Resort meetings are back. So are sales events, incentive programs and all the other business-related functions that once kept resorts—and planners—busy.
“In 2010 we made up the 24 percent of business that dropped in 2008 and 2009,” says Ed Svitak, director of sales and marketing at the Grand Geneva Resort & Spa, in Lake Geneva, Wis.
Adds Ivo Tomulich, director of sales and marketing at Viceroy Snowmass, in Snowmass, Colo., “We last saw this kind of growth in 2007,” says “After five years, we are coming back to pre-recession levels.”
But resorts have been slow to bounce back, Tomulich notes. A new forecast from American Express Meetings & Events found the recession-era shift from luxury and resort properties to mid-tier and urban venues will continue. And resort pricing still lags.
“Rates are not where they were during the prime years,” says Svitak. Going forward, he notes, adjustment will be slow. “We will see a spike in rate in 2012, but estimates call for a five to eight percent increase.”
Group buyers have noticed the sluggish growth.
“A Ritz-Carlton that was $400 a night dropped to $200 and maybe came up to $300,” says Brian Stevens, president and CEO of ConferenceDirect. “In 2009, Four Seasons unbooked more than it booked. That’s reversed, but rates haven’t recovered and lead times are shorter.”
Location also matters. Resorts with easier airport access are recovering faster. Urban resorts like The Ritz-Carlton, Miami have an advantage over more rural competitors like The Ritz-Carlton, Half Moon Bay.
Location also affects events’ perceptions. The AIG Effect has largely faded into history, but some companies still deal with lingering doubts that resort meetings are business-oriented.“People just don’t have the same perception of San Francisco as they do of Hawaii,” Stevens says.
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 back,” says Bruce Baltin, senior vice president of PKF Consulting in Los Angeles. “At some point in 2010, the AIG Effect went away. But meetings and occupancy are not coming back with the opulence we saw from 2005 to 2007. These are 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 bottom line, there are deals in resorts,” Harris says. “It’s a time to re-evaluate venues, shop around, and lock in rates for three or four years.”
The Pendulum Swings
Resorts had to adapt to what became a buyer’s market during the recession. Some properties dropped the words “resort” and “spa” in response to perceptions, notes industry consultant Bruce Tepper, vice president of Joselyn, Tepper & Associates. White House comments on “boondoggles to Orlando and Las Vegas” in 2009 didn’t help matters.
“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 for planners, Nagaoka says. “Companies are ready to travel.Planners can propose a resort now, if the client hasn’t 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.
New Meeting Models
Meeting and event design has shifted, too. But 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, 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. but properties are cutting that, condensing the event to three days, and then offering 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.
