When the corporate group market tanked after 9/11, CVBs and meetings hotels sought refuge in the SMERF (social, military, education, religious and fraternal) market. But when the high-paying corporate market bounced back, many SMERF groups found themselvess priced out of first-tier destinations as room rates continued to increase.
Now, of course, the pendulum has swung back. The on-and-off love affair with the budget-conscious SMERF market, where attendees usually pay their own way, is back in full bloom in first- and second-tier cities alike. Hotel occupancy trends tell why.
In the first quarter of this year nationwide average hotel occupancy slumped 10.9 percent and the average daily rate (ADR) dropped 7.7 percent from last year’s period, according to Smith Travel Research. It followed a year when average occupancy was off 4.2 percent while ADR still increased 2.4 percent.
This occupancy and ADR decline, along with booking incentives offered by a wide range of hotels in many destinations, has brought new options for SMERF organizations, according to Donavan Shia, vice president, market intelligence for Destination Marketing Association International (DMAI).
“Many top-tier cities are struggling and are much more willing to negotiate with SMERF groups. Groups can access incredible savings and incentives at top destinations,” Shia says. “It’s an amazing buyer’s market.”
Along with new city choices, he notes that SMERF planners now have access to high-end hotels and resorts that were once out of reach.
“They’d like your business now,” he says. “The biggest change in the type of deals we are seeing is in the pricing of group sleeping rooms. Such top-tier cities as Atlanta have become more aggressive. Higher-end properties such as Ritz-Carltons that were on the sidelines are now participating,”
Filling the Gap
Among planners who agree with Shia is Gregg Talley, president of Mount Royal, N.J.-based Talley Management Group, an association and event management company whose clients include Alcoholics Anonymous, the National Society of Experiential Education and the Real Estate Educators Association.
“Deals are being offered all over the place,” he says. “Everybody’s gotten easier to deal with as we go through this. Look at upscale and resort properties—normally not a bracket we can afford, but now we can.”
While Talley acknowledges that the hotel industry is hoping for a mid-2010 rebound, he’s not so sure it will come that fast.
“I think the jury is still out and that it will be a slower pullout, which should translate to a more protracted buyer’s market,” he says.
EMCVenues, a Brielle, N.J.-based site selection and meetings solutions company, held three focus groups of primarily corporate meeting planners earlier this year, with the results indicating that hotel availability should favor non-corporate markets for the next 18 months or so.
“Their number of meetings was off 25 to 30 percent on average and the number of attendees had shrunk. All saw it coming back at the end of next year,” says Jody Wallace, president and CEO of EMCVenues. “Properties are looking to government and SMERF to fill the gaps.”
In contrast to corporate business, Wallace notes that the volume of meetings her company does in the education market is relatively unchanged.
“Education foundation meetings, especially those that are grant-driven, have held steady,” she says. “We’ve seen some falloff, but they are still happening.”
Warm Welcome
Cities are putting out the welcome mat for SMERF groups as never before, including first-tier destinations such as New York City, which has rolled out a new meetings campaign called “NYC Now.” Its tagline states that “There’s never been a better time to book NYC for your meeting and convention.”
“We’ve become more aggressive. We’re pounding the pavement,” says Chris Heywood, vice president, travel and tourism public relations for New York & Co., the city’s CVB. “New York is more affordable than ever. SMERF groups might have been priced out of the market before, but there will be tremendous opportunities over the next two years.”
New York & Co. opened meetings and conventions sales offices in Chicago and Northern California last year and recently appointed a meetings sales representative in the United Kingdom. Although the bureau has no dedicated SMERF market sales staff, it has a full-service team ready to provide assistance, according to Heywood.
Philadelphia is another city well acquainted with the value of SMERF business.
“The SMERF market has remained steady, especially on weekends. Attendees have made their plans and allocated the resources to do so,” says Jack Ferguson, executive vice president of the Philadelphia CVB’s convention division. “It is very important to us, and our marketing efforts toward it have remained consistent. With the downturn in the economy there is more availability and rate flexibility for SMERF—even in in-season periods.”
In Tampa, Fla., Norwood Smith, vice president, sales for Tampa Bay & Company, also says that SMERF business has remained strong, even as corporations have canceled their meetings. The bureau has almost tripled its sales staffing dedicated to the SMERF market.
SMERF groups are also likely to find a warmer welcome at conference center properties these days.
Destination Hotels & Resorts, which operates two IACC-certified properties in the Northeast, Hamilton Park in Floram Park, N.J., and Tarrytown House Estate in New York’s Westchester County, is seeing an upturn in SMERF-related business, according to Steve Sackman, the company’s regional director of sales and marketing.
“We’ve seen a decrease in short-term demand from the corporate meetings market [segments], especially in the finance and banking,” he says. “Other markets remain active. Weddings and leisure seem to be pacing well but are value-conscious. We are finding that nonprofit education groups that couldn’t afford it or get availability before are buying up.”
However, he predicts a turn-around in the corporate market fairly soon.
“From a corporate meeting standpoint, longer range we are seeing that companies are starting to put their thoughts and plans together for recovery—strategic planning sessions, restructuring meetings,” Sackman says. “We’re seeing a promising spike for 2010.”
The 248-room Heldrich Hotel & Conference Center, an IACC-certified conference property in downtown New Brunswick, N.J., is among hotels seriously pursuing religious meetings. The property introduced flexible “Divine Inspiration” packages earlier this year.
“We were looking at ways to fill rooms on weekends when rates are lower,” says Joe Di Girolamo director of sales and marketing. “We’re getting a cross section of all religions, usually 20 to 60 people, many coming in by train.”
Recession Proof
For now at least, SMERF organizations are finding that the odds are in their favor.
“Groups that book a year in advance, and that’s most of our groups, are in the driver’s seat,” says Ted Dey, president of Norfolk, Va.-based Armed Forces Reunions. “They’re in good shape though 2010. Hotels are begging, but we’re not finding the deals for 2011 and 2012. Hotels are looking at the future as if it is going to be rosy.”
Sidney Dunn, administrator of the Indianapolis-based Fraternity Executives Association, echoes that the deals are out there through 2010.
“Hotels are anxious. We’re seeing more deals and lower rates for those booking short term,” he says.
DeWayne Woodring, CMP, CEM, executive director of the Indianapolis-based Religious Conference Management Association (RCMA), also says hotels are currently eager for business.
“It is amazing how sales people get religion in difficult times,” he says. “I’m hearing from our members that they are being contacted by hotel sales people that they’ve never heard from before. Usually, the religious market is recession-proof. People save all year to go to them and many of them stipulate that they must be held each year.”
