With high hotel occupancies and room rates not likely to go away in 2007, neither are the challenges facing meeting planners searching for value destinations. Flexibility on dates and location will continue to be the keys to survival in the months ahead.
Most cities around the country are sharing in the national burst of prosperity that has brought the seller’s market back in full force.
“There is no region of the U.S. that is not enjoying this peak era of high occupancies and room rates,” says consultant Robert Mandelbaum, director of hospitality research for PKF Consulting in Atlanta. “We will be in this peak for a fairly extended time, with hotel managers doing what they can to keep the rates as high as possible.”
Bill Briscoe, chief industry relations officer for the site selection firm HelmsBriscoe, also says that hotels in most cities are in position to drive hard bargains.
“In general we’re back to the late 1990s in terms of how well the hotels are doing,” he says.
According to figures from Smith Travel Research (STR), hotel room rates in major U.S. cities increased by an average of 7 percent last year, following a 5.3 percent increase in 2005. STR also reports that hotel occupancies remained fairly flat in 2006, with Honolulu on top with 83.1 percent, closely followed by New York City at 82.8 percent.
Other major metro areas with high occupancies include Los Angeles/Long Beach at 75.1 percent, San Diego at 73.3 percent, San Francisco at 72.9 percent, Anaheim/Orange County at 72.7 percent, Miami at 70.8 percent, and Seattle at 70.5 percent.
While hotel rates and occupancies are not expected to grow quite as much this year as they did during 2005 and 2006, Mandelbaum says a continued lack of new supply is among the dynamics keeping things rosy for hoteliers.
“Because construction costs are so high, we’re seeing more acquisitions of existing properties rather than new-builds,” he says. “This keeps rates high because little new competition is being created.”
Planner Strategies
So what’s a planner with a limited budget to do? For Jeanne Torbett, president of Superior Media, Meetings & Management in Jacksonville, Fla., who handles primarily state association business, creative strategies are the answer.
“I don’t like to sacrifice location, so I have become more flexible,” she says. “I recently saved $30 on a room rate just by moving the meeting back a week.”
Torbett also searches out hotels that have just opened or are still under construction.
“When hotels are brand new, they are often hungry for business,” she says. “I contacted The Ritz-Carlton, Sarasota when they first opened and got a rate of $155 a night—about half of what they charge now.”
Another tactic she employs is to hold two or more meetings back to back or close together at the same hotel.
“I recently got a really good deal at an upscale resort by booking two groups within two weeks of each other,” she says.
Similarly, Walter Caudle, an independent meeting and event planner based in Columbia, S.C., has found that flexibility works in just about any destination.
“I don’t necessarily avoid the major hotels and venues. You never know—they might have some dates they really need to fill,” he says. “I also find that maintaining strong relationships with certain hotels helps more than ever these days.”
Changing Scene
John Keeling, a hotel analyst with PKF Consulting in Houston, says that it’s important to look at the changing dynamics affecting various cities, meaning that a city that is not a value destination this year could become one next year.
“For example, Austin [Texas], which has fully recovered from the dot-com bust, is a very hot meetings destination right now,” he says. “However, they are adding a lot of new hotel inventory over the next few years and there is some concern over how they will fill rooms in 2010. So if you’re planning a meeting three or four years out, Austin could be a very good deal.”
Conversely, New Orleans, which still offers more negotiating room than many cities because of lingering fallout from Katrina, is likely to become less negotiable in the future.
“In a few years we could see New Orleans hard to get into and Austin easier to get into—a total reversal of the situation,” Keeling says.
Suburban Bargains
For planners who don’t want to pay first-tier rates but still want an accessible location, the answer can sometimes lie just outside a major city. This is the message promoted by the Gwinnett CVB, which represents the city of Duluth, Ga., located about 30 minutes from Atlanta.
“We position ourselves as an affordable and convenient alternative to downtown Atlanta and even some of the suburbs,” says Gwinnett CVB Marketing Communications Director Lisa Anders. “Our average daily rates are $30 to $40 less, and we also offer free parking at our convention center, a savings of $10 to $20 a day in Atlanta.”
According to Anders, a growing number of groups are drawn to Duluth, which focuses primarily on state and regional association business requiring up to 1,200 rooms.
“Our convention center had its best year ever last year,” she says. “We’re seeing more groups come here because rates are getting so high.”
Value Periods
While their rates are higher overall, major cities still offer value periods and most CVBs and hotels will work with planners in searching them out.
“Yes, it’s a seller’s market, but I’ve never seen a city yet that is full 365 days a year,” says Butch Spryidon, president of the Nashville CVB. “If you can be flexible on dates, we’ll provide some real incentives for value.”
In San Antonio, where hotel occupancies and rates are among the highest in Texas, the CVB is working harder than ever to steer planners toward value periods, according to Director of Sales Steve Clanton.
“We know it’s more difficult for people to find affordable rates, so we’ve done more staff training on this,” he says.
In particular, dates on or near holiday periods can provide good value.
“We just had a large state group, one who normally can’t afford to meet here, come in a week after Thanksgiving and take 1,500 nights,” Clanton says. “More groups are willing to do this.”
Jim Wood, president of the Greater Louisville [Ky.] CVB, also notes the trend.
“We’re seeing more conventions choosing holiday periods, even between Christmas and New Year’s,” he says.
Wood also says that planners need to look at more than just hotel rates to determine if a city provides value.
“One thing that makes us a good value is that we have a strong mix of hotels within walking distance of the convention center,” he says. “This saves people time as well as money.”
