According to Cvent’s latest Group Business Outlook, fewer group rooms have been booked for six of the next eight quarters — a slowdown that may be due to the start of commission change policies and other seasonal factors.
The outlook uses data from the Cvent Supplier Network, which saw $16 billion in unique RFPs sourced in 2018. Based on this large volume of sourced business, the CSN data can provide a good indication of the pace of group business in the U.S. The report shows that awarded group business is expected to increase only in Q3 and Q4 of 2019, by 1.5% and 0.8%, respectively.
Looking further ahead, the 2020 group bookings forecast is down as much as 3%. Q2 of 2019 could be suffering because Easter comes later this year, while uncertainty surrounding Brexit, trade wars, and budgeting may be hurting bookings overall.
Looking ahead to the group bookings forecast
It’s not all bad: There’s some growth quarter to quarter
While the data show a downward trend, the numbers indicate that there has been some improvement in bookings since last quarter, as well as a flurry of RFP activity at the end of 2018. In fact, the number of group RFPs awarded on the Cvent platform — for all future dates — rose 17% when compared with Q4 of 2017.
“As we move through the first half of 2019, it will be interesting to see whether the strong end to last year’s RFP activity will continue to drive momentum, or if the increase in activity was merely a blip on the radar due to external factors, including commission change policies that will go into effect this year,” says Jeffrey Emenecker, Cvent’s senior director of analytics.
The commission changes are certainly on planners’ minds. In American Express’ “2019 Global Meetings and Events Forecast,” 68% of surveyed planners cited lower commission rates as the biggest impact of hotel mergers and consolidation, vs. only 14% last year. That concern may have spurred planners to award more business at the end of the year, before the cuts go into effect. Because many companies pay for meetings through commissions, this shift has also affected budgets.
According to the Amex report, North American planners predict that their event budgets won’t keep pace with the rising meeting costs and hotel rates.
Event duration and room block size also decreasing
Other statistics seeing a slight decline in Cvent’s Group Business Outlook include the average size of group hotel blocks (213.7 rooms, down 3% from 2017) and the average event duration (3.3 days, down 1.8% from 2017). Budget concerns may be to blame for shorter meetings. Planners surveyed for the Amex report said their top strategy for controlling costs is reducing the length of the event — and, therefore, the total number of room nights.
Insights from group business outlook can inform marketing and sales
Hotels can use the insights from the quarterly Group Business Outlook to benchmark their own performance against that of the industry, as well as gain perspective that can be used to adjust their group business strategies. Particularly as the demand is weakening and supply is growing, group marketing and sales tactics will prove to be very important. Download this quarter’s Group Business Outlook to get the latest information about future meetings activity and make the most of your marketing strategies. Still not sure what it all means? Watch our webinar to see how Emenecker breaks down the numbers and trends.