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July 5, 2009

MUTUAL BENEFIT:What hotels can do to help the meetings industry

The booking patterns for people involved in meetings, incentive travel, conferences and events have changed significantly due to the global recession, according to Great Hotels Organisation (GHO), and hotels need to do all they can to help. Ian Whiteling discovers exactly what that involves.

Hotels are a key part of the meetings and events industry, with a growing number of properties providing a venue as well as accommodation for delegates and organisers. An important player in this field is Great Hotels Organisation (GHO), the London-based hotel marketing company, which provides a dedicated sales desk for meetings, incentive travel, conferences and other events for its member hotels.

GHO has noticed a number of interesting trends in the meetings and events industry this year that relate directly to the downturn, and is recommending hotels change their strategies in response, for the benefit of themselves, as well as organisers and delegates.

Key meetings trends
It will come as no surprise that booking lead times are down for meetings and events, with GHO reporting an average decrease of 21% in May 2009 compared to the same month last year. What’s more, meeting planners are also attempting to cut costs by decreasing their travel times, meeting length and size of meetings.

As budgets are slashed, GHO has noticed that city destinations are increasing in popularity at the expense of resorts. For example, in Europe, the UK (especially London) and France (Paris, in particular) have become more popular for meetings and events, while the Algarve in Portugal and Marbella in Spain are losing out.
GHO puts the fall in average meeting length at 50%, with the average delegate stay in 2009 around 1.5 nights. Meanwhile, the number of delegates attending meetings has dropped by 66%, with the typical group size now down to around 50 people.

Adjusting pricing policies
These trends are unlikely to shock many in the meetings and events industry, although the size of the actual figures themselves might. Furthermore, many dedicated venues have probably noticed similar trends with respect to event sizes. So is there anything that can be done to help organsiers and planners hold bigger and better meetings, and raise hotel and venue revenues in the process? Well, GHO thinks there is.

“Successful revenue management requires accurate forecasting based on historical data,” says Yunna Takeuchi, director of e-distribution at GHO. “But this year does not look like the past few, when hotels were enjoying high average daily rates and high occupancy. Therefore, it’s so important that this year revenue managers are flexible with their pricing strategies, but smart enough not to drop prices too much.

“The booking trends clearly show people are insecure about their finances and are reluctant to pay in advance for bookings. This makes it important for hoteliers to adapt their pricing strategies in accordance to guest booking patterns. This makes flexibility key. Flexible cancellation policies to encourage advance bookings, flexibility in length of stay restrictions, flexible release dates on allocated inventory, and the flexibility to offer last-minute deals are all strategies that should be considered.”

Maintaining service levels
This flexibility is revealed in some of the strategies GHO has brought in this year, to help relieve the huge pressure companies are facing with respect to budgets. However, it’s vital that service levels are maintained at all cost.

“This year, we started to sell a new lower-price range of rooms in order to attract clients who are more price sensitive. But we also believe that quality and excellence in service is key to our sales strategy,” says Borja Martinez Junquera, rooms division manager at the Insotel Fenicia Prestige hotel in Ibiza, Spain. 

“Price is not the only aspect to drive bookings,” he stresses, “but we want to offer value for money to all our clients.”

Addressing needs of organisers
More last-minute deals, added-value packages and promotions should be available, as opposed to previously popular early-booking discounts, which will prove ineffective at a time of short lead times.

A variety of differentiated and targeted rates should also be offered, according to GHO, as opposed to slashing prices across the board, which may unsettle organisers by throwing the perceived quality of the venue or hotel into question.

Cross selling existing facilities can also help delegates save money, while keeping revenue in the hotel. For example, giving people an incentive to use spa or restaurant facilities rather than having look elsewhere could benefit all parties.

Encouraging loyalty
GHO also believes that loyalty programmes need to be reassessed and adjusted in order to meet changing demands. The rules of rewards and redemption should be clear and precise. Hotels and venues should examine customer profiles with the aim of creating personalised packages or bundles for their most clients. Such customer relationship building will be appreciated, and pay further dividends once the global economy recovers – which is now widely believed to be during 2010.

During the economic downturn, the success of a hotel is determined by effective crisis management and the ability to adopt short-term pricing strategies and improvements. This will help to relieve the pressure on meetings and events organisers and planners, and will help to cement this key and growing relationship, so that it can blossom further once the economic skies brighten.

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