As group meetings grow in size, some hoteliers—and their markets—are finding it a challenge to keep up.
REPORT FROM THE U.S.—The meetings segment of the hotel industry has rebounded so strongly since the 2009 recession that not only are meetings increasing in frequency but also in size. Hoteliers and their markets now have the enviable chore of keeping up.
But it’s easier said than done. With only so many open dates on the calendar, many of the popular convention destinations simply can’t take on much more meetings demand than they’re already accommodating. The result has been to prompt meeting planners to consider “off” times of the year for holding events, as well as to look to secondary and tertiary markets when choosing a location.
“Group demand has been healthy and has been robust coming out of the recession, and it looks like from 2013 onward there was a shift to larger meetings,” said Jan Freitag, SVP of lodging insights at STR, parent company of Hotel News Now. “Not only do we have more group demand, but now the meeting planners are telling us their larger meetings are getting bigger, which is good news, but it begs the question: Where are all those people meeting?”
- Read more about the future of meetings.
In major destination and convention markets, existing high occupancy levels make it difficult for meeting planners to expand the size of existing events, at least without paying a premium or booking significantly far in advance.
Another option gaining popularity is to skip major convention markets such as New York City; Las Vegas; Orlando, Florida; and Chicago entirely, and instead find an up-and-coming tertiary market as a host. All the interest means many markets are beefing-up infrastructure—namely their convention centers—specifically to satisfy meeting demand.
“You can see the ones that have the nice, brand-new convention centers tend to be the ones getting more of the big meetings than the ones that don’t or are having to shut down and renovate,” said Chris Klauda, director of destination research at STR. “Washington, D.C., just finally finished their big convention center, which is doing really well. Nashville’s got a fabulous convention center that just opened a couple of years ago that’s hot. Then there are some that are not so hot.”
Even existing hotels that have long catered to meetings clients are now finding the need to expand. As meetings increase in size, owners find they need to make tweaks, such as increasing the width of banquet rooms, improving food-and-beverage operations, boosting Wi-Fi, adding guestrooms, or any combination of those aspects and more.
“There is a need to continue to grow out,” said Mike Dominguez, SVP of hotel sales for MGM Resorts International. “We have a ton of hotel rooms and a lot of meeting space, and you can still see in today’s cases it’s not enough, especially through our prime periods of the year.
“If you asked me if I have enough meeting space, the answer is yes, but not if you’re asking me if I have enough meeting space January through May and October through November, because that’s when everybody’s meeting, and I just don’t have the extra room. I’m at full capacity.”
Keeping pace with growing groups
MGM’s answer has been to grow its Las Vegas meeting space significantly, including a $70-million, 350,000-square-foot expansion at its Mandalay Bay Convention Center in August, as well as a $154-million, 200,000-square-foot addition to its ARIA Resort & Casino, beginning in May 2016 and targeted to open in February 2018. And it likely won’t end there, according to Dominguez.
“We’re looking at some of our other properties to see where else we may want to be adding meeting space,” Dominguez said. “The additional need for space is so visible that we’re looking at those opportunities to be able to grow it. Part of it is new business, but part of it is we’re having to do some of this just to be able to maintain the groups we’ve had over a long period of time, because they are growing.”
And it’s good, too, that companies like MGM are working to keep pace with burgeoning group demand, according to sources, because the active pipeline in many markets is surprisingly low on meetings-focused product. At present, much of the new nationwide supply is concentrated within lower-tiered segments not typically targeted by large meeting planners.
“Today, yes, the hotels are there, but if I look at the pipeline it gives me pause, because it looks like two-thirds of all rooms under construction today are limited-service,” Freitag said. “You can’t have a 400-person meeting at the breakfast buffet of a limited-service hotel. You need ballroom space, and it’s just not being built. That’s a little disconcerting.”
Dominguez also noted that the nature of meetings are changing, which in turn prompts additional changes/factors to consider when modifying existing space or planning new facilities. For starters, a vast tradeshow floor is no longer the sole priority when designing group spaces.
“It’s not just renovation of the centers today; they’re expanding,” Dominguez said. “The functionality of meetings has changed, because everybody who’s expanding, even traditional old exhibit shows, there’s always educational components to it today.
“It’s not just needing more exhibit space, it’s also meeting and conference space. There’s going to be some type of educational and meeting component that’s going to coincide with those type of trade shows, which didn’t exist 10 years ago.”