November 2010 Franchising World
By: David Gabri
There is a shift occurring in the meetings industry which you should be considering to maximize your values and those of your attendees. Over the past two years organizations became accustomed to booking whatever property they were seeking enjoying remarkably discounted rates, with unprecedented favorable terms and conditions. This is changing, especially for programs for 2012 and beyond. Corporate business meetings have dramatically returned, gobbling up dates and space, and creating a noticeable shift in the demand for hotels.
Individual business travel has also improved, affecting the available room inventory that hotels allocate for group business. These trends started within city hotels, and are gradually affecting resorts. This, added with improved leisure travel trends, provides strength to the resort and hotel markets. So now is the time to lock in significant value opportunities for your programs, as the window in many markets is closing. The pendulum is swinging from the current buyer’s market toward sellers.
We all know the financial lending markets essentially halted lending last year, and have only slowly opened for investments in franchising and other pursuits. Simultaneously, there have been no significant investments in new hotel developments, and this is likely to remain dormant, at least through 2012. This affects the available inventory of hotels and resorts for meetings and with demand increasing and no new supply, we all know what happens.
Why is this important to you? Rates at hotels and resorts have bottomed out, as we’ve already seen an increase some dramatic. Rates and RevPAR (the combination of rates and occupancy) are forecast to increase significantly in 2011, compounded with even more dramatic rises in 2012 and beyond. Additionally (and meaningfully), the shifting market conditions will lead to the reduction of some of the special concessions, and will lead to the general return of tighter terms and conditions such as food and beverage minimums, attrition and cancellation schedules.
What are executives and meeting professionals to do? Focus on what is on the horizon for your meetings and conventions, and lead. Take time now to think strategically to identify your program needs for 2011, 2012 and years beyond. Lock in the program dates and terms now to capture exceptional values, and mitigate risks as the special deals and concessions are still available and hoteliers are still building their group business backlogs. Don’t tarry however, as owners and operators are raising their expectations for the New Year.
The “E” of Attendees Is Increasing
Another trend is that the “Es” expectations of attendees is increasing. Whereas during the economic downturn attendees and hosts were more accepting, according to Meeting Professionals International research, attendees are again expecting that programs provide an experience that will meet or exceed their higher expectations and standards.
We’re not talking extravagant. The word of the day is “distinctive.” Companies and organizations are choosing distinctive venues that will provide a unique and memorable experience as they advance their business messages.
In doing so, the organization stands out by offering a meeting solution that complements its program and its brand, with content in an invigorating environment that promotes creativity, enthusiasm and distinction.
Face-to-Face Meetings Value
Companies and organizations are again investing in programs for their employees, members or customers, and franchisees, to remain competitive.
While many business leaders have intuitively understood the value and benefits of face-to-face meetings, it became truly apparent how effective they are when the comprehensive “Return On Investment of U.S. Business Travel” study by Oxford Economics was released in 2009. This authoritative study found that face-to-face meetings allow companies to convert 40 percent of prospective customers, versus just 16 percent without such a meeting. In addition, the average company generates 5 percent to 20 percent of new business through conference and trade show attendance.
The study also identified that each dollar invested in business travel (including meetings) drives approximately $12.50 in sales and $3.80 in profits. Furthermore, the average business would forfeit 17 percent of its profits in the first year of eliminating business travel, and it would take three years for profits to recover.
In other words, meetings provide a great ROI.
Another trend is that meetings now provide more meaningful business content. Long gone are the days of conducting a meeting just for the sake of meeting. Now it is essential that the program features meaningful presentations with rich content, invigorating leadership, and progressive direction to keep your attendees engaged, and to justify the expense by all participants.
Another development is that planners who had been booking room blocks conservatively to avoid attrition exposure over the last two years are amending that strategy. In our experience, over 50 percent of programs in 2010 exceeded their room blocks. Not a huge problem in 2010, but this could be a real issue in the future, especially in 2012 and beyond, as far less availability is expected. So set a realistic room block, and adjust it along the way if possible.
Utilize Available Resources
Statistically there is now a greater reliance on utilizing reliable national sales organizations by corporate meeting and association professionals to tackle the challenges we now face.
One of the biggest advantages of working through a NSO, like Associated Luxury Hotels International, is that they provide a “one-stop shop” with insight on multiple hotels and resorts, in a variety of destinations, with one discussion. Allow your NSO to make best value presentations for your executive team to consider. You also may consider locking in the next two or three available dates, not just one, considering market circumstances.
And work with your NSO to leverage one program and another meeting to your advantage. Besides your trusted NSO knowing where the best values and options remain, their enormous volume to their hotels provides you an extra advocate to secure the very best arrangements. This saves you time and adds value and expertise with skilled NSO professionals who have in-depth knowledge of their hotels, resorts and destinations to match with your specific needs.
NSOs also can share important information, such as details on capital improvements, and consolidated value lists, like ALHI’s “Luxury On Sale” opportunities, among their entire portfolio. And for clarity, there is no cost to your organization to utilize the national sales services of a NSO as they are funded organizations set up to serve you.
Take a step back to consider if you are well-prepared for the changing trends that could affect your future meetings and programs. Actions today could be the key to protecting your company’s interests for 2011 and beyond in a significant way.
David Gabri is president and CEO of Associated Luxury Hotels International, which has the national sales responsibilities to the meetings and incentive industries for its portfolio of over 125 Four- and Five-diamond Hotels and Resorts worldwide which specialize in meetings and conventions. He can be reached at 407-295-1950 or email@example.com .