Matching Group Size With Seasonal Needs, Meeting Space Is Key
As leisure demand normalizes, group business big and small plays an increasingly important role in filling out hotel occupancy and driving revenue.
Not all group demand is equal, however. As social and corporate groups seek out hotel space for events, hoteliers navigate bringing in the business while also maximizing profitability.
During the "Revenge of the Group" session at the 2023 Hotel Data Conference, hoteliers and hotel sales experts discussed how they're working with groups and meeting planners to get the most desirable business on the books.
When Amaury Piedra started at the managing director of the Caribe Royale Orlando more than three years ago, the property’s guest mix was about 35% group and 65% transient, he said. Property leaders decided to flip that mix. While the pandemic stymied that effort in 2020, the resort started getting bookings in 2021 for the following year. By May 2021, there was a push for group bookings in 2023. By early to mid-2022, there was a spike in request for proposals.
Meeting planners were initially trepidatious, but being flexible helped secure those contracts, Piedra said. Group business is coming back, and they are starting to book further ahead. Many of these bookings coming in are rebookings from prior reservations.
“We really started seeing the trend of,’ OK, we’re going to come out of this,’” he said. “There’s pent-up demand. We still need to have face-to-face meetings.”
Though demand has since tapered slightly, the Caribe Royale Orlando is still setting record year-over-year group room nights, he said. The goal is to be close to 200,000 room nights next year.
The Thompson Nashville has a large group base for a small hotel, said Lisa Bush, director of marketing and sales at the hotel. The roughly 20,000 group room nights the hotel sells each year make up about 30% of its guest mix. The smaller groups, such as sports, entertainment and luxury consortia, have helped the hotel reach its goals.
As a smaller hotel, there’s limited space for groups, so it has to be strategic with the size of the groups and the size of the spaces booked for them, Bush said.
“If we can be flexible with the client, we will, and we’ll allow them to have a larger space closer in,” she said. “A 75, 100 [person] group is our wheelhouse. A 30-person group that wants our ballroom is not ideal, so we have to set guidelines and show them the way we can make it work in a smaller room.”
When compared to 2019, 14 of the top 25 markets have recovered to 2019 levels, said Patricia Shea, senior vice president of sales and customer success for Knowland. Those that haven’t yet are seeing double-digit growth in 2022 and 2023. In terms of volume, the longer events are recovering stronger. The two- to three-day events are up about 15% of the share while the four- to six-day events are up about 40% compared to 2019. The one-night events are still down about 8%.
On one hand, that’s great news because hoteliers want longer group bookings, Shea said. However, there’s been some siphoning off of the one-day catering events that are critical to evening out the week. Non-traditional, lifestyle venues have been picking up some of that business.
Corporate groups are the top in terms of revenue and profitability, Piedra said. The second-most profitable are the associations followed by the social, military, educational, religious and fraternal group segment.
“To be successful, you have to work with all the segments,” he said. “It just depends on the timing of when you’re working with them.”
Most hoteliers know their peak season, shoulder seasons and off-season, Piedra said. It’s a matter of working with a group to find the right time of year in the right space. That may mean telling an association that wants to book in February when corporate demand is booking that timing might not work.
“It’s about working with the groups and really laying them out appropriately and to maximize all the different segments because, at the end, it takes all the segments year-round to really make it work,” he said.
Bush said she takes a similar approach, evaluating each piece of business that comes in on a daily basis.
“You never know where it’s going to fit for you, and you could have a hole and you just have to evaluate each business,” she said.
That has changed somewhat because of the pandemic, Bush said. There may be some business hoteliers considered in 2019 that today they might not have a place to put it.
“I think you just should have a better eye on your business coming in the door now,” she said.
Grouping up is core to every hotel’s strategy, especially midweek with the decline in business travel and corporate group, said Richard Jones, senior vice president and chief operating officer for Hospitality Ventures Management Group. His company has been selective in the groups it has taken in as they have to be profitable.
Room nights and occupancy make up 60% of its growth over 2019 while 40% of that is rate, he said. While that’s great, it’s also barely keeping up with inflation.
It’s important to have discipline around pricing and not giving away space or ancillary services, Jones said.
The patterns of business travel and its volume have changed, so the business evaluation parameters have changed, he said.
“We’re taking group with open arms, but we are doing our best to be disciplined and make sure that the price and the contribution that it makes is a big part of our profitability strategy,” he said.
When booking large events, meeting planners are looking for new, fun experiences for their clients, Piedra said. They want to get people out of the meeting room, to have outdoor meals with a theme and put on customized parties.
The Caribe Royale Orlando will start with a site inspection and let meeting planners know they can do things differently with the space, he said. His resort has turned its reception building into a nightclub with different themes throughout the space. One group wanted a tailgate party, so the resort turned a portion of its parking lot into a football tailgate bar.
“It’s getting people out of the room and into something different that’s memorable,” he said. “How do we make it memorable for the attendees? That’s really the customization that seems to be going on right now.”
The lifetime meeting planners are still out there, but more recently and particularly with smaller events, there are meeting planners with no experience in planning meetings or contracting with a hotel, Shea said. That requires hotel sales teams to spend a lot of their time essentially training them on how to do business.
“It takes away a lot on the sales side of being able to go out and look for business that’s really going to fill in periods and be the most profitable because they’re spending so much time hand-holding customers,” she said. “It’ll be interesting as more and more direct bookings and being able to book small groups online comes in.”
Jones said HVMG has been experiencing that situation with meeting planners. Its big focus at the moment is response time and being able to be that adviser and problem-solver.
A hotel might receive a call from someone who was directed by their boss to plan a meeting and it’s the last thing they have time to handle, he said. The response strategy is to let the client know the hotel team is there to help.
One of HVMG’s bigger group and convention hotels did a good job redeploying and re-segmenting its leads, making sure the right sales associates were paired with the right leads and inquiries, Jones said. Companywide, the strategy is having a faster response time because the latest statistic shows the first to respond to a request has a 70% greater chance of winning the business.
“If you can answer that call on the first ring and you’re live and you can say, ‘I can solve your problem,’ you can overcome rate objections, you can shift perhaps arriving on Thursday to arriving on Wednesday and help your pattern out,” Jones said.
The hotels that do this best and most consistently are the ones that are going to win, he said. It builds a relationship with someone by being the one to take this off their plate and solve their problems.
Copyright 2023 CoStar Group. All rights reserved. From https://www.costar.com. By Bryan Wroten, Hotel News Now.