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Groups and Meetings � the Next
Frontier in Online Booking
This article is from the Summer 2007 issue of Hospitality Upgrade magazine.To view more articles covering technology for the hospitality industry please visit the Hospitality Upgrade Web site or to request a free publication please call (678) 802-5307 or e-mail.
By John Burns 

In January 2007 PhoCusWright Inc. released Groups and Meetings: Market Opportunity Redefined.  Authored by Dr. Daniel Connolly, with assistance from Dr. Bill Carroll and Susan Steinbrink, this report delivers a well-researched, timely and thought-provoking analysis of the groups and meetings marketplace.

Two core questions drove this research were how big is the groups and meetings marketplace and at what pace is this business moving online.  In addressing these questions the authors have provided an estimate of the magnitude of group-related activity within travel�including within the hotel industry�and a valuable summation of the opportunities (and impediments) to achieving widespread online booking services for meeting organizers.

In conducting the research, the PhoCusWright team attempted what they termed a 360-degree perspective.  The team interviewed meeting organizers, representatives of intermediaries, supplier executives and members of various professional meeting planner organizations.  In looking at the online booking of meetings and groups the team sought to determine and document what is working, what is not, the important trends and likely developments.

The report begins by presenting metrics to describe the size and growth pattern of the meetings market.  Copious statistics are provided, all showing continued growth of a marketplace that is already substantial in size.  According to PhoCusWright, the total U.S. groups and meetings market (which includes air, hotel, car rental and other ground transportation, tour, cruise, meeting rooms, food and beverage and audiovisual equipment rental) generated $158 billion in 2005 and is projected to grow to $175 billion by 2008. 

The authors then examine and estimate the size of sub-segments within this market�a market dominated by a combination of leisure group business and corporate group and meetings business.  Addressing lodging activity in the leisure sector specifically, the authors report $14.4 billion in expenditures in 2005 and project an increase to $18.1 billion in 2008.

One of the far-reaching observations offered is the importance of small-size gatherings and group travel activity (in comparison to large-scale meetings) in the leisure sector.  The authors report that while 42 percent of all leisure group business was generated from groups involving 20 or more rooms, 58 percent of all activity was generated by group bookings for parties of 19 or fewer rooms. 

Examining these group activity statistics leads to one of the most interesting proposals put forward in this report: that the travel industry should reconsider its basic definition of a group.  Typically, the travel industry classifies groups as bookings for 10 (or sometimes 15) rooms, depending on the nature of the travel services being supplied. 

PhoCusWright disruptively challenges this traditional thinking by suggesting that the marketplace is only appropriately understood and tapped when the definition is recalibrated to define a group as two or more households traveling on an overnight journey.  Applying this definition, 35 percent of leisure group business is provided by groups of nine rooms or under, while 23 percent is provided by groups occupying 10 to 19 rooms.

Turning to the corporate meetings and group sector, PhoCusWright pegs the total value of activity in 2005 at $73.4 billion, growing to $75.8 billion in 2008.  The report identifies the corporate segment as the largest area of online booking activity in comparison to other groups and meetings sectors, and predicts it will generate nearly $24 billion in online transactions in 2008, which equates to a 60 percent penetration rate.

PhoCusWright attributes this remarkable extent of online booking penetration to the general adoption of online booking tools within the corporate sector.  That said, the authors remind us that they expect the fastest growth in adoption of online opportunities to come in the leisure segment, where they forecast the proportion of online bookings of group and meeting reservations to grow from 19 percent in 2005 to 28 percent in 2008.

Examining the Market Forces

Equally illuminating as the statistical analysis and market sizing is the identification and examination of what Groups and Meetings: Market Opportunity Redefined calls �market forces�.  Dr. Connolly and his colleagues ask why the meetings and groups market has not moved online more quickly and why one might reasonably expect it to do so now.  Not unexpectedly, the theme of technology, both in terms of the constraints of current systems and of the promise of emerging systems, surfaces repeatedly.  Integration of the entire supply chain, they suggest, must be achieved if activity is to be moved substantially online. 

The authors go to some length to document the shortcomings of current systems to centralize inventory � especially that beyond rooms inventory such as meeting space, food and beverage services, etc.�the challenges of applying revenue management principles to the pricing for those services, and the difficulties inherent in making them available in a user friendly manner on Web sites.

To their credit, they also remind the reader of the non-technical issues, including the myriad of factors involved in evaluating potential group business reservation to determine its importance, revenue potential and profitability.  They point out the concerns at both ends of the booking process�on the part of buyers who are worried that automated options will not accommodate their specific and sometimes complex requirements, and equally on the part of suppliers who worry that they will not develop a full and accurate picture of the potential booking.  Further, they suggest that suppliers in general do not feel pressured to move into the online world � a lack of motivation, they suggest, that may have unfortunate ramifications in coming years.

While noting the general inertia among suppliers with respect to bringing groups and meetings bookings online, the PhoCusWright team takes time to recognize the initial steps made by some suppliers.  In the hotel sector, the report highlights initiatives such as Hilton�s e-Events program and Starwood�s Meetings in a Moment, as well as a specialized variation � Marriott�s Joy � Your Dream Wedding event and planning service and weddings portal.

If suppliers are not going to fill this gap, who will, the report asks.  The authors then suggest that a wake-up call is sounding for suppliers.  That wake-up call is represented by Internet-based intermediaries who appear poised to enter this field. 

An array of potential participants are identified by Dr. Connolly and his colleagues.  At the front are the online travel agencies who they see as being faced with increased pressure from shareholders to grow and differentiate themselves.  The group and meeting sector, they suggest, is a logical extension of existing booking capabilities, particularly in the managed corporate travel area.  The experience garnered by Expedia, Travelocity and Orbitz could provide them with highly applicable skills and resources.

�In recent years the industry has seen a number of technology developments to support the shopping and booking process for meetings and groups,� the report states.  It describes the growth of companies like StarCite (recently merged with OnVantage) and Passkey for tasks like destination selection, itinerary planning, housing and group reservations processing.  It also identifies new entrants such as Groople and Group Travel Planet, which, they propose, are looking to carve out their niches, while sites like MeetUp and TripHub are attempting to capitalize on Travel 2.0 trends by creating communities to promote and facilitate group travel.

In this report PhoCusWright correctly suggests that �the key challenge and opportunity are for one or more companies to merge and integrate the entire supply chain and various technologies supporting each phase of the in group lifecycle.�  The goal they describe: �to provide friction free, end-to-end e-commerce.� 

This report pulls no punches in describing how difficult meeting this objective will be.  At the same time it makes the rewards awaiting the organizations who achieve this objective abundantly clear.  The stakes are high, the opportunities great, and Groups and Meetings: Market Opportunity Redefined brings them into clear focus.

John Burns is the president of Hospitality Technology Consulting. He can be reached for comment at [email protected] or by phone at (480)661-6797.
 

© Hospitality Upgrade, 2007. No reproduction or transmission without written permission.

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Geneva Rinehart 
Managing Editor 
Hospitality Upgrade magazine 
and the Hospitality Upgrade.com website
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Also See: Hospitality Technology Contracts and Pitfalls / Raymond M. Asad / June 2007
The Online Metrics Handbook for Travel Marketers / by Cindy Estis Green for TIA and HSMAI / March 2007
Future Proofing Your Property / by John Burns / March 2007
Ask Not For Whom the Wedding Bell Tolls / Mergers and Acquisitions - Good for the Hospitality Industry? / Michael Schubach / March 2007
Hello, Front Desk? I Think I've Been Robbed!/ Nick Price / February 2007
The Personal Data Privacy & Security Act� Is Your Hotel Ready? / Rick Warner / October 2006
Hospitality Loyalty Programs; Strategies for Points-based, Recognition-based Programs / Mark Haley / October 2006
How Fast Do You Want to Go? Understanding the risks and costs with technology implementation and getting there too fast/ Ed Klein / October 2006
What's New in the Hotel Guestroom? Digital, HD or IP Televisions / Ashok Kumar / June 2006
A Future Vision for Hotel Revenue Management / Caryl Helsel and Kathleen Cullen / June 2006
Marketing to the Next Generation of Buyers; Scoring Your Hotel Reservations System / Debra Kristopson / June 2006
Consortia-Corporate-Group Best Available Rate (BAR): Good or Bad for Hotels? / Caryl Helsel / October 2005
Check In Kiosks: Coming to a Hotel Lobby Near You? / Jerry W. Sheldon / October 2005
Moving into Compliance Mode; Realizing the Benefits, Cutting the Costs / Dorian Cougias / March 2005
What Hoteliers Need to Know About Flat Panel and HDTVs / Jake Buckstead / March 2005
10 Trends Affecting Hospitality IT in 2005 / Bradford Iverson / March 2005
Searching for Bookings? Optimize / Dr. Matthew Dunn / August 2004
Instant Messaging: Age Is Everything - Expectations of Immediacy, Productivy and the Rise of IM / Elizabeth L. Ivey / August 2004
Baby It's Cold Outside the Firewall / Michael Schubach / April 2004
High Wired: The Hotel Room of the Future / Kelly Stanford / April 2004
We're Not In Kansas Anymore; Differentiating your hotel through technology / Mark Haley / January 2004
Understanding the Power of Customer Relationship Management / Neil Holm / Hospitality Upgrade Magazine / November 2003
The Case for Self Service in Hospitality / Marvin Erdly and Amitava Chatterjee / Hospitality Upgrade Magazine / October 2003
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Surf's Up - Internet Marketing for Destination Properties / Marvin Erdly and Amitava Chatterjee / Debra Kristopson / Hospitality Upgrade Magazine / October 2003
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Tradeshows & Economic Soldiers / Dan Phillips / Hospitality Upgrade Magazine / April 2003
Hotel Telecommunications in the 21st Century / Geoff Griswold / Hospitality Upgrade Magazine / March 2003
The ABCs of CRM  / Mark Haley & Bill Watson / Hospitality Upgrade Magazine / March 2003
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Attention Hotels - An Ounce of Prevention is Worth a Pound of Cure / Elizabeth Lauer Ivey / Hospitality Upgrade Magazine / May 2002 
HOSTEC - EURHOTEC 2002 - Room for Improvement / Christel Dietzsch / Hospitality Upgrade Magazine / Feb 2002 
Technology and the Human Touch / Dan Phillips / Hospitality Upgrade Magazine / Spring 2002
Wireless Technology:  Where We Have Been, Where Are we Going? / Geneva Rinehart / Hospitality Upgrade Magazine / Spring 2002
Effective Customer Relationship Management (CRM) Implementations / John Schweisberger and Amitava Chatterjee, CHTP / Hospitality Upgrade Magazine / Fall 2001 
What's Up With Call Accounting Systems (CAS) / Dan Phillips / Hospitality Upgrade Magazine / Fall 2001
Technology Dilemmas: What have IT investments done for you lately? / Elizabeth Lauer / Hospitality Upgrade Magazine / Summer 2001
Full Circle from Centralized to ASP - The Resurrection of Old Themes and a Payment Solution / Gary Eng / Hospitality Upgrade Magazine / Summer 2001 
A High Roller in the Game of System Integration / Elizabeth Lauer / Hospitality Upgrade Magazine / Spring 2001 
CAVEAT EMPTOR! Simple Steps to Selecting an E-procurement Solution / Mark Haley / Hospitality Upgrade Magazine / Spring 2001 
Your Bartender is Jessie James and He Needs to Pay for College / Beverly McCay / Hospitality Upgrade Magazine / Fall 2000 
Choosing a Reservation Representation Company / John Burns / Hospitality Upgrade Magazine / Spring 2001 
Understanding and Maximizing a Hotel�s Electronic Distribution Options / by John Burns / Hospitality Upgrade Magazine / Fall 2000 
The Future of Electronic Payments - From Paper to Plastic and Beyond / J. David Oder /  Hospitality Upgrade Magazine / Summer 2000
Timeshare Technology Steps Up / by Elizabeth Lauer / Hospitality Upgrade Magazine / July 2000 
Biometric Payment: The New Age of Currency / by Geneva Rinehart / Hospitality Upgrade Magazine / Mar 2000 


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