Hoteliers discuss best practices to combat a trend toward smaller and shorter meetings.
REPORT FROM THE U.S.—As the economy inches back, meeting planners reportedly are aiming for shorter and smaller meetings, and many hoteliers said they are either adapting or developing strategies to combat the losses in revenue.
At the Westin Boston Waterfront, GM David Connor said holiday parties in 2012 were smaller than in the past and not nearly as elaborate. The hotel hosted more receptions and less traditional sit-down dinners, he said.
“Guarantees are very low and we’re even seeing that with guestroom needs,” he said. “The number of room blocks is shrinking.”
While the Sheraton Downtown Denver Hotel hosted plenty of large meetings in 2012, the hotel’s GM said his team has needed to implement techniques to extend meeting length and increase revenue.
One technique GM Chuck Schuringa said his team uses is encouraging meeting planners to open up rates on shoulder days in order to persuade attendees to parlay leisure trips on the beginning or end of business trips.
It also works best with larger groups, he said.
“When we have a need period and have the availability we will open up the rate offered for their meetings,” he said.
Connor said booking windows are shrinking as well on the group side, which requires hotel staffs to be faster on their feet. Similar to the trend with transient customers, he said meeting planners realize the downturn led to increased availability and think they can get a deal if they wait later.
“That’s very, very tough from an operations standpoint,” Connor said. “You’re going to see the pendulum swing back. 2012 was an enormous year and 2013 will hold stable. 2014 will be off the charts.
“If you’re a planner who thinks you can get a smoking deal by waiting you’re not going to find anything.”
In TravelClick’s top three markets—Chicago; Washington, D.C.; and New York—the data confirms what hoteliers have suggested: group length of stay shrank in two of those three markets toward the end of 2012.
Looking at group length of stay for October and November 2012 compared to those same months in 2011, group length of stay decreased 6% in Washington to an average of 2.33 nights; decreased 2% in Chicago to an average of 2.58 nights; and increased 20% to 2.4 nights in New York.
“Part of the reason for the decline in occupancy outlook for Chicago and Washington may be attributed to the decline in length of stay,” said Taylor McGrann, a spokeswoman for TravelClick.
However, group occupancy is beginning to rebound after dips in late 2012, according to recent TravelClick data. When looking at Q4 2012 through Q3 2013, group demand has bounced back from being flat to up 2.2% year over year.
Smaller and shorter meetings make for operational challenges, the hoteliers said. Not every group comes in for four or five days at a time.
Because of shortened meetings, the hotel squeezes more meetings into a shorter window.
At the Sheraton in Denver, it’s typical to have 800 departures and 800 arrivals on the same day.
“But we have effective plans in place,” Schuringa said. “We secure a meeting room where we offer beverages and snacks for people that aren’t able to check in. We hold on to their luggage.”
To combat losses in revenue due to shorter meetings, Schruringa suggested making it up in other areas, such as in food and beverage.
“Groups with reduced nights want to wow their attendees with F&B,” he said. “Those costs come at a premium. We can offer upgraded receptions and/or plated meals. Those things make a difference to a meeting planner’s attendees.”
Hoteliers can require minimum spend on F&B, but those budgets have been shrinking as well, Connor said.
“We also try to be creative with the planner on how to best use the budget they have, rather than simply discounting our menus,” he said. “We prefer to design a special menu than offer a straight discount.
“We also contract attrition charges if the F&B comes in lower than anticipated,” Connor continued. “When facing this situation, we will work with planner to increase breaks, etc., in order to minimize the amount of attrition needed.”
Revenue manage meetings
Just as effective revenue management increases profits on the transient side, today’s GMs are revenue managing their meetings business as well.
Schuringa said the Sheraton Denver’s sales team “can really maximize the space we offer our customers to where we can book other business directly after a meeting ends.”
“This can also provide a challenge but has been very effective,” he said. “It’s a combination of being able to up sell to those meeting planners and focused on fitting those holes that can open up.”
Connor said one way to combat less revenue from shortening and downsizing events is to ensure the hotel is not giving all of its space to groups that aren’t staying overnight.
“Groups are guaranteeing less and less guestrooms,” he said. “If you’ve given your ballroom up for a 50-room group, I’m going to forgo that for a 500-room group. Unless you’re calling me for this weekend, you’re not going to get that space.”
Connor also suggested hoteliers can restrict arrival and departure patterns just like an airline does. For example, if a 50-room group wants to come in on a Tuesday and Wednesday night (popular group nights) they’ll either pay a premium rate or the business will go to a larger group.
“We revenue manage every potential piece of business that comes across our desk,” Connor said.