Shorter group booking window has trickle-down effect
 
Shorter group booking window has trickle-down effect
24 JUNE 2019 7:06 AM

As booking windows shrink for groups, hoteliers continue to revenue-manage rates around occupancy, but they are being flexible in the options and concessions they offer for close-in reservations.

REPORT FROM THE U.S.—The pace of distribution has sped up, in part due to advancements in online bookings, and in this fast-paced world, expectations have shifted for groups looking to book meetings and events at hotels.

“The booking window for groups is decreasing, as many group bookings are being done in a shorter timeline than historically,” said David Sangree, president of Hotel & Leisure Advisors, based in Cleveland.

One factor behind that shorter booking window is that some companies are hosting meetings off-site from the hotel and are only looking to book guestrooms, rather than meeting space, which they might have sought to book further out, he said.

This trend is adding pressure to the negotiations between meeting planners and hoteliers.

Planners are looking for more, often with less lead time, for their groups. In return, hotel revenue managers often have the power to demand more in room rates, but how much power still depends at least somewhat on how full the hotel is.

“(Hotels) try to accommodate those groups that are wanting to book further out with better rates and amenities. Shorter booking groups tend to get higher rates, unless a hotel is needing to fill a gap,” Sangree said.

But the give-and-take between hoteliers and meeting planners is more complex than that.

Wider effects
While hoteliers in some markets are raising rates when accommodating shorter booking windows, others focus more on competitive pricing, Sangree said.

In a second-tier market, when occupancy is less than 70%, hotels often are willing to drop their rates to attract large and small groups to fill in their business, he said.

Justin McCabe, regional director of revenue management at Davidson Hotels & Resorts, said revenue-managing around a shorter group booking window has implications beyond just the group business side.

“The shrinking booking window has a trickle-down effect, not only on transient pricing and availability, but also on local catering events,” he said. “With a stronger likelihood of receiving short-term inquiries for groups requiring space, many of our hotels have adjusted space availability releases for local catering events.”

Most branded and independent hotels are operating on sophisticated revenue-management platforms, which rely on a base forecast of group and contract crew to determine remaining transient rooms available to sell, McCabe said.

With the shorter group booking window, it is becoming harder to predict what rooms are actually available to sell to transient or leisure guests, he said.

Joe Gardner, director of revenue management/managed hotels for Radisson Hotel Group, said approximately 50% of group bookings come within a 90-day window to arrival.

“To allow the hotel to yield rates properly within the transient segments, it is imperative to extend the group booking window and secure base business outside of 90 days to arrival,” he said. “To accomplish this, we have taken a more competitive stance in offering realistic group rates rather than aspirational rates to secure the bookings further out.”

Give and take
Despite giving less lead time on bookings, groups still are asking hotels for extras, and properties that want this business have to weigh the cost of those extras against the potential revenue.

Where hoteliers can give, and often do, is in food-and-beverage discounts, room upgrades and lower contracted F&B minimums, McCabe said.

If hoteliers know the trends in their market, they can adjust revenue-management strategies and charge accordingly for meetings booked closer in, even those less than two weeks out from arrival, said Marissa Maguire, GM of both the 150-room AC Hotel and the 150-room Residence Inn, which are co-located in the same building at Frisco Station in North Dallas.

For smaller groups, the booking window has become shorter over the last three to five years, she noted.

“If I don’t have as much business at my hotel at a certain time, I could be more aggressive and have a lower rate. But, if a group books and we have lots of business, we would be able to drive the rate up,” said Maguire, whose property is opening in July.

But it can be harder in general for groups to get the rates and room types they want with last-minute bookings, she added.

With the data that can be collected by online distribution channels about guests, including groups, it is easier to know what they may want and to be more specific on what the hotel can offer them up front, said Frank Bewley, RAR Hospitality’s director of revenue optimization.

“Revenue management is different now; it is getting a lot more specific,” he said.

Ken Chane, area director of revenue at both the 189-room Kimpton Hotel Monaco Seattle and 125-room Kimpton Hotel Vintage Seattle, said the booking window for groups is “strange” right now.

Many of the larger hotels are being extremely competitive with rate, making bookings farther out. However, there also seems to be an increase of last-minute group business that is shopping around because of the great deals they can get now, he said. This seems to mostly benefit larger hotels with more inventory, he added.

“We have responded by making sure we are putting our best price forward and leveraging existing relationships,” Chane said.

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