While group business has been largely flat lately in the hotel industry, experts say it’s still important to the success at many hotels and hoteliers can be doing more to capture it.
NASHVILLE, Tennessee—Overall group business numbers for the hotel industry are not inspiring, according to a panel of experts who spoke at the recent Hotel Data Conference.
But the group segment is still important, and it’s possible for hoteliers to still make the most of the demand available, according to panelists speaking during the “Keeping pace with group business” session.
1. Prospects growing, at least in the short term
Don Urbahn, VP of sales and revenue management for New Castle Hotels & Resorts, said he’s recently noticed an increase in prospects for group business. But upon digging into why there’s a sudden increase in interest, he said the boost has been driven by short-term interests and isn’t sustainable.
“What we discovered is this is kind of an offshoot result in commission rate changes (to third-party intermediaries from brands),” he said. “The four major brands are still in the window where you can book and get the full commission, so some sales teams are trying to book sooner rather than later.”
Jason Areng, VP of sales and revenue for Expotel Hospitality, said this phenomenon has many planners “trying to book way outside the normal booking window.”
“They’re trying to lock in every commission,” he said. “We’ll enjoy it in the short term, but in the long term we’ll pay a price.”
2. Focusing on group can defy trends
David Shenman, director of sales and marketing for Lotte New York Palace, said group is still a huge focus at his property, despite the difficult macroview of the segment, and it continues to be key in New York City.
“We work hard to make it a relevant part of our business mix,” he said. “In New York City, costs rise 4% annually whether you want them to or not, so we have to think holistically about how we run our property and business. That includes remembering that the highest (average daily rate) might not be the most profitable ADR.”
Shenman, who described himself as “a group guy at heart,” said his hotel makes roughly $50 million in group revenue annually.
He said due to a shortage of meetings space in New York City, his team has managed to double the amount of group business on property in the last several years even as overall trends stagnate.
3. Sales and revenue management lack synergy
Areng said revenue managers and people selling group business often aren’t on the same page, largely because they have different perspectives. He said it’s not uncommon for a salesperson to come in with a potential piece of group business only to be shot down by a revenue manager who claims they can find better rates elsewhere, but Areng warned there are more factors revenue managers need to consider.
“You have to put a good case together (for the revenue manager),” he said. “You can talk about things like ancillary revenue or the potential for a two-year deal. You have to put terms together that make sense.”
He said the rationale for small groups often comes down to more long-term thinking than just focused on the rate you can capture in the near term.
“You have to ask, ‘Does it make sense to forgo this business and a relationship for short-term gain to capture an extra $5 in rate?’” Areng said.
4. Online channels are growing
In every other segment of the hotel industry, online bookings are now completely ubiquitous, but the unique nature of group business has kept that from seeing the same level of proliferation. That seems to be changing as of late, as online tools are becoming more responsive to both planner and hotel needs.
Brian Berry, SVP of sales and data analytics for Cvent, said historically the industry has not invested in online tools in the group space. He said some brand websites are “absolutely awful” in that regard.
“Some have a tab on the top that says ‘meetings’ or a little form to fill out, but as an industry, we’ve not invested in the resources and attention to make the experience as good (as the experience for) the leisure traveler,” he said.
Shenman said better online tools play a key role in future success in the space for both sides of the equation.
“It’s incredibly important that people provide all the tools to understand (what a hotel provides),” he said. “Because everybody is overworked. … If you don’t provide that information, they’ll skip right over you.”
Areng said growing third parties in that space will be vital because planners “don’t have time to go to 10 different websites to fill out (a request for proposal).”
5. Responsiveness is key
One of the key advantages of evolving online tools is a higher degree of responsiveness from hotel sales representatives to planners, and Berry said that can be the top determiner of success in winning group business.
“Responding quickly and thoroughly was always important, but it’s 10 times more important in the online space,” he said. “A quicker response will increase the likelihood of winning business, and the data shows that.”