Planners looking to hold meetings at luxury hotels and resorts, especially in North America, can expect to find continuing challenges over the next couple of years, both in terms of availability and rates, according to hospitality industry analysts.
The reason, as always, is one of supply versus demand.
“There’s just not a lot of new supply coming in at the high end, so it’s going to get tougher to find availability at upper-priced hotels geared for meetings,” says Robert Mandelbaum, director of research information services for PKF Hospitality Research. “Most new properties being built are extended stay, limited service or boutique—not hotels that have a lot of meeting space.”
The cost of developing a full-service hotel with extensive amenities, and the length of time it takes to build one, is why most new projects on the horizon tend to have a smaller footprint than in years past, according to Bjorn Hanson, a consultant and professor at the Preston Robert Tisch Center for Hospitality and Tourism at New York University.
Even resort hotels are being built on a smaller scale and with less meeting space than in years past, he says.
At the same time, meeting groups are facing increased competition from upscale leisure guests, particularly in the resort market, Hanson adds.
“The economy has been good for the segment of the U.S. population that likes to vacation at luxury resorts,” he says. “U.S. resorts are also enjoying increasing demand from international leisure travelers.”
Making the situation even more challenging is that many luxury hotels and resorts are increasingly targeting transient travelers who typically pay higher rates than groups, Hanson adds.
“Meetings are viewed as less desirable [than leisure], so groups are being steered toward dates when transient business is low,” he says.
Not surprisingly, all guests can expect to see rising rates at luxury hotels, which have largely recovered from the recession. Average daily rates at luxury properties, which rose 4.5 percent between 2009 and 2013, are expected to increase by another 5.2 percent between now and 2018, according to figures from STR.
“Luxury hotels had the strongest decline during the recession, so they had a lot to make up for,” Mandelbaum says. “They were some of the best values in the lodging industry. Now they are the most expensive.”
