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The Pros and Cons of Common Group Types

The Pros and Cons of Common Group Types

Event technology, communication, and social media are making it easier than ever before to bring people together for meetings and events. Organizations that traditionally operate on lower budgets, will now be able to prove ROI from events for the first time. Which is contributing to growing demand in group business, and is making it more important than ever before to focus on a high value client mix.

Every hotel is different, and so is every destination. Your revenue management team is crunching the numbers right now, by examining benchmarking data, your comp-set and seasonality, all of which play a major role. While you work with your team to determine your best targets, here’s a quick overview of the pros and cons of the most common group segments.

Corporate Events
We love corporate events because they always close at higher rates. On the other hand, we bend over backwards for corporate clients. These clients can be more demanding and ask for amenities we’re not always willing to offer. What’s trending? Pharmaceutical organizations in China have been approved for international marketing. All signs point to more events from big Pharma.

Pros: Higher average rates; much high guestroom rates on average
Cons: Less reliable; don’t give as much lead time; more demanding

Associations
If you’re looking to double down on higher value groups, you may want to avoid local associations (when you can). This segment rarely books guest rooms and is far less likely to host a catered event. Association events — especially in municipal services or education — tend to book years in advance, which can create conflicts if a higher value group were to express interest at a later date. Despite lower rates, association events are more reliable when you’re looking to fill function space occupancy gaps.

Pros: Faster sales cycle; more reliable; shorter events can fill occupancy gaps
Cons: Lower guest-room rates; local associations don’t require guest rooms; book too far in advance

Government
Like local associations, government events can be a great way to fill occupancy gaps. Government employees travel on per-diem, which means that as budgets fluctuate year to year, so too will the broader impact on your hotel. Government clients are reliable in terms of demand and occupancy but not when it comes to overall yield rate.

Pros: More flexibility
Cons: Employees travel on per-diem; budgets fluctuate year-to-year

SMERF (Social, Military, Educational, Religious, and Fraternal)
Here’s where booking group business turns into more of a free-for-all. Try to approach each SMERF event on a case by case basis. Be careful that you’re not investing too much time as this segment rarely books sleeping rooms and some SMERF events (like motivational workshops for example) will only ever occur one time. SMERF events are hard to anticipate but you can create predictability by building the right partnerships. Create relationships with local universities and religious groups in order to build out an annual calendar.

Pros: Good generator of new business; more opportunity to upsell
Cons: Not always recurring events; little to no predicability; more challenging to prospect

Today, it’s still a challenge dealing with association and SMERF events with a shorter turnaround time. Even if your hotel was to solely focus on corporate events, adapting to higher frequency and shorter turnaround times will take time. As travel becomes faster, easier, and cheaper, millennials will look for more “drop-in” and “drop-out” events. Additionally, as corporate event budgets grow, so will the need for planners to prove ROI from events. That means knowing where you have leverage to negotiate for every event type, and prioritizing the right deals for the biggest impact on the bottom line.

For more information, check out the Social Tables’ Group Sales Playbook for 2017 to see why group business will drive revenue growth in hospitality over the next few years, and find out how you can prepare yourself and your sales team to take advantage of this trend.

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