Lynne Schueler is pretty demanding when it comes to booking her first-quarter incentive programs. She needs a lot of meeting space, she’s not flexible with her dates, and she books during high season. So she has to find a negotiating advantage. “Booking properties pre-opening fits that bill,” says Schueler, assistant director, supplier relations, at The Principal Financial Group in Des Moines, Iowa. “Where we might not be able to use certain properties otherwise, if we book them pre-opening, it is possible.”
Potential construction delays and a new, untested staff just scratch the surface of the risks involved in such a strategy. But Schueler calls it “a calculated risk”—one that is mitigated by the fact that The Principal “writes really solid.” For example, Schueler requires that the hotel be open for a minimum amount of time (usually 10 months) before her group arrives, and the specifies that the hotel send regular status updates and notify the company of any delays. If conditions aren’t met, Schueler can back out.
The Principal was first on the books for the Fairmont Mayakoba in Riviera Maya, Mexico, with two back-to-back programs, and the company also booked the Fontainebleau Miami Beach; Terranea Resort in Rancho Palos Verdes, Calif.; Montage Deer Valley in Park City, Utah; and JW Marriott San Antonio before any of them had opened.
And as hoteliers point out, getting business on the books is worth a lot to a new property. “Because the hotel owners expect and need to have business immediately when the hotel opens, the hotel is in a position to offer reduced group rates as well as multiple concessions” to planners who commit pre-opening, says Anne Erickson, director of national accounts, insurance, at the Fontainebleau Miami Beach. “At the same time,” she points out, “the planner must understand that the property is operating with new staff and new systems, which often take time to mature. The ultimate challenge comes when opening delays occur due to unforeseen circumstances. The planner must be willing to accept this possibility with the understanding that should this happen, they would have to move to another location.”
At the Montage Deer Valley, Martin Johnston, director of Midwest and insurance sales, points out that it is also in a new hotel’s interest to start a buzz early. “Traditionally a property is looking to garner exposure with the professional meeting planner community, and thus, yes, there can be even more value [when booking pre-opening] in terms of the overall agreement,” he says. “But it is also important to note that there is great responsibility on behalf of the property to deliver on the trust placed in us by planners who book during pre-opening.”
Should You Take the Risk?
Schueler has had to walk away from a hotel. “We took a leap and put our heart and soul into it, and it just didn’t open,” she recalls. “Even though it was a great financial situation for us, we thought we couldn’t stick with it any longer. But we all walked away friends.”
Before you leap, consider the following, courtesy of Isabel Mahon, director,sales, for Fairmont/Raffles/Swissôtels, who has booked pre-opening programs at four new properties in the past few years:
1. Does the hotel have appropriate financing in place?
2. Is the hotel in a location where staff is accessible, so training will not be a major issue? If it is a newly developed resort area, understand that it might take a year to get service running smoothly. On the other hand, a major metropolitan hotel opened by a brand with other hotels nearby is able to shift staff around so that not everyone is new.
3. Do you have the patience and flexibility to handle a pre-opening situation? If the hotel is delayed, you may have to scramble for another property. Things like meeting room names and banquet menus may not yet have been created. And some of the pricing may be estimated.
4. If you want the greatest possible value, don’t just book first, arrive first. If you book pre-opening but don’t meet until the hotel has been open 18 months, your rates will be good, but not as good as if your program takes place in the first six months.