the Same Number of Meetings, But Receive More Revenue
|by Robert Mandelbaum, January 2007
For several quarters now, PKF Hospitality Research (PKF-HR) has observed that the U.S. lodging industry is approaching a peak in the long-term business cycle. At the peak, hotel occupancy levels either stabilize, or decline slightly. Concurrently, management strives to aggressively increase room rates. The net result is fewer occupied rooms, but more revenue.
Looking to 2007, hotel managers can expect a similar outcome in the conventions market. Based on a recent survey conducted by PKF-HR and Convention South magazine, 64.6 percent of meeting planners expect the number of meetings they organize in 2007 will be comparable to the 2006 level. An even greater number (86.1 percent) believe the number of exhibitions year over year will remain the same.
However, the attendance at these events should be greater, as well as
the total dollars spent by the sponsoring organization. Because of
the combination of more attendees and rising prices, a majority of planners
(51.2 percent) plan on spending more to stage their events in 2007 compared
Percent of Meeting Planners
PKF-HR, in conjunction with Convention South magazine, surveyed a total of 131 meeting planners. Although the survey focused on meetings held within the southern region, the sample of respondents consisted of planners located throughout the nation. Association meeting planners comprised 46.6 percent of the survey sample, followed by corporate planners (19.8 percent). The remaining respondents were evenly divided among government/non-profit, independent, and other meeting organizers.
While increased expenditures are virtually inevitable, 63.4 percent
of the planners did state they were feeling some degree of pressure to
control their event budgets. For those planners being asked to cut
costs, the areas of focus for reduction are off-site events (36.6 percent),
food and beverage (32.1 percent), and audio-visual (24.4 percent).
Conceding that the pendulum of negotiating leverage clearly favors hotel
sales managers, only 21.4 percent of the planners looked to trim guestroom
rates, while 17.6 percent have attempted to reduce the cost of meeting
Percent of Meeting Planners
The inability to negotiate hotel room rates frustrates meeting planners.
When asked to rate the importance of nine criteria when selecting a meeting
site, the price of hotel rooms tied with the number of available hotel
rooms as the second most important site selection criteria. The size
of available meeting space was ranked as the most important factor determining
the location of an event.
Selecting a Meeting Site
Scale: 1 = Unimportant, 2 = Somewhat Important, 3 = Very Important
Productive and Happy Attendees
Typically, the plannerís role when organizing a meeting is to achieve the stated goals of the event within a given budget. This may, or may not, be consistent with the expectations of the attendees.
The planners in our survey were asked to rate the importance of 13 on-site
hotel amenities to meeting attendees. The offering of restaurants
and lounges within the confines of the property was rated by 86.3 percent
of the planners as an important amenity for attendees. Delegates
may want a night on the town, but theyíd prefer to do most of their eating
and drinking within the hotel.
Percent of Meeting Planners
While attendees want to enjoy their time away from home or their business, they also want to remain productive. Second on the list of most important hotel amenities was access to a business center (73.3 percent). Meeting planners recognize the desire of attendees to be both productive and happy. Therefore, the availability of guest room and meeting room technology (i.e. wi-fi, high-speed internet access, video conferencing, high-tech entertainment) was consistently rated as an important hotel feature.
Remaining healthy is another important feature for meeting attendees. The only other on- site amenities rated by more than half of the planners as being important to their attendees were swimming pools and fitness facilities. While downtown full-service and convention hotels were the favored lodging facilities for 32.1 percent of the respondents, resort hotels were rated as the preferred type of hotel by 24.0 percent of the planners. This is yet another indication of the desire to blend recreation and enjoyment with business and learning.
Yield Meeting Management
While short and near-term market conditions certainly favor hotel sales managers, donít expect meeting planners to be totally submissive. Expect some groups to move to secondary destinations, while others will cut event activities.
Operating at the peak of the business cycle allows hotel operators to be more selective in the groups they decide to accommodate. A few less events can be offset by increases in attendance and prices. However, being a cyclical industry, lodging operators must be aware that meeting planners will remember the current tough negotiating stance when the next industry recession occurs.
Robert Mandelbaum is the Director of Research Information Services for PKF Hospitality Research. Special thanks to Kristen McIntosh, vice president and editor of Convention South, for sponsoring the survey. This article was published in the December 2006 edition of Lodging magazine.
|Also See:||Stability Returns to the Meetings Market / Robert Mandelbaum / January 2006|
|The Evolving Relationship Between Hotel Sales Managers and Meeting Planners / What's in the Minds of Meeting Planners Today? / Robert Mandelbaum / January 2004|