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Day delegate rate growth slows over EU uncertainty

Buyers reclaim power as rates fall across northern regions, while UK average rises a modest 1.4 per cent
25/05/2016

Pictured: Scotland and North have recorded declines in Day Delegate Rates (DDRs) for Q1 2016

Economists have warned external influences such as next month's EU referendum are negatively influencing UK venue performance.


BDRC Continental says event buyers now have more negotiating power with hotels, who 12 months ago were said to be benefiting from a supplier's market and held the balance of power.


The research consultancy says the shift has been demonstrated in a slowdown in growth of Day Delegate Rates (DDRs) across the UK, with prices rising a modest 1.4 per cent on average for Q1 2016.


BDRC Continental client services manager Natalie Wiseman said: "The quoted DDRs we obtain through our sales enquiry mystery shopping vary between regions. We are seeing the North and Scotland struggle to match previously quoted rates, whereas the South East and London show stronger signs of improvement, with London recording its highest rates to date.


"The slow in growth for the UK as a whole suggests an air of caution from venues about raising prices. It is important for venues to exceed service and product expectations in order to set themselves in the best possible position to confidently increase rates."


Venues in Scotland recorded the largest drop in average rates for Q1 2016, falling on average 6.6 per cent from the previous year to £34.66. That was followed by North West, which fell 3.3 per cent to £36.80. Conversely, London DDRs increased 3.8 per cent, the largest increase of any region, reaching £67.92 on average, followed by East and East Midlands (+3.5 per cent) to £38.25. The lowest rates were found in the North East, Yorks and Humber, where DDRs were an average £33.60.


Wiseman said the possibility of a Brexit was one factor influencing the results.


"There is general uncertainty about which way the referendum will go, and the financial impact if the UK votes to leave the European Union. Just this week we heard from the Treasury how another recession could be triggered if we leave,” she said.


"I don't think that has singlehandedly defined what has happened in Q1, but I think a lot of decisions are being paused at the moment. Venues and their suppliers are reacting to the uncertainty in a static nature, whilst buyers feel that booking events will become more difficult if ‘Brexit’ was to happen."


Wiseman added that security, and even the shared economy, were other current challenges facing the meetings and events sector.


She said: "Security can be physical, but intangible forms such as customer’s personal details and more general internet security are also important considerations. Venues need to ensure there are procedures in place to foresee and manage such situations in order to protect customers, and inevitably, reputation. Security has become second-nature in some countries and industries, and it’s important that venues have a hierarchy of responsibility that is cascaded effectively to frontline staff.


"The shared economy is another challenge. This has been a concern for hotels, but the speed at which this economy has grown suggests it may grow significantly. An offer of service from experienced professionals is something that the sharing economy tends not to offer, which venues will need to capitalise on with their buyers in order to retain them."


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