September 18, 2019

Hoteliers Adapt to Shift in Size of Group Meetings

Hoteliers are seeing a change in group meeting trends, such as a rise in smaller groups. Although large groups aren't going away, hoteliers are looking at ways to adapt to the shift.

There's a shift happening now in group meeting trends, and hoteliers are adapting their properties and strategies to support the evolving landscape.

One shift that hoteliers are noticing is smaller groups are becoming more popular. But when the smaller groups go to smaller hotels with more limited meeting space, hoteliers must be more creative.

"It's still a multibillion dollar industry, mega groups aren’t going away, (but) they are shrinking in size no doubt," said Agnelo Fernandes, chief strategy officer and EVP of Terranea Resort, on a panel titled "The evolution of group business is happening now!" at the Hotel Data Conference.

He said he's starting to see a trend where general sessions at conferences aren't as mandatory anymore and they are shrinking; however, conferences are holding multiple general sessions, which causes a few constraints with space.

Fernandes said that groups are still looking for experiences and he's noticing more boutique hotels are taking smaller groups off site to converted warehouse spaces, for example.

Amy Brodrick, VP of sales and marketing at Chartwell Hospitality, said some of her company's select-service hotels have had to adapt and cater to smaller groups. For example, Chartwell has built some Courtyards and Hilton Garden Inns with a little more meeting space than usual to fit those specific groups.

Brodrick and Fernandes said the booking window is also starting to shrink.

Liz Uber, VP of asset management at BRE Hotels and Resorts, said some of her newer select-service hotels are also being built to include a lot more meeting space, such as with their Courtyards and Sheratons. Those properties are competing more with the full-service hotels, she added.

Spending smart, driving rates

To stay competitive, hoteliers also need to get smart with selling. Fernandes said it's about going back to the basics of selling. Staff need to ask meeting planners the right questions and understand what the client is looking for.

He said knowing where to find high-margin business is key, along with profiling different streams of revenue. For example, he knows that if guests are offered a premium bottle of wine, they will pay for it, but a typical house wine should be complimentary. The company also offers a discount at the bar for groups, he said.

He said the importance of group has never been as high as it is now, and Terranea has a 40% to 50% group base. In the past, the focus has always been about driving transient, but now his outlook has changed to also looking at revenue per occupied group room, he said.

Uber said her company has started to approach group business very differently, and as markets change and new supply comes in, BRE is taking more group business and acting more assertive on negotiating rates, parking and more.

From a select-service perspective, a lot of big revenue comes from groups, so it's about trying to "get the biggest piece of business on the books, especially if it's a great pattern - Monday through Thursday or Monday through Friday - we are definitely taking a look at that closer now than we ever have in the past," she said.

OTAs, commission rates

Brodrick wants to be good partners for the brands in her portfolio and is staying focused on that 7% commission, and the brands respect the fact they stick to those guidelines.

"Does it mean that someone's not still going to try to get a higher commission? No," she said. "...But, again, we really want to maintain that relationship with the brands, so we want to follow those guidelines. I think for between our select service and full-service hotels ... our select service hotels tend to panic a bit more when they (get pushback)."

She said the full-service hotels are a bit better at holding their ground when there is pushback about commission rates.

Uber said BRE follows the brands' 7% commission rate. She's seen more group business come through "commissionable people versus direct."

She believes some companies are consolidating the amount of staff who book meetings and it's easier for them to outsource it to a third-party meeting company or hotel planner.

"Although we are following the 7%, we are paying more commissions because we're getting more groups through the commissionable (people)," she said.

Fernandes said he sees more pressure from online travel agencies than he would like to admit, but that's just the nature of today's landscape.

A couple of years ago, Terranea created a customer journey map, which he said was critical for better understanding the distribution landscape. He said he understands the relevance of having partners to support Terranea.

He said his team can get about 80% of business direct but everything else comes through a third party.

"It's important to know that ... you have that power, reputation, that brand recognition in the marketplace that people trust you so much that they come straight to you," he said.

To maintain a relationship with the OTAs and third parties, Fernandes said sales and revenue teams at hotels need to tread lightly. Those relationships can make or break a meeting booking.

"The most successful (salespeople) know how to balance their emotions on both sides ... sales is still, last I heard, the oxygen to any business," he said. "You pick the people that are relationship driven, that know how to tread lightly, know how to balance things out."

Next big thing in group business

Panelists were asked what they see as being the next trends in group business. Here were their takeaways.

  • Brodrick: "Pushing group up. I think we’re going to need more of it."

  • Fernandes: "I would suggest you think experiential, sustainability, cost related (and) maximizing revenue ... by square foot."

  • Uber: "I think our select-service groups are going to have to step it up and they're going to need some of those experiences in their back pocket. ...We're going to have to figure out how to compete with the big boys."

Copyright 2019 STR, Inc. All rights reserved. From By Dana Miller.

To view all articles, check out the Internet Travel Monitor Archive

Play Video