News for the Hospitality Executive
Current Environment Is the Best Meetings
Buying Opportunity in 20 Years
Hotels Are Under Pressure to Do Whatever They Can to Produce Some Results
SCOTTSDALE, Ariz. (Feb. 20, 2009) – After months of researching internal databases and talking to customers, hotel investment professionals, hotel management and sales teams and industry professional groups, William Kilburg, Hospitality Performance Network (HPN) Chief Executive Officer says he believes the current environment is the best meetings buying opportunity in 20 years.
“We haven’t seen an industry buying opportunity like this since the late 80’s,” said Kilburg. “I’m calling it a “generational” buying opportunity; if you weren’t in the market in 1989 you’ve never seen anything close to this. Hotels are under massive pressure to do whatever they can to produce some results for 2009. If you’re planning a meeting or conference anytime in the next four years, the time to book is now. During the next six months, there are going to be significant discounts and deals.”
Hotels are proactively reducing rates and terms to fight the current
economic environment, maintain occupancy and avoid staff reductions, which
is creating tremendous value and opportunities for associations or companies
who want to place meetings in the coming years.
Those companies should heed Warren Buffett’s advice and “be greedy when others are fearful”. Planners that commit during this window can show results for their organizations for years to come, says Kilburg, a former CFO.
The effect of governmental pressure has added great scrutiny to meetings that selected certain market segments and geographic areas. Everyone is familiar with the AIG effect and Wells Fargo Bank being forced to cancel their top sales producer meeting in Las Vegas due to societal pressure.
“As high end hotels get hit with this stigma, they are starting a discount war to stay alive,” said Kilburg. “The industry is getting aggressive about pushing back and lobbying to correct this. Changes are coming and the industry will benefit but this will take time and meeting planners who act now can obtain deals like there haven’t been for 20 years.”
The economic downturn is hitting hotel owners hard. More and more hotels are experiencing foreclosures and bankruptcies, which means ownership is putting massive pressure on hotel management and they are going to do whatever it takes to close deals for much needed revenue.
Kilburg says, “I used to be that owner. When times are tough, you push management hard to do whatever it takes to get deals done and maintain market share.” Hotel managers are feeling the pressure to produce by hotel owners, so again expect to see large discounts and deals at most franchises, independents and especially luxury brands.
“The window of opportunity is now,” said Kilburg. “Most hotels will be doing 2010 budgeting in September-October 2009, and I believe they have written off 2009 performance already. As the government’s stimulus package takes effect, we’ll start to see the fire sale slow down. This is an opportunity to book meetings and help keep the wheels in motion while the industry is recovering from the downturn.”
Hospitality Performance Network
|Also See:||‘AIG Effect’ - Companies Cutting, Scaling Back Meetings to Appear Financially Responsible in Hard Times / Sandi Cain / January 2009|