Resort meetings are back. So are sales events, product launches, incentives and all the other business-related functions that once kept resorts—and planners—busy.
“The last time we saw this kind of growth was in 2007,” says Ivo Tomulich, director of sales and marketing at Viceroy Snowmass, in Snowmass, Colo. “After a five-year span, we are finally coming back to where we were before the recession.”
But recovery has not been uniform. Resorts have been slower to bounce back than urban venues, Tomulich notes. A new forecast from American Express Meetings & Events found that the recession-era shift from luxury and resort properties to mid-tier and urban venues will continue. And resort pricing still lags.
“A Ritz-Carlton that was $400 a night dropped to $200 and may have come back to $300,” says Brian Stevens, president and CEO of ConferenceDirect. “In 2009, Four Seasons unbooked more meetings than it booked. That has been reversed, but rates have yet to recover and lead times are shorter. We have a client who is planning a Christmas party now, the first week in December, because the organization wanted to see how November went before committing.”
Location also makes a difference. Resorts with easier airport access are recovering more quickly. That gives urban resorts like The Ritz-Carlton, Miami an access advantage over more rural competitors like The Ritz-Carlton, Half Moon Bay, which is an hour away from San Francisco International Airport.
Location also affects perceptions of events. The AIG Effect has largely faded into history, but some companies are still dealing with lingering doubts that resort meetings are somehow less business-oriented, less serious, or less cost-effective.
“People just don’t have the same perception of San Francisco as they do of Hawaii,” Stevens says. “You can’t go to Laguna Niguel for a serious business meeting, but you can go just down the coast to San Diego. That’s not reality, its perception. But it’s a perception that some companies and planners still have to recognize.”
Recovery By The Numbers
Resort occupancy nationwide was 63.8 percent for the first 10 months of 2011, according to Smith Travel Research, up 4.7 percent over the same period in 2010. Average daily rates were up 4.8 percent to $135.20 and revenue per available room was up 9.8 percent.
“Resort meetings are coming back,” says Bruce Baltin, senior vice president of PKF Consulting in Los Angeles. “At some point in 2010, the AIG Effect went away. The world came back to saying there are business reasons to meet in a resort. We are seeing meetings and occupancy come back, but not with the opulence we saw in 2005, 2006 and 2007. These are better times than 2009, but still unsettled times.”
Not surprisingly, some resorts are doing better than others. Properties like the Little Nell in Aspen always lead the market in both occupancy and rate, says Bruce Harris, president of ResortVenues.com, in Aspen, Colo. Westin Hotels & Resorts and Rosewood Hotels & Resorts have been more flexible while resorts like the Viceroy Snowmass and The Ritz-Carlton, Beaver Creek have consistently underbid urban competitors.
“If the organization can look beyond the property zip code to its own bottom line, there are deals to be had in resort venues,” Harris says. “This is a great time to re-evaluate your venues, shop around, and lock in rates for the next three or four years.”
The Pendulum Swings
Resorts had to adapt to what quickly became a buyer’s market during the recession. Some properties dropped the words “resort” and “spa” in response to changing perceptions, notes industry consultant Bruce Tepper, vice president of Joselyn, Tepper & Associates. Comments by the White House on “boondoggles to Orlando and Las Vegas” in February 2009 didn’t help clarify the positive contributions that resort meetings can make to a company’s bottom line.
“We couldn’t bid on certain pieces of business because we were a resort,” says Rick Nagaoka, director of sales and marketing of The Fairmont Orchid, on the island of Hawaii. “That is less of a problem today.”
That’s good news for planners, Nagaoka says. Perceptions are easing as corporate profits improve, and companies are giving in to pent-up demand.
“Companies are ready to travel again,” he says. “Planners need to take that step forward and propose a resort if the client hasn’t already brought it up.”
Nagaoka said some still avoid the limelight. Schedules might mention the president’s club with no company name attached; banners with the company name have not returned; and budget flexibility is still key.
“We are backing into budgets,” explains Michelle Gilman, regional director of sales and marketing for Fairmont Hotels and Resorts in California and Arizona. “Instead of sending out menus at different price points, the chef is sitting down with the planner to see what can be done within the client’s budget. It’s a different way of doing business that has as much to do with service as it does with price.”
New Meeting Models
Meeting and event design has shifted, too. Companies with three or more consecutive quarters of positive financial reports are ready to travel again, Stevens says. They are being more aggressive about using resorts and rewarding top producers, but ROI remains a top concern.
Resorts aren’t fighting the ROI focus, they are finding ways to help planners address it. For example, all parties to the equation have found that cutting event costs is an easy way to boost ROI, and cutting the length of the program can work ROI miracles, too.
A traditional four-or five-day event has a day or more of leisure time for spa, golf and similar activities, but properties are cutting the official leisure time, which condenses the event to three days, and then including pre-and post-meeting packages for attendees.
“You can be in a spectacular setting that draws attendance while focusing on business,” Gillman notes. “High attendance allows a nice rate pre- and post-meeting that falls to the attendee to pay, and that the organization doesn’t have to pick up. Everybody wins.”
Fred Gebhart has covered the meetings industry for more than 30 years.
