2016 promises to be exciting with the Summer Olympics in Rio, and the Presidential Race in our living rooms (and in our pockets) from now until next November. Meetings and events are also back in the news with a changing landscape that includes increased group business and a shift in control from the meeting owner to the hotel supplier. Carlson Wagonlit Travel (CWT) just released their fourth annual 2016 Meetings and Events Forecast revealing an exciting future for the meetings and events industry in 2016.
I'll share some of the highlights here with you, and with my planner savvy, will include some advice on how to make the shift toward the hospitality side of the business more of a collaboration with your planner. Don't rest on predictions and your past bookings.
Advertise a hotel that is ready to work with the planner in 2016 for your most successful group business year in recent history.
The Year of the Seller's Market
The tide is shifting from a buyer's market (the result of the recession) back to a seller's market in 2016 with the demand for hotel sleeping rooms and meeting space exceeding supply.
The result is that hotels are showing less mercy:
- Hotels will be less flexible with contract clauses that relate to cancelation and attrition. Planners are losing the options to rebook for future dates without penalty or to resell unneeded rooms to offset meeting costs.
- The traditional 20-25% offers will move closer to 10-15%.
- Hotels will not be as generous holding space, even for loyal customers. Planners will pressure organization decision-makers to reach resolution so venues in high demand are available for booking.
ADVICE: Though 2016 marks a significant shift to the seller, remember that the market can change at anytime (2007 was not that long ago). Don't tie up rooms for organizations without contract protection but do offer as much flexibility as you can.
Hotel Occupancy On the Rise
Organizations will host more meetings in 2016 which, again, puts high demand on hotel sleeping rooms and meeting space. Statistics show that the hospitality industry is "under construction" because of the high demand. The CWT forecast compares June 2014 to June 2015 in the U.S. and reports an increase of 11.1% for rooms under contract. The top three markets for most rooms:
- New York City, New York
- Houston, Texas
- Dallas, Texas
CWT predicts that the 2016 U.S. lodging occupancy is expected to reach 65.7%, the highest level since 1981! Great news for the meetings and events industry.
ADVICE: Reevaluate your pricing model with the high demand but also make sure to include hot dates and hot rates to get hotel group business from planners who gave you good business during the recession but may not be able to manage a contract with you in their budgets with your new pricing.
F&B Drives Pricing
CWT reports that the price of booking a meeting at a hotel increased by 4% in North America. The cost per group guest will increase by 4.5% driven mostly by F&B costs. Planners, regardless of budget, are increasing the demand from hotels for locally grown, sustainable and organic F&B, keeping in mind healthful alternatives for guests.
ADVICE: Proudly present well thought out menus with your new pricing to planners. If the budget is just too tight for your planner, have a creative, budget-friendly alternative menu that you can keep in your back pocket.
Lead Times Are Still Shrinking
The recession trend of shortening lead times for the organizations seems to be sticking around for at least a while and perhaps is something that will stay with the industry for some time. So what's a hotel to do with those short lead times that will continue into 2016? Records of your hotel's past booking history and research like the CWT Meetings and Events Forecast are imperative in booking hotel group business for you in the coming year.
ADVICE: Apply the same strategic guidelines to all business, whether the lead time is short or long. Protect your space and revenue but be flexible with trusted and loyal planners. Short lead times can help you to fill space that may lie vacant otherwise!
Create your 2016 strategic business and marketing plan with these four trends in mind as we look toward a hope-filled, exciting future as shared by CWT. Collaborate with planners, booking hotel group business for what promises to be a fantastic upswing in the meetings and events industry!
Written by Sherry Cummins.