Offsiter
Market Opportunity for Offsite Meeting
Offsiter: Offsite, On Budget
Enabling companies to host cheaper and more effective offsites.
Introduction
Offsite meetings have many purposes: to drive strategy, to celebrate success, to train the workforce, to generate ideas, and more. Offsite meetings also have many advantages: propinquity breeds camaraderie and inspires idea, and further, avoiding major metropolitan areas can significantly reduce the cost of accommodation compared to city centers. While the success of these offsite meetings can vary widely, there is a common theme in all: logistics. Flights, trains, hotels, meeting rooms, and more. There is plenty of work to do, but plenty of costs as well.
Offsiter is a platform for simplifying the logistics of, and lowering the costs for offsite meeting planning. The goal is to utilize modern APIs and web scraping to optimize flight and venue bookings to create a unique search engine targeting a niche of offsite meeting planning.
The Market and The Opportunity
Focusing on offsite meetings allows for more targeting messaging and pushing into additional event management adjacencies compared to the market that generic corporate travel services such as Egencia (owned by Expedia Inc.) cater towards. The logistical problem is also quite different. As the American Express report puts it:
“…meetings tend to gather people from several different destinations, meaning large groups are often not traveling together on the same route. This poses some challenges for group bookings and could lead to new thinking around how travelers can be booked together as a group despite different flights.” [1]
Instead of organizing generally point-to-point travel where the destination is known as in the majority of business travel (the market for which was nearly $290B in the United States [2] in 2015), meetings and events have an additional mathematical challenge of optimizing the location. Additionally, customer requirements will expand from a simple hotel stay to venue booking, access to breakout rooms, A/V equipment, and more.
A 2010 Economic Significance of Meetings to the U.S. Economy study commissioned by the Convention Industry Council (CIC) and conducted by PriceWaterhouseCoopers illustrated that in 2009, meetings represented a $263.4 billion industry. Just over half or $132.127 billion was directly attributable to corporate and business meetings. [3] A whitepaper by Bondurant Consulting found that hotels represent the largest portion of meeting and event expenditures (45%) [4].
Zooming in, ‘training’ and ‘internal team meeting’ — the two segments most likely to be tied to productivity and closed to the public (compared to incentive-trips or conferences), companies are expecting that 3,525 attendee-days will be spent on training, and 2,117 on internal team meetings according to 2016 American Express Meeting & Events North America Survey [1]. After some number crunching (see Methodology, [M1]) about 18% of all company meeting expenditure (exclusive of air travel) is attributable to training and internal team meetings, that leaves approximately $23.7 billion per year in this segment. If Bondurant Consulting’s finding noted above holds, we determine that the total addressable market of hotel spend by companies for training and internal company meetings is about $11 billion per year, or about 8% of the total corporate and business meetings and events market. This gives us a target market of over 28,000 customers in the US alone [M2].
As a separate analysis, using the survey ‘expected spend per attendee’, we can determine that surveyed companies are spending about $522k per year on training, and $310k per year on internal team meetings. Factoring in the figure from Bondurant Consulting cited above, we determine that companies are spending around $370k per year on hotels alone across these two segments. Taking 6.25% as a modest affiliate fee, addressing this market would lead to $690M annual recurring revenue (ARR). Crunching the numbers, about 27% of meetings in North America also include Group Air Management [M3]. Taking a modest $4.5/round trip flight affiliate fee, the market has an additional opportunity of $85M ARR in flight management [M4].
Methodology
- The figure of 18% (17.9% based on 3 significant figures available) was calculated by taking the product of number of events per year, attendees per event, and spend per attendee to calculate company spend per year. Then, I calculated the spend per year contributed by ‘training’ and ‘internal team meetings’. All figures were taken from the American Express Meetings & Events North American Survey, August 2016.
- Taking the company spend per year (as calculated above) for training and internal company meetings, and dividing it into the annual spend of $23.7B per year provides the number of companies in the target market of 28,000 with two significant figures.
- This figure was estimated based on survey results that broke down which percentage of meetings required Group Air Management based in bands to indicate which percentage of meetings required . I took the midpoint of the bands (e.g. one band was to indicate that 1–10% of a company’s meetings required Group Air Management, so I took the midpoint as 5.5%), and weighted it by the respondents (in the above example, 26%), and summed across all bands, leading to 27% with two significant figures available.
- The product of number of events per year, attendees per event, and Group Air Management per event percentage provides the number of attendee-flights per year which require Group Air Management. Multiplying by the affiliate fee and total number of customers leads to $85M with two significant figures available.
