Changing Marketplace = Changing Strategy
My Take: Strategic Perspective
The meeting & hospitality industry has always been very cyclical, with "ups and downs" based on many economic and changing global dynamics. So as we distance ourselves from the great recession, it is not surprising that the pendulum is rapidly swinging to a hot sellers market. A senior manager of a major hotel chain stated it best when he told me "the hotel industry took a pounding during the recession and now, our hotel owners have huge profit expectations for the next several years".
Realities Of The New Marketplace
- Increased hotel occupancy, Average Daily Rate and RevPar (revenue per available room). In 2011, there was a 4%-7% spike in room rates and RevPar, depending on hotel and brand category. This trend will continue in 2012, with projected increases of 7%-9% in upscale and luxury hotels and resorts
- Limited new hotel supply. In 2009, in the face of the recession, there were 172,000 new hotels rooms added, in all categories. Contrast this by a 2012 projection of 40,000 new rooms.
- More demand, less supply compromises short term meetings. Less availability and space at a premium
- More corporate and association meetings / increased attendance, however, meeting budgets remain flat
- To counter flat meeting budgets, hotels adding hotel fees and surcharges ( ancillary fees totaled $1.8 Billion in 2011)
The Shift From Logistics To Strategic
The bottom line is just that...hoteliers can now be more select and will ultimately fit in the group with the best total meeting value. The focus on logistics is critical to the planning and execution process, but in today's Strategic Meeting Management (SMM) environment, having a value based negotiations plan is a must to assure success.
Assess Your Leverage And Have A Plan
Knowing the value of your meeting is essential in a sellers market and understanding the basics of Hotel Revenue Management will assist in this process and improve your communications with hotel partners. This starts with the strategic RFP and providing hotels with good information, including all date / pattern options, room / suite block, by night, meeting history, meeting and event space, by day with minimum square footage / ceiling heights, F & B functions, production / technology overview, display or table top needs and any special requirements. Don't forget set up & tear down, office, storage, registration, speaker room, etc)
Variables That Influence Hotel Availability And Pricing
How Hotels View Your Meetings:
- Transient Demand
- Arrival / departure pattern
- Rooms to space ratio
- Group food & beverage revenue
- Lead time
- Potential incremental revenue
- Value of total account
- Number of rooms held vs. ability to pick-up block
- Cancellation/attrition clauses in contract
- Other groups contracted over same dates / revenue contribution
Hotel Revenue Management Meets
Strategic Meeting Management (SMM)
I know many of you are thinking that it's not "meets", but "collides", however, that is not necessarily the case. The key to successful value based negotiations in today's marketplace requires meeting planners to carefully evaluate all elements of each meeting, understand their overall meeting value, determine flexibility points and elevate their communications and negotiations process with hotel partners.
Yes, the pendulum is rapidly swinging to a sellers market, however, when meeting planners make the "strategic shift"and have a plan, clearly they will add more value to their meetings and bottom line, with a emphasis on risk reduction (and improve partnerships in the process)!
Tim Brown is CEO at Meeting Sites Resource. MSR is a global strategic meeting management solutions organization with 20 year track record of meeting excellence. This includes global hotel sourcing and custom contract negotiations, professional meeting support services, Strategic Meeting Management (SMM) consulting and advanced meeting technology.
Tim contributes articles to industry trade publications and speaks at many industry events. MSR also designs custom strategic education for planning and procurement teams. MSR is a recognition recipient of Meeting Professionals International’s Golden Paragon Award, MPI’s highest recognition for meeting excellence.
For Additional Information Contact:
Tim Brown, CEO
Meeting Sites Resource
(949) 250-7483 ext. 312