Google “hotel trends 2019” or something similar and what will come up is pages and pages of information on event experience, engaging an audience, marketing to millennials, or driving attendance. What does NOT come up is all the ways hotels are looking to maximize their profitability through contract negotiations and how that impacts the meeting host or end user.
Supply of rooms is increasing in sync with room demand; leaving occupancy flat in 2019 and average rates are up just below expectations at 1%. Hotels are looking for other opportunities to grow revenue and maximize profits.
Driving F&B Spend: If you have sent out an RFP to multiple destinations or even several hotels in one destination, you have seen how widely the F&B minimum can vary. That is because some hotels calculate F&B spend as a per-person, per-day spend. Other hotels will have an F&B minimum assigned to specific meeting rooms, based on how many people that room can accommodate. Many times, the salesperson is just entering a number they were given by a revenue manager or supervisor.
AV Spend: Audiovisual costs are skyrocketing. Partially due to individual users having multiple devices, requiring more bandwidth. But AV companies are also bundling services into packages to upsell and create more revenue. My recommendation is to always get a detailed AV quote on the front end, once you have narrowed down a short list of venues. I have seen the same in-house AV provider at different hotels be $10K apart on pricing. In other words, company ABC that is in-house both at Chicago Hotel A and Chicago Hotel B, delivered two different quotes that are $10,000 apart. When possible, you can also save some money with a few pieces of your own equipment, and writing in a clause that AV discount will still be applied if you bring in certain pieces of equipment.
Resort Fees: Marriott is taking advantage of its position in the market by standing firm on resort fees. I attended a Marriott luncheon recently and asked about this topic. The response I got is that there is a strong push from leadership to not waive the resort fee. Not only are they enforcing that added cost, but they are also writing that into the contract as part of the total revenue commitment. Marriott and other hotel companies are trying to sell the value of the resort fee by having it include WiFi and sometimes parking. Although city center hotels will still charge a steep price for overnight parking. City hotels are making their attempt by instituting a daily amenity fee which may include WiFi, a welcome drink, and all the typical inclusions such as a fitness center or daily newspaper. Although we may not be able to waive these added fees, the best strategy is to negotiate what is and is not included, to make sure there is true value being delivered.
Lead Time / Booking Further Out: Hotels are at once preaching to clients to book further out, while often turning away business of a certain size if it’s “too far” out. If a hotel has 500 rooms and your 200 room group comes along looking 2+ years out, a hotel may decide they do not want to commit almost half their inventory to your group. They are hoping a larger group comes along with a higher total revenue contribution, and then they can layer in a smaller group over the large one. It’s all ways to make the puzzle fit perfectly. Maximizing day of week pattern, meeting space allocation, sleeping room inventory, and incremental revenue. While your contract only holds you to sleeping room and food & beverage revenue, the hotel is anticipating that your attendees will also spend money in other outlets.
To learn more about how I can help you with any of the above and more, please contact me at JShkolnik@HPNGlobal.com
Vice President, Global Accounts at HPN Global
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