The Great Migration: Groups Show Shifting Booking Patterns Toward Smaller Markets and Chain Scales

/The Great Migration: Groups Show Shifting Booking Patterns Toward Smaller Markets and Chain Scales

The Great Migration: Groups Show Shifting Booking Patterns Toward Smaller Markets and Chain Scales

|2017-08-28T13:25:55+00:00August 28th, 2017|

A Mid-Year Trend Review

by Katherine Leiden

2017 has so far been a record-high year for occupancy and ADR. Rising rates and tighter availability in many large markets are causing some meeting planners’ destination selections to shift away from cost-intensive options. Those planners who don’t consider alternative dates to stay in a particular market are seeking availability or rate relief by favoring smaller cities and, in some instances, changing the chain scale in which they book their groups.

STR reported that ADR was up 2.2% in Q2 2017 over Q2 2016. Occupancy and RevPAR were also up .5% and 2.7%, respectively, for the same time period. Among the markets highlighted in STR’s report were Seattle and Norfolk/Virginia Beach, both of which saw more than a 9% increase in RevPAR. Though overall group performance was down in Q2 2017, many second-tier markets are showing similar patterns as hotels in smaller markets absorb group business from larger, more expensive cities.

In a recent study, Knowland confirmed these destination shifts by analyzing the top corporate groups and the markets in which they met. The dataset included groups that held more than 50 meetings from 2015 to 2017 in any US market. 48.1% of these groups held more of their meetings in markets outside the top 40 (as per STR market rankings) than in top-40 markets in Q1/Q2 2017 compared to Q1/Q2 2015. 35.6% of these groups had an increase of 5% or more of their total meetings held in smaller markets over top-40 markets.

Many top corporate organizations, such as major beverage and technology companies, have shown increases around 30% as far as the number of events held in non-top-40 markets in 2017 over 2015. The corporate organizations showing the greatest increases held nearly 70% of their meetings in smaller markets in 2017, up from less than 40% in 2015.

Corporate Organizations in the US, Percentage of Total Events in Non-Top-40 Markets

% of Events in Non-Top-40 Markets

% Change/Increase YOY

Company A

2015

37.9%

31.3%

2017

69.2%

Company B

2015

31.6%

30.5%

2017

62.1%

Company C

2015

40.6%

29.4%

2017

70.0%

Company D

2015

25.0%

28.9%

2017

53.9%

Overall, the top corporate sub-segments driving the shift from top-40 markets to smaller markets showed as much as a 6.82% increase in percentage of total meetings held in non-top-40 markets. Tobacco, arts/entertainment, and online retail were the sub-segments that showed the greatest amount of movement toward smaller markets.

Top Sub-Segments with Top-40 to Non-Top-40 Market Movement

% of Meetings in Non-Top-40 Markets

Sub-Segment

2015

2017

2015 to 2017 Change

Tobacco

31.3%

38.1%

6.8%

Art/Entertainment

32.7%

37.9%

5.2%

Online Retailer

19.3%

24.2%

4.9%

Conglomerate

26.3%

30.2%

3.9%

Sports Entertainment/Media

33.7%

36.7%

3.1%

Consumer Goods

33.9%

36.8%

2.8%

Aerospace

24.9%

27.5%

2.6%

Consulting

24.3%

25.7%

1.4%

Food/Beverage

32.4%

33.8%

1.4%

Construction

30.1%

31.4%

1.2%

For all sub-segments nationwide, the markets outside the top 40 that showed the most growth in the percentage of events from 2015 to 2017 in Q1 and Q2 included Newark, New Orleans, West Palm Beach-Boca Raton, Albuquerque, Nashville, and Charleston.

Because planner booking patterns indicate shifts toward smaller chain scale hotels as well as smaller markets, the Knowland study focused on group activity in a sample of hotels to provide data to support this trend. Because the southeast United States has a high concentration of Hilton Garden Inns and Hyatt Places, Knowland targeted this market to sample the movement of group activity. The groups in the dataset included top corporate groups that met in the southeast US and held 10 or more meetings in Q1 and Q2 of both 2015 and 2017. 24.9% of these groups had an increase in the percentage of total events they held in Hilton Garden Inns and/or Hyatt Places compared to any other brand. Furthermore, 13.5% of these groups had a 5% or larger increase in the percentage of meetings they had at Hilton Garden Inns and/or Hyatt Places.

Among all corporate groups in the southeast US, there was a .5% increase in the percentage of meetings that were held at a Hilton Garden Inn and/or Hyatt Place, representing 3.4% of the corporate market in 2017 compared to 2.9% in 2015. The corporate sub-segments showing the largest shift to Hilton Garden Inns and/or Hyatt Places included online retail, direct selling, and tobacco.

Top Sub-Segments with More Meetings at a Hilton Garden Inn or Hyatt Place in the SE US, Q1/Q2 Only

Sub-Segment

% of 2015 Meetings in a HGI or HP

% of 2017 Meetings in a HGI or HP

2015 to 2017 Change

Online Retailer

0.0%

7.7%

7.7%

Direct Selling

3.74%

8.95%

5.2%

Conglomerate

2.1%

7.3%

5.1%

Tobacco

5.4%

9.3%

3.9%

Agriculture

1.9%

5.5%

3.5%

Packing/Shipping

1.5%

4.9%

3.5%

Construction

2.5%

5.4%

2.9%

Retail

3.7%

6.3%

2.6%

Oil/Gas

1.6%

4.1%

2.4%

Accounting

0.2%

2.4%

2.2%

Whether observing trends in chain scales or destinations, group data provides clear evidence of meetings and events shifting from larger destinations and higher chain scales toward smaller destinations and chain scales. As long as ADRs remain high and availability constrained in top-tier markets, planners will likely continue to search for alternatives among these lower-tier markets and chain scales. Hotel sales teams can take advantage of patterns revealed by big data to strategically target group sub-segments and reconsider areas such as deployment to help catch new opportunities as planners seek new destinations and venues.

About Katherine Leiden

Katherine Leiden is the Marketing Manager at Knowland. Starting her hospitality career as a part-time cowgirl, Katherine worked at a Four-Diamond resort and dude ranch in Colorado. She then took her experience to a role as a travel and vacation package writer and editor in Washington, DC, where she worked closely with digital marketing and marketing optimization for small businesses.

Katherine joined the Knowland team in 2015, bringing her combined hospitality and marketing skills. She oversees daily operations behind the voice and image of the company as Knowland grows and progresses as an industry leader in hospitality technology. 

Contact: Katherine Leiden

kleiden@knowland.com/571-429-5739

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