Deep into the fourth year of rising hotel room rates, planners charged with price-sensitive SMERF (Social, Military, Educational, Religious, and Fraternal) meetings are facing some of the industry’s toughest challenges. However, many are finding relief from high rates by looking to second-tier cities and other receptive destinations.
Ironically, SMERF groups have unwittingly helped create the seller’s market. One of the fastest-growing areas of the meetings industry, SMERF business has become a huge market for hotel and meeting space, helping to escalate demand.
While hotels were eagerly courting recession-proof SMERF groups in the slow economic climate of five or six years ago, the situation turned around once corporate business perked up in 2004. With dwindling availability, hotels began hiking rates, especially in the business districts of major cities. Left at the altar, SMERF groups began scrambling for new locales.
Willingness to consider secondary destinations has become the key to success for SMERF meetings, according to Brian Stevens, president and CEO of ConferenceDirect, a Los Angeles-based site selection and meeting planning services company that books 4,000 meetings a year.
Stevens says that SMERF groups should look to such affordable cities as Pittsburgh, Kansas City, St. Louis, Nashville, and Minneapolis, adding that “for cities like New York, Chicago and San Diego, wait until 2010.”
He asserts that plenty of good deals can still be found, and he predicts that the current seller’s market will only last another two years.
Among meeting planning companies looking closely at second-tier locations these days is Talley Management Group, an association and event management company based in Mount Royal, N.J. The company recently selected Chattanooga, Tenn., as the meeting site for a national education group of 2,000 attendees, which normally meets in first-tier cities such as Atlanta and Orlando.
For another large education group, Gregg Talley, CAE, president, says that he’s currently looking at Spokane, Wash., and Sacramento, Calif. In prior years, the group would have chosen a larger city such as Seattle.
“SMERF groups should keep an open mind and explore new destinations,” Talley says. “We continue to look to smaller cities and smaller markets, and have been for a few years now. It’s a great opportunity for these cities.”
Fraternal Meetings
Also employing new strategies is Indianapolis-based Fraternity Executives Association, which represents 84 fraternity and sorority member organizations whose annual meetings require anywhere between 40 and 600 hotel rooms. The organizations typically hold annual meetings in summer, while board and regional meetings are held in winter, spring and fall.
Sidney Dunn, the association’s administrator, says 60 percent to 70 percent of those attending annual meetings are students, and that the threshold for room rates, which until recently averaged $100 to $110, is now being pushed up to $125 or $130.
“There’s less flexibility for members in negotiating contracts even with flexible dates,” he says. “Higher room rates make it difficult for them to go to Boston or New York. Fraternities, and especially sororities, have been drawn to the South—Florida, Texas and New Orleans—where summer rates are better.”
There has also been a trend, he adds, for member organizations to sign two- or three-year contracts with hotel chains such as Marriott, Hilton, Hyatt, and Starwood, rotating to different destinations. This strategy allows groups to book properties its members might not have otherwise been able to afford.
Military Reunions
Armed Forces Reunions Inc., based in Norfolk, Va., books more than 30,000 room nights a year for military reunions nationwide. The average group size is about 150 people, although a few are over 1,000.
The majority are annual reunions that meet from April to October, according to Molly Dey, the company’s director of operations.
“It’s a tough market,” she notes. “Not only have room rates increased, but also motorcoach rates have increased and so have fuel surcharges. We’re telling groups to be flexible with dates, if they can, and to book only up to two years out.”
Dey adds that explaining escalating hotel rates to groups is a big challenge, especially when it comes to popular destinations.
“Most don’t want to go into the triple digits. They want room rates in the $90 to $99 range,” she says. “They are always interested in San Diego, but room rates there have gone through the roof. Washington, D.C. is always hot but it’s also a challenge to get the rate. Nashville is a good draw, and Norfolk is always popular.”
While World War II reunion numbers have been dwindling, Dey notes that increasing numbers of Vietnam veterans, once reluctant to meet, are holding reunions. Interest from veterans of the Gulf War is also getting stronger, she adds.
The 202-room Chattanoogan, a Benchmark Hospitality-managed hotel in downtown Chattanooga, Tenn., has seen an increase in its military reunion business.
“Part of the reason is that the Chattanooga CVB has concentrated on this market,” says Kris Reagan, the property’s director of sales and marketing. He notes that World II veterans are combining units for reunions.
“Reunions come in on a Thursday, and bring families who stay over the weekend. Tuesdays and Wednesdays are our peak corporate nights, so it’s ideal,” she says.
The hotel, which has several restaurants, a spa and a 26,000-square-foot, IACC-certified conference center, is adjacent to the Chattanooga Convention Center. It is also within walking distance of museums and the waterfront in a downtown that has been revitalized in recent years.
Reagan adds that having Civil War battle sites, such as Lookout Mountain, close to downtown, and having room rates averaging $20 below those in Atlanta, 90 minutes away, helps in selling reunions.
Religious Meetings
For religious groups, times are tough for those seeking reasonable hotel room rates, according to DeWayne Woodring, CMP, CEM, executive director of the Religious Conference Management Association (RCMA).
Due to heightened security measures, another challenge is getting delegates from abroad to attend religious conferences, he says.
However, he describes the economic impact that religious groups have on destinations as “staggering.”
The latest survey of RCMA members shows religious meetings have grown by 195 percent over the last decade. Attendance last year—14.7 million people at 16,716 meetings—was up 13.6 percent from 12.9 million in 2005.
Woodring lists the advantages of hosting religious groups: They are recession proof, they often meet during low season, they are usually flexible with dates, and they tend to hold lengthy events that can run up to 14 days.
“Also, often a religious conference planner will ask what services the group can donate to the community and will schedule full days of charitable works while in the city,” he says.
Woodring adds that cities who host RCMA’s annual convention benefit by getting more business from religious groups.
Among those cities is Tampa, Fla. Norwood Smith, vice president of sales at the Tampa Bay CVB, says that Tampa has booked 175,000 room nights—groups of 100 to 15,000 booking one to five years out—as a direct result of holding the RCMA conference in 2002.
Over the last year, he says, the CVB has added three members to its sales staff that are dedicated to the SMERF and sports meetings markets. The city’s largest group ever, the Shriners International Convention with 20,000 attendees, was held over the 4th of July holiday last year.
“You have to take a long-term view for a well-balanced business. It takes all shapes and sizes of groups for a destination to be successful. The wonderful thing about SMERF is that they run the gamut of shape and size and can fix a problem in the current year,” Smith says.
He adds that with hotel occupancies flat across the country, and RevPAR (revenue per available room) growth dwindling in this current cycle, “we need to go back and look at the occupancy side of things.”
Some destinations that have recently developed meeting and convention facilities are heavily dependent on SMERF groups.
Gwinnett County, Ga., has the Gwinnett Center, 30 miles from downtown Atlanta, in Duluth, Ga., with about 400 hotel rooms within walking distance. In 2002, it added a 21,600-square-foot ballroom, and in 2003, a 13,000-seat arena to the facility, which also has a 700-seat performing arts center, a 50,000-square-foot exhibit hall, and 22 meeting rooms.
This October it will host a youth leadership conference of 11,000 people. This summer will bring a Jehovah’s Witnesses event for 25,000 people—5,000 people at a time over five weekends.
Lisa Anders, the Gwinnett CVB’s marketing communications director, says the expanded center has been far more successful than was forecast due in no small part to SMERF groups.
“We have a limited number of hotel rooms nearby, which makes it difficult to compete for national conventions, but religious groups drive in and there are lots of choices for inexpensive hotel rooms,” she says.
Education Meetings
“We’re definitely seeing an increase in demand from universities for space for educational meetings, but rates have increased and price does matter,” says Jody Wallace, president and CEO of Brielle, N.J.-based EMCVenues.
Many groups, she says, are looking more at suburban and airport hotels. “They are also looking at day conference centers, which are a good value and are perfect for educational meetings. We need more of them,” she says.
A site selection and meetings solutions company, EMCVenues specializes in small to mid-size meetings, mainly in the range of 100 to 150 participants, and lists 350 conference centers, hotels and resorts in moderate to upscale categories on its website.
Wallace says that there is also increased demand for educational meetings from government sources and that the corporate meetings market continues to be strong.
The 374-room Doral Arrowwood Conference Resort is one property that has seen the educational market grow. Located at Rye Brook in Westchester County, N.Y., 40 minutes from New York City, it offers golf, a spa and 30,000 square feet of IACC-certified meeting space.
“We’ve been seeing growth in the education market with lots of weekend business when rates tend to be lower. We’ve been getting lots of calls this year. We get some fraternal business but not as much,” says Celia Gerundo, sales manager at the resort.
