I recently read an article in Smart Meetings Magazine that reaffirmed something I have been noticing for a while. Hotel occupancy is up, and as a result, so are prices.
Reported in 2013, the hotel industry showed gains in all three of its performance metrics which measure success against hotel occupancy and changes in Adjusted Daily Rate (ADR). Last year in the U.S., hotel occupancy rose 1.5 percent to 1.1 billion room nights sold, the average ADR rose 3.9 percent to $110.35, and there were no decreases in ADR reported.
Overall, hotels are doing well and are continuing this trend into 2014. For planners, however, a high-performing hotel industry means challenges ahead.
Consider the RFP process, for example. Think about an RFP you sent out in 2013 or 2014. Did many of your top hotel choices not have your preferred weeks available – even if you bid a year out? Did the room rate shock your client into a budget-cutting panic? Did the hotel request a quick response to hold you at first-option? These are challenges that are not uncommon, but until recently, they were few and far between.
From a planner’s perspective, this upward trend in the hotel industry can only lead to one thing: tougher negotiations on behalf of our clients and companies. We all know our clients and their executives want to beat the rate they had last year or the year before; but now with the hotel industry doing so well, it’s becoming nearly impossible to achieve. We are being pushed to rethink our strategies and operate in ways we haven’t considered before.
So, what can we do to help our clients navigate this upwardly-mobile industry?
- First off, it’s all about the planning. Get ahead of the game and be strategic. If you typically don’t start your RFP process until months in advance of your event, back it up and start sooner. This will open up your options tremendously. BUT, make sure you have a plan in place and fully understand your client’s needs. The objective is to get them the best deal.
- Consider exploring properties that aren’t in the top 25 markets. If your client is looking for rates that match what they’ve seen in the past, go outside major cities or to cities that have a lot to offer, but frequently get overlooked. Have a local CVB or DMC help you find some great options.
- Make sure you get creative with your negotiations. There are often out-of-the-box solutions that will achieve your clients’ goals while meeting the hotels requirements. Remember to make it a win-win for all!
- Have a frank conversation with your client or executives. Help them understand what’s happening in the industry and set realistic expectations. This will help you all move forward on the same page so you don’t waste anyone’s time with solutions that won’t work.
- Lastly, be prepared to act! If you want the space, put pen to paper as soon as you can, because as we’ve seen… it won’t be around for long. At least not in the near future.
No matter how we choose to approach this situation, we can all agree that we must ensure the clients’ needs are met.
While this surge in hotel economics has its challenges, it also brings something positive – companies are hosting meetings again! So – for now – we all still have jobs.
Smart Meetings Magazine, Economic Momentum for Hotel Occupancy. March 2014
Cited stats: Smith Travel Research, str.com; and PricewaterhouseCoopers, pwc.com
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