During the Great Recession, group business took a nosedive as many companies and organizations no longer had the funds to host large events. Now that the lodging industry is booming again, group demand is on the rise. Group average daily rate (ADR) has increased 3.9 percent as of June, according to STR data, and is predicted to finish the year at $182. Although that’s higher than the previous peak of $173 in early 2009, group ADR has yet to recover to pre-recession levels, and it still lags behind transient ADR. Meetings and events remain an important revenue driver for many hotels, which is why hoteliers are paying close attention to emerging trends that will help them capture more group business.
“There are three main trends we’re seeing with group business today: the majority of groups are smaller than they were in the past, they stay for less time, and they spend less on extras like food and beverage,” says Erik Browning, vice president of business consulting for The Rainmaker Group, a company that provides profit optimization solutions for hospitality, gaming, and multi-family housing industries.
While George Brennan, executive vice president of sales and marketing at global hotel management company, Interstate Hotels & Resorts, echoes Browning’s observations, Brennan also notes that it can be extremely difficult to generalize when it comes to group business, and that the overall trends need to be viewed through a filter depending on the type of group being discussed. “At one end of the group business spectrum, you have conventions that host up to 10,000 people that require years to plan due to logistics, while at the other, you have small group gatherings of fewer than 100 people, which is what constitutes the majority of group business,” he explains.
Regardless of the size of the group, flexibility is key when capturing this segment. “Ultimately, it’s all about choice,” Browning says. “Groups need to be able to choose the best venue for their meeting, and that venue needs to be flexible enough to accommodate their needs.” These needs can entail anything from space and seating to food and beverage to connectivity and technology.
And, competition is fiercer today than ever before, because the internet has made it easy for event planners to reach out to multiple properties with the same proposal and then see who responds with the best deal. “Before, event planners had to call each hotel individually, so there wasn’t as much shopping around,” Browning explains.
Technology in particular has become a major factor in choosing a meeting space. “Many companies now have an extremely high bar regarding connectivity and bandwidth,” Brennan says. “And a growing number of meetings include a digital component that broadcasts the event off-site to logged-on participants. As a hotelier, you have got to find a way to deliver reliable internet connectivity because most people now walk through the door with three or four devices, and they’re going to be using all of them throughout the course of the event.” Hotels that are unable to provide top-notch connectivity may be left behind, especially as event planners cast wider nets to find the best space for their meetings.
Group business will definitely be a profit center for many hotels in the coming years, but Browning cautions hoteliers to be careful about making sure supply doesn’t out-pace demand and keeping their pricing reasonable. “Numbers can be misleading in their raw form, and adjustments must be made to understand actual demand. If I think there’s a lot of demand right now, I might raise my rates too high. That’s counterproductive, because there are plenty of other options out there right now for groups.”
CONNECT THE DOTS
George Brennan, executive vice president of sales and marketing at Interstate Hotels & Resorts, offers the following advice for hoteliers who are looking to capture—and keep—group business.
Close transactions quickly. “The number of group business transactions that you can potentially close is increasing and being booked in a shorter period of time. Response time for qualified leads needs to be faster to capture that business.”
Encourage your guests to be flexible. “Finding groups that have the flexibility to move their dates a little bit, or even a lot, can be very profitable to the hotel because you can move them to when you need business the most. Work with the groups who are willing to work with you to fill room nights.”
Customize the group experience. “Being able to design spaces within the hotel that can be adjusted to accommodate different meeting types is imperative. You don’t want to limit the events that can take place at your property. Different meetings and events have different requirements, and being able to cater to them all is key.”