Meetings are increasingly important to hotels' bottom lines. So reported keynote speaker Bjorn Hanson, a noted lodging analyst with PricewaterhouseCoopers, at the Professional Convention Management Association annual meeting in early January. Hanson said group business accounted for 27 percent of profits at full-service hotels in 2002 — up from 20 percent in 2000. In fact, in many major cities last year, the group rate was higher than transient rates. (Hanson's full report is available at www.lodgingresearch.com. For more perspective on Hanson's data, see “A New Twist,” CMI January, page 21.)
“Hotels understand this [the value of group business], but they may not want to share it,” Hanson said. “Corporate [volume] rate negotiators were brutal in 2002, with expectations that rates would be lower in 2003 than 2002. I suggest you follow their lead.” Hanson predicted that a recovery for the hotel industry would not begin until 2004 — assuming the United States does not go to war against Iraq. If there is military action against Iraq, Hanson expects that lodging demand would drop as much as it did in the third quarter of 2001 if the war lasted beyond 12 weeks.
Even without a war, Hanson's data show a disturbing trend: a continuing drop in demand even as the economy recovers — a drop due increasingly to traveler concerns about safety and convenience. “Now that we have a Department of Homeland Security, you can count on more travel alerts,” he said, which is going to continue to depress travel.
PCMA's January 5 to 8 event at the Anaheim (Calif.) Convention Center drew nearly 2,500 registrants — about 500 more than 2001 and a couple of hundred more than PCMA expected.