There’s been a lot of chatter on meetings-industry social-media sites lately about the surprisingly high rates hotels are asking for guest rooms connected to business events. However, such observations must be looked at more closely for planners to truly understand the marketplace they are dealing with for the remainder of 2022 and into 2023.
Specifically, the fact that leisure travel has returned strongly to resorts and to certain destinations should not obscure the fact that center-city hotels focused on business travel are generally not faring as well, and perhaps even less so in cities where the airport is not a major carrier’s hub and flight cancellations could affect meetings held there.
To help urban hotels get back to their pre-pandemic financial health, Heidi Banak and John Zangas of Hotel & Leisure Advisors wrote this article for trade-media outlet Hotel Management.net. In it, they explain to business-hotel sales executives how group bookings allow them to price the remainder of other inventory at rates favorable to the property. In fact, the consultants provide a hypothetical example of group-business pricing and individual-room pricing at a hotel with 50,000 square feet of meeting space, followed by an example of pricing at a competing hotel with 10,000 square feet of meeting space.
Their message to the sales leaders: Get meeting groups booked as soon as possible, even at rates that are favorable to the group, so you’ll know how much guest-room inventory remains for a given week and how much revenue you’ll need from that inventory. Another important message: Have sufficient amenities and labor staff on hand to properly service meetings.
The conclusion from Banak and Zangas:
“Full-service hotels should set goals to fill 30 percent to 60 percent of their guest-room inventory with discounted group business and be poised to capture the returning individual travel demand at higher rates. Hotels that wait to see the individual traveler return before filling group-sales positions will experience a much longer recovery...Offering discounts and perks [to groups] on the front end could help ramp up sales and ensure a faster recovery. The long-term profitability and survival of the vast majority of full-service hotels will only come from having a base of group business booked in the hotel, giving the property confidence to charge higher retail rates for the returning individual travel demand and ultimately driving profitability.”