Is today’s buyer’s market, which is translating into good deals in top-tier cities that were once turning business away, having an impact on site choices? Should groups who normally meet in second-tier cities seize the change to move on up?
“It’s now more conceivable to meet in first-tier cities than it was—especially if groups will work in putting the meeting into a period of opportunity,” says hospitality industry analyst Bruce Baltin, vice president of PKF Consulting in Los Angeles. “Hotels are not slicing room rates indiscriminately, as they’ve learned their lesson in what happened in 2001 and 2002 when rates fell so far that it was hard to recover. But they are willing to make deals to fill periods of need.”
Helping create need periods in many major cities, which tend to be heavily dependent on business travel, is a sizable drop in transient business travel, he adds. At the same time, he notes that Las Vegas, which has seen a fall-off in leisure business, is currently one of the best places to shop around for good hotel rates.
“Because Vegas has so many revenue sources, they can afford to be more flexible with hotel rates than other cities,” he says.
Sara Herzberg, national account executive for Concepts Worldwide, a San Diego-based meeting planning firm, is among planners who are amazed by the deals being offered by first-and second-tier cities alike.
“We’re hearing from a lot of places who want our business—there’s a sense of desperation,” she says. “There’s less of a price difference between cities, a situation that favors the first-tier. We’ve seen quotes from a five-star property in San Francisco for $165, which is unheard of.”
At the same time, Herzberg says site decisions are often most influenced by accessibility and airfares, which would seem to favor the major airline hubs, but not always.
“You can’t make assumptions,” she says. “We recently priced the costs of flying into Atlanta versus Jacksonville [Fla.], and we found Jacksonville to be less expensive.”
With most of the current booking incentives being offering by CVBs and hotels aimed at short-term business, is there even any reason for associations and others who plan far in advance to alter their site choices?
MaryAnne Bobrow, a Citrus Heights, Calif.-based independent planner with association clients, says today’s economic climate is also providing opportunities for meetings that are booked long-term. However, she is proceeding with caution.
“Suppliers are also looking at booking long-term business, and so there are advantages now for associations as well,” she says. “But it has to be a win-win. I would not want to get a good deal and then live in fear that my business could be dumped at the last minute once it turns back into a seller’s market. We know some cities do this.”
In general, association and trade show planners are unlikely to alter their site choices because hotel rates in various cities are suddenly more affordable, says Doug Ducate, president and CEO of the Center for Exhibition Industry Research in Dallas. He believes a city’s airlift and overall infrastructure are much bigger factors.
“If you’re an association planner booking five to seven years out, you’re sitting and analyzing the airlift situation and trying to figure out what the viable destinations will be if the shrinkage continues,” he says. “The safe harbor is to stick to the destinations where you’re confident there will still be air service.”
Likewise, Ducate observes that planners are skittish about choosing cities where a promised convention center or headquarters hotel is not yet up and running.
“In today’s economic climate, there’s a lot less trust that the hotel or convention center will get built,” he says. “Planners want to see steel coming up out of the ground—not just the ceremonial turning of dirt.”
