18. All signs indicate that consumers will be able to enjoy cheap fuel for the foreseeable future.
For the majority of meeting professionals, that’s good news: Attendees have more money in their wallets. A recent report from the JPMorgan Chase Institute estimates that the average household will gain $700 in 2015 from cheaper fuel. While that isn’t a life-changing amount of money, cheap gas prices could play a role in convincing prospective attendees to register for a meeting.
“It will be interesting to see if lower prices at the pump have an impact on regional shows with regular drive-in traffic,” said Brian Casey, president and CEO of the Center for Exhibition Industry Research (CEIR). “With gas being so cheap, perhaps some attendees who are on the fence may decide to hop in their cars to be part of the experience. Meeting planners might want to consider reminding certain segments of their audiences that driving makes participating easy and more affordable.”
BOTTOM OF THE BARREL
The news for attendees may be positive, but the current oil climate is creating challenges for meetings and conventions. “While it benefits the consumer, there are a lot of people in the energy industry who have lost jobs,” Casey said. “It’s affecting the profitability of some firms. We’ve seen them cut back on some of their innovation budgets, and that may have more of an impact on the meetings and trade shows represented in the sector.”
Wes Scott, executive vice president of dmg events, which produces the annual Global Petroleum Show (GPS) in Calgary, has been working to remind attendees who regularly participate in GPS that lagging oil prices make the show even more valuable. “With low energy prices, it is more important than ever for companies to be present in the global market and get face-to-face with their customers,” Scott said. “Energy companies are focused on bringing down their costs to match what is happening in the market, and innovations and technologies are some of the key ways to bring down their drilling and production expenses.”
Scott’s message didn’t go unheard at GPS 2015, which welcomed more than 50,000 attendees. But other energy shows have suffered from the troubled sector. After drawing a record number of attendees in 2014, the ONS Norway energy conference canceled its 2015 event, blaming low oil prices for sluggish exhibitor registration. Likewise, the American Association of Professional Landmen, which serves oil workers, canceled its Pittsburgh NAPE Expo, which was scheduled for this past April. “With the substantial negative impact that the drop in oil prices has had on our industry, we feel it is in the best interest of all of our customers to suspend the event this year,” Marty Schardt, AAPL’s executive vice president, wrote in an email announcement. “We look forward to a turnaround of our industry and to better days ahead.”
DRILLING FOR BUSINESS
Some destinations with economies rooted in the oil and gas business aren’t waiting for those better days to arrive. Instead, they’re turning to meetings and conventions as an alternative business source.
Heather Lundy, director of marketing for the Calgary TELUS Convention Centre, acknowledges that it has been a relatively soft year for events among local oil and gas companies, with some of them canceling holiday parties or reining in their events budgets. But she says her team has a mandate to attract citywide business that isn’t part of the local economy. Their efforts are working. Lundy expects that 2016 will be one of Calgary’s strongest years for meetings and conventions business.
Likewise, in the Arabian Gulf, where oil prices historically have been synonymous with national wellbeing, the Sultanate of Oman has been aiming to diversify its economy. The Oman Convention & Exhibition Centre will open its doors in 2016, and General Manager Trevor McCartney says the government is counting on group business to fuel its future. “The development of the Oman Convention & Exhibition Centre is very much at the heart of Oman’s tourism offer and diversification plans,” McCartney said. “This landmark project is the centerpiece of Oman’s business-development program.”
Indeed, a 2013 study projected that the building could contribute up to $623 million to the national economy by 2030. That could prove crucial. The International Monetary Fund recently projected that, if oil remains at $50 per barrel, Oman could run out of money within five years.
Meanwhile, a recent report from Goldman Sachs suggests that oil prices eventually might fall as low as $20 per barrel. As the meetings industry looks to 2016, drops in oil prices most likely will continue to create additional spending money for attendees and additional hurdles for some organizations and destinations. While even lower prices would certainly create more spending money for prospective attendees, CEIR’s Casey notes that gas prices alone will not dictate success for meetings. “Cheaper travel costs can be a tipping point in the decision to attend,” he said. “But the content at the meeting is still the most important attendance driver. If someone is truly compelled to come to the meeting, they’ll find a way to get there regardless of gas prices.”