Article Summary: In the second installment of a new series, the Hotel News Now editorial staff answers important questions about the hotel industry. Round two: Are you seeing a shift in group business overall through segmentation?
In the second installment of a new series, the Hotel News Now editorial staff answers important questions about the hotel industry. Round two: Are you seeing a shift in group business overall through segmentation?
Primary Category: Revenue Management
Editor’s note: You ask. Hotel News Now answers. In this occasional series, we pose your questions to industry experts for answers, opinions and advice on everything from the big-picture stuff, like where we are in the cycle, to small potatoes, like whether to serve mashed or au gratin on the breakfast buffet. Submit your questions to HNN Senior Managing Editor Robert McCune at firstname.lastname@example.org.
REPORT FROM THE U.S.—As the U.S. hotel industry has seen revenue-per-available-room growth slow, hoteliers have anxiously looked to their business mix to see what answers they could find in their transient and group segments.
While transient has remained relatively stable, hotel company executives have shared their hopes for a return to stronger group business. However, signs of a potential downturn have hoteliers once again worried about what that means for their group business.
Hotel News Now reached out to hoteliers to learn how well group business is performing at their properties.
Karen McWilliams, VP of revenue strategy, Concord Hospitality
“Year-to-date through August 2019, Concord Hospitality is seeing a nice uptick in the group segment. Overall, we are seeing demand up about 1%; however, group (average daily rate) is nearing a 10% increase over the same time last year. With the group corporate segment leading the way, we are seeing a rise in both corporate meetings and training. Group sports and social segments rank next in terms of growth to last year.
“We have invested resources in targeted group training for our sales professionals and have been successful at trying some new deployment methods. In addition, the enhancements each of the brands have done in terms of their yield systems have allowed for greater insight into building an effective and innovate group strategy. Toward mid-2018, we began to look at the group segment through a different lens, allowing for both short-term and long-term strategies to be put under a microscope. This has allowed for new solutions that have resulted in greater optimization in the group segment.”
Allison Handy, SVP of sales and marketing, Prism Hotels & Resorts
“Meeting planners are getting savvier in negotiating for room rental, coffee, internet, parking. As the volume of business that comes through third parties continue to rise, our profits are impacted. Not only do we have the commission, but they know from past experience what they can and can’t negotiate. Unfortunately, these are our high profit areas so by cutting these items, it makes it significantly harder to maintain a healthy profit margin. Therefore, we have to get savvy with new fees, set up fees, labor fees, etc. This works especially well when you have ‘unique’ space to sell. It seems much more acceptable to charge space rental and set-up fees for those spaces then our traditional meeting rooms.
“Shorter booking windows, even for larger groups. We’ve seen enormous programs trying to book three months out, when in the past these would be a year plus. From our discussions with the clients, they simply don’t know if they will have the budget for the events when booking so far out, so they wait until they can confirm without risk that the budget is approved. But their job becomes much harder looking for available meeting space and their options are much narrower. It makes the catering space release policies very challenging.
“Because office space is so flexible in design now, and companies have unused space with so many telecommuters, we’ve seen an increase of corporations holding meetings at their office and using the hotel for rooms only.
“Interestingly, in a few markets we’ve seen the demand for religious groups increase. I can speculate this is due to state of stress in the world—politics, unrest and general combative culture—that people are turning to a place of safety in religion, but don’t have tangible evidence to back that assumption up.”
Clifford Ferrara, EVP, sales & revenue generation, Chesapeake Hospitality
“In general, we have not seen a shift in the group business overall through segmentation unless we have altered sales strategies. We have handled many extensive renovations/conversions from brand to independent or soft brand, i.e. Preferred Hotels or Tapestry by Hilton, and in doing so we target increased corporate bookings. This can be attributed to the boutique nature and re-positioning of the hotel after an extensive renovation coupled with the increased ADR expectations by ownership after a significant investment. Sales strategies are targeted to group segments willing to pay the rising group rates.
“It is also typical in a hotel takeover situation that the group sales strategies and group mix are evaluated and altered to maximize group sales revenue contribution, taking share from the competition.”
Susan Greenberg, regional director of sales, Hotel Equities
“Group is and remains the most pivotal market segment in our industry. The greatest aspect of group is the consistency of its prevalence and the adaptability for each of our hotels to choose how little or how much they want to absorb. The differentiator (in) maximizing group is the sales person; it is all about relationships and executing win-win scenarios for both the client and the hotel. Executing the booking of group business is a strategic game with constant new players and rules: business disruptors, Airbnb, commissions and consolidations.
“Each hotel team creates a strategy to best penetrate that market at the right price and the right time. ‘Group-up’ continues to be the theme for all brands, especially when the future of the economy remains uncertain. No matter whether your product is in the select service or the luxury resort category, success can be elevated by leveraging the group element. At Hotel Equities, our people are the differentiators.”
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Headline: HNN Answers: What’s happening with group business?
Article Date: 10/24/2019
Article Time: 9:45:00 AM