Attendance at Orange County conventions is expected to top 1 million for the first time since 1994 this year and leisure business is healthy, if not robust. But full-service hotels are still feeling a bit of a pinch from lower-than-projected visitor counts and cutbacks in corporate business travel that is the mainstay of most hotels� weekday business.

That fall-off has caused hoteliers to search for new business with promotions that range from discounted rates and weekend packages to the pursuit of new market segments and waiving of some fees in. Web sites bulge with special deals and meeting planners have been deluged with direct mail from every conceivable source across the country.

�I�ve never seen so many open dates (for meetings),� said Tim Brown, managing partner of Irvine-based Meetings Site Resources. �It�s a good time for deal-making.� 

In other words, it�s a buyer�s market�something that hasn�t been seen in this industry since the early �90s. 

And that could be good news for OC companies looking to hold meetings closer to home as their meetings budgets shrink. 

Hoteliers contacted for this story consistently used the phrase �very aggressive� in discussing sales efforts geared to future bookings. Many mentioned the high-flying pharmaceutical industry as a potential source for future meetings, but there was barely a murmur about the technology sector.
For some, aggressive marketing payed off.

Michael Consuelo, group and convention sales director at the Disneyland Resort for Disney�s three Anaheim hotels, called local business a �high percentage� of the resort�s group bookings. �We�ve booked a lot of local corporate meetings in a short-term booking period,� he said. 

Overall Orange County hotel occupancy is up 2.2% as of June 30 this year. But like executives everywhere, hotel managers are under pressure to meet budgets set last year in a more robust economy. Some sales budgets have not been met in this year�s business climate, despite generally healthy leisure business.

�The hotel industry is in a revenue tailspin,� said Michael Branigan, vice president of Wise Hotel Investments in Corona del Mar.

PKF Consulting�s Hospitality Research Group in Atlanta predicted the average hotel operating profit will drop from 10% in 2000 to 5.6% in 2001. And PricewaterhouseCoopers, which accurately foresaw a nationwide downturn in 2001 as far back as 1997, expects revenue per available room�a profitability benchmark in the hotel industry--to drop this year for the first time since the recession of 1991. 

But this time around, industry pundits say hotels are better positioned to weather the storm because they are not as heavily leveraged as they were a decade ago. But painful memories of the early �90s�particularly in Southern California�mean that hoteliers are still willing to do what it takes to get travelers in the doors.

In some cases, that means reassessing extra fees.

Hilton Hotels Corp. earlier this month announced that energy surcharges, begun last spring when energy costs sky-rocketed, will be eliminated as of September 1. Others, like Costa Mesa�s Westin South Coast Plaza, have reduced the charge to $1 from $2.50 per night. 

The Hospitality Research Group found that every 5% increase in energy costs means a 0.5% reduction in hotel profits. But though energy charges became increasingly common in recent months, they also were a hindrance to meetings business. Consulting firm Deloitte & Touche made trade press headlines this summer when the firm said it would not sign a group contract at any hotel where energy charges were imposed.

Corporate cutbacks also have meant that people who still travel on business might have to stay at lower-cost hotels, or fly coach instead of business class. And that takes a toll on higher-end hotels.

�We may benefit from companies looking at lodging with lower rates, especially for training meetings,� said Sheryl Spickler, director of sales at the recently remodeled Holiday Inn Costa Mesa. She said the hotel has dropped its rates �a little� due to increasing competition and is turning to the local market to fill in open dates.

New markets, too, are important to keep occupancies high.

At the Disneyland Resort, where the new Grand Californian began targeting the pharmaceutical sector last year, Consuelo said a sales person now is assigned exclusively to that industry to keep tabs on trends and solicit future business.

�We�re just trying to stay visible,� he said.

Overall, Consuelo said the three Disney properties have surpassed their goals with the meetings market this year, and fall dates are �filling up nicely.�
 

Ed Karlan, director of sales at the Hilton Anaheim�the Southland�s largest hotel that draws heavy convention business�said he is looking to the association and professional organization market where meetings business remains strong to bolster 2002 business that so far looks to be flat compared to 2001.

The 1,572 room Hilton Anaheim  located  adjacent to the Anaheim  Convention Center

�We�ll be flexible on group pricing if the group is flexible on its dates,� said director of sales Bill Allison. 

In South County, hotels are facing increased competition from the new St. Regis Resort (see story page 22). One of those is the Ritz-Carlton Laguna Niguel, where director of marketing George Munz admitted business has been lower than forecast. 

�We rely on repeat business,� he said, �and go to great lengths to create that. Group, leisure, meetings, business travel � all the pieces have to work together,� he said. �We just want to remind people we�re here.�
Meanwhile, at the Four Seasons in Newport Beach, director of marketing Carrie Olson said the hotel isn�t doing anything special to recruit more groups.

�The word from the top is to do business as usual,� she said. �We�ve been through this (kind of economy) before.�

Olson said the key is to be creative with clients who face cutbacks. For instance, if a group can�t meet its promised number of rooms, she works with them to see if they can create the same amount of revenue by using other services�a spa visit, an included breakfast, a gift basket�rather than assess penalty fees.

With increased competition for business, even hotels that aren�t open yet are pounding the pavement. 

The new Doubletree Santa Ana isn�t scheduled to open until January, but director of sales Pira Martinez said she already has been contacting local area businesses, with a particular eye to financial clients and the executive market that hasn�t had a full-service hotel in Santa Ana for many years.

�They�re hungry for this kind of product,� she said.

In Garden Grove, just a mile from the convention center, competition will heat up even more when the Embassy Suites opens in November and the expansion of the Hyatt Regency Orange County is complete at year�s end. 

The Embassy will add a 10,000-square-foot ballroom to the area�s mix of meeting space, plus an atrium and outdoor pool terrace where catered events can be held.

Director of Sales Kelley Baker said group bookings have been brisk, with quite a few calls from local businesses, upcoming convention groups and even from people seeking space for weddings.

The Hyatt will boost its space to about 60,000 square feet when the expansion is done by year�s end. Director of sales Kathy Williams said hotel bookings are ahead of pace and next year looks �promising.�
 

Sandi Cain is copy editor and a staff reporter covering hospitality,tourism, travel and sports. Cain holds bachelor�s and master�s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late �70s. She enjoys travel, gardening, reading and spoiling her three cats.