Shifts in volume, spending lift group business
Shifts in volume, spending lift group business
13 JULY 2015 7:55 AM
Many hotel companies are reporting positive growth in group business, and that trend should continue if the economy remains strong.
REPORT FROM THE U.S.—Some of the largest hotel brands are reporting strong group business growth this year, signaling that businesses and organizations are continuing to feel more confident about the post-recession economy.
“The U.S. economy is entering the mature phase of the current business cycle,” said Joseph Bates, VP of research for GBTA Foundation. “That means we are nearing full employment along with steady gains in (gross domestic product) and solid business confidence. This suggests we will see continued, steady and growing demand on the group business travel side as well as the transient business side.” 
The Global Business Travel Association estimates group meeting volume declined by 1.9% in 2014. Bates said much of the decline was as the result of a cyclical snapback from 2013, which saw an 8.6% growth. The foundation estimates that group business will increase this year by 1.6% and another 2.5% in 2016. Most of the growth is coming from the corporate sector.
“Currently, the overall state of group business is strong as both businesses and attendees alike continue to recognize the value of face-to-face meetings,” said Rob Scypinski, senior VP of industry relations and events for The Americas at Hilton Worldwide Holdings. “Face-to-face meetings continue to be a significant driver of ideation, deal making and networking.”
Scypinski cited an IMEX Group and Meetology study in which participants said that face-to-face meetings still generate more ideas than virtual meetings.
Ross Hosking, executive VP of global sales for the Wyndham Hotel Group, said the company expects an 18% increase in group business this year and a 7% increase in 2016. 
Companies might be booking more group meetings, but the big difference that’s happened since the recession is that the companies are shortening their meeting times, Hosking said. 
“What we’re seeing now is a typical two-day meeting with an overnight; this has led to consolidation of deployment based on demand of short-term meetings,” he said. 
Hosking said that has led to more involvement by GMs and sales directors, who must help sellers understand the best businesses to convert. 
Tom Faust, VP of sales for Omni Hotels & Resorts, said his company is on track for a 7% increase in group sales this year. He agrees that the length of stay is getting slightly shorter, but the lead time for most group bookings is increasing. 
“This has caused a shift in patterns; in the past we never saw weekend or holiday week meeting bookings, but it is now happening due to the lack of availability in the traditional business week,” Faust said. 
Group business spending on the rise   
U.S. business travel spending will increase by 4.9% in 2015 to $302.7 billion, according to recent research from the GBTA Foundation and Visa. The 2016 outlook anticipates a surge in economic activity and confidence, with travel spending projected to increase by 5.4% to $318.9 billion, according to the research. However, researchers noted that ongoing concerns about the U.S. economy will rein-in what could be even sharper growth.
According to GBTA, the average traveler spending did decrease slightly in 2013 to $660.42, down from $669.80 in 2012. However, that number rose again in 2014 to $698.35. 
Ancillary spending plays a key role in that increase as meeting participants have more special food-and-beverage requests, sources said.
“We’ve been keeping a pulse on two F&B trends related to group business, which is customization and local sourcing,” Scypinski said. “Meeting and event planners’ expectations are changing as people become increasingly engrossed in what they eat.”
Scypinski said that special requests for vegan, gluten free, kosher and other requests make up an average of 35% to 40% percent per meeting. 
Smaller plates featuring sourced food with a local flavor (think Kansas City and barbeque or Maine and seafood) is in high demand, as well as socially responsible options such as free range and organic foods, and water stations instead of providing bottled water. 
Hotel chefs are creating food “events” more now than in the past, Faust said, adding F&B revenue is up 8.2% at his company over last year. 
“Attendees look forward to the meals; they want to have more healthy benefits but also refuel and fortify, and we have to make it fun and interesting,” Faust said. 
Hosking, who noted that F&B is up 16% at Wyndham-managed hotels, said that the increase is not just due to price increases. “It has to do more with what the customer is ordering,” he said.
Hoteliers also are seeing a steady demand for outside activities, particularly healthy group activates that involve sports or exercise. 
The bottom line for group business, Faust said, is that if the economy continues to stay strong, group business will continue to as well. 
“It’s mostly economically driven,” Faust said. “As long as businesses and organizations are feeling confident, we’ll continue to see a good market in group business.”

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.