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Group, transient business becoming one
September 9 2013

The line between group business and transient business is blurring, panelists said during the Hotel Data Conference.

Highlights
  • Leisure travelers are beginning to travel in groups more frequently.
  • Group meetings are a half-day shorter than they used to be.
  • “It’ll never be 2007 again,” MGM’s Michael Dominguez said.
By Shawn A. Turner
Finance Editor
Shawn@HotelNewsNow.com

NASHVILLE, Tennessee—The transient and group traveler don’t necessarily represent different streams of business for hotels any longer; rather, the two groups are melding together, panelists said last week during the 5th annual Hotel Data Conference, hosted by STR and Hotel News Now.

During a session titled “A tale of two travelers: Transient vs. group,” the panelists pointed to several instances of the line blurring between the two different segments of travelers. For example, group travelers are booking like transient guests, while more group business is comprised of non-corporate guests.

Chris Klauda, VP of quality services at D.K. Shifflet & Associates, is seeing a particularly heavy amount of the latter. She said the leisure group segment is traveling in heavy numbers.

“This is the segment that’s kind of holding things” together for hotels, she said.

Customers who’ve traditionally comprised the leisure sector are now traveling as part of the group sector, Klauda said. She’s seeing a lot of older customers who are traveling for seminars and the like as part of an effort to enrich their lives.

“I really think group business … is not just corporate business,” she said. “People are eager to attend seminars and engage and travel. It’s not just big convention (business) that’s out there.”

Debra Bates, CFO and chief development officer of Dolce Hotels and Resorts, said she’s seeing more group travelers are bypassing the use of group-booking software and are being encouraged to book independently.

“We think they’re trying to avoid attrition charges,” Bates said of meeting planners.

Group characteristics
The group business for hotels is changing in other ways, too, said Michael Dominguez, senior VP of sales at MGM Resorts International. He said group meetings today have shrunk by a half day.

“You used to have that full day, and you had that extra night’s stay,” he said. “Now we’re finishing up at noon so we can catch a flight.”

The panelists also noted that groups are smaller than they were in the past.

“It’ll never be 2007 again … Those times are gone and will never be back,” Dominguez said.

Susan Weigel, VP of revenue management and distribution for Denihan Hospitality Group, said the economy has played a big role in shaping how much group and transient business walks through a hotel’s front door.

“I think everyone is just a little more hesitant,” she said.

Selling group
John Greenleaf, global head of the DoubleTree by Hilton brand, said one way Hilton Worldwide is adapting to the shrinking group customer is by guiding these groups to smaller, select-service hotels rather than the traditional full-service hotels that groups have used in the past.

“This is all about trying to meet the needs of our meeting customers … and meet the needs of our guests,” Bates agreed.

It’s important to ensure you’re offering a value-added experience for both transient and leisure travelers because if guests are impressed, they will return, she said.

While group business might not return to the heady days of 2007, there is still money to be made, Dominguez said. “There’s $2.3 trillion in cash sitting on the sidelines that needs to be spent.”

Government
Politics has impacted both government-group and transient-leisure business, Dominguez said. The sequester impacted government business, while comments from President Obama that Americans should refrain from visiting Las Vegas when saving for college hit the leisure side.

“The president did us a disservice,” he said.

Regardless, Dominguez said President Obama has done a lot to encourage travel since. “We at least have started to turn the table.”

The sequester could be a blessing in disguise for hotels, however, he said. If payments aren’t made by the federal U.S. Department of Veterans Affairs because funds weren’t available to send VA staff members for training, that will help highlight the importance of travel.

“If there’s a positive, it’s that the government is running even more inefficiently,” he said.

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