As our “No Vacancy” feature makes clear (page 34), today's hotel seller's market is not like ones in the past, when the gap between supply and demand wasn't huge and it didn't last long. In today's market, the gap between the number of available hotel rooms and the demand for them is the greatest in the 20 years that the hotel accounting firm PKF has tracked this data.
Moreover, with not much supply in the pipeline, a strong seller's market is projected to continue at least through 2007, according to analysts. The reasons behind the slowdown in supply are complex, as our article details. But one result is record revenues and profits for the hotel industry.
“There's a ton more pressure [from hotels] to book more revenue,” says Katherine Dutrow, meeting services manager at the American Academy of Ophthalmology. This pressure can take the form of annual room rate hikes that are sometimes twice the pace of inflation, much higher food and beverage minimums, and room pickup requirements that are as steep as 90 percent. Not to mention that in many top-tier cities, there's the difficulty/impossibility of even getting adequate room blocks reasonably close to the convention center.
It's a market that will test the skills of even the most seasoned planners. One piece of good news, however, is that there are many second- and third-tier cities that are more than able to handle all but the largest association events, especially since many smaller cities have built or expanded their convention facilities in recent years. (Ironically, there is something of a glut of convention center space in the country overall at the moment — which adds a weird twist to the hotel seller's market.) It's a great time for associations to consider new markets for their events — ones where the “No Vacancy” sign isn't likely to be so visible, or the cost of booking business so high.
P.S.: Last issue I wrote in this space about a new “memoir” detailing the hidden hazards of meeting planning as revealed by the anonymous author “C.M.P.” Sorry to disappoint readers who asked where to get a copy of Let's Not Quarter the Danish Tonight, but that book and my review of it was a spoof. It was fun to write, and I hope you got a chuckle.