Group business is pacing well for next year, but booking windows are getting shorter, and it can be tougher to raise rates, said sales and marketing executives at a recent industry roundtable.
WASHINGTON—Group business for 2018 is pacing well, according to sales and marketing executives speaking at a recent roundtable. But behind those numbers are increasingly shorter booking windows and often flat, instead of growing, rates—realities that sales-and-marketing departments are learning to work with.
At a roundtable hosted by the Hospitality Sales and Marketing Association International last week, most participants agreed that group pace in 2018 is up, though it looks a little different.
“Group is ahead of pace, but we’re seeing these booking windows get shorter and shorter, which makes it very difficult to forecast or plan, so we’re trying to work around that right now,” said Barbara Eslick, VP of sales and marketing for full service hotels and resorts at Shaner Hotels.
Jim Zito, SVP of sales and marketing for Real Hospitality Group, agreed on both fronts. “Our group pace, depending on the market, is flat or slightly up, but our group lead time is pretty short,” he said. Bookings “show up just a few weeks before they happen,” he said.
That shorter booking window can be a cause for concern for hoteliers worried that the people might not actually materialize. Eslick shared a story about a 100-person group that booked a full-service Marriott just two weeks before their event.
Zito added the short booking window trend is also prevalent among travelers coming from abroad.
These booking behavior shifts have forced sales-and-marketing teams to change some of their strategies to adapt.
Barb Ward, VP of sales and marketing for CSM Corporation, said focusing on group business in the latter half of 2017 was part of her company’s plan.
“Our group pace is up, but it was a strategic move on our part, for fear transient would lag,” she said, citing some markets like Seattle and Portland, where high supply growth dampened demand this year. “We put in place more goals for the fourth quarter of this year to make sure group pace would be up.
According to HNN’s parent company STR, demand growth so far this year on a rolling 12-month basis is largely transient-driven, with transient demand growing 18% and group only 6%.
Effects on pricing
Still, the shorter booking window for group business can affect the price tag.
“The window is definitely tightening,” said Ron Taylor, VP of sales and marketing for Windsor Capital Group. “It’s amazing the groups coming in at the short term. The booking window for small groups has gone through the roof. How they’re affording it, I don’t know.”
Allison Handy, SVP of marketing for Prism Hotels & Resorts, attributes that trend to changes in the overall business climate.
“I asked a client about it, and the response is that they’re not positive they’re going to have the meeting,” she said. “It’s taking them a long time internally to decide, and they’re not taking for granted that they’re going to have the same meeting year after year.”
Ward shared an example of a company that pre-booked all of its meetings in the past, but “ended up paying so much in cancellation and attrition that they stopped booking everything until six weeks out.”
“It’s the factor of the bigger, better deal concept,” Handy said. “Things are happening so quickly in business and moving on a dime, it’s changing (companies’) ability to be as forward-thinking when it comes to meetings.”
Chris Kenney, SVP of sales and marketing for Two Roads Hospitality, said that shorter window can be a good opportunity to gain rates.
“If it’s shorter-term, we do have the strength then,” he said. “Or we can make the decision to not do it, shift (the business) to the dates we want or fill it with transient.”
That can be a gamble, however, particularly in this era of holding on to market share at all costs in the face of stiff competition from new hotels.
Chris Rudisill, corporate director of sales for Hospitality Ventures Management Group, said “travel managers were a lot tougher this year” in terms of pushback on rates and wanting reductions.
Add in competition from new and sometimes unexpected sources and it can be tough to grow rates, the panel participants said.
“There are a lot of really nice hotels opening everywhere now,” Handy said. “You have to hold on to your market share when there’s seven new products down the street.”
Phill Burgess, VP of sales and revenue management for John Q Hammons Hotels & Resorts, said marketers need to be aware of competitive hotels in their markets that may not have been competitors before but are now, thanks to the changing nature of group business.
“Seventy percent of our (group) business is now 30 rooms or less,” he said, in hotels equipped for much larger groups. “Down the street, a (smaller full-service hotel) is going in, and they have only 2,000 square feet of meeting space that’s in four breakout rooms. … All of a sudden, you lose meeting share when you used to not lose group share to those guys.”