"So goes corporate America, so goes the group market," says Christie Hicks, senior vice president ofsales, North America, Starwood Hotels and Resorts, White Plains, N.Y.
Group travel is indeed bouncing back, though not at the same pace as leisure and business. Hoteliers estimate that room rates for groups will probably go up in the 3 to 5 percent range in 2005. In the large coastal cities like New York, San Francisco, and Washington D.C, rates may go even higher—perhaps 10 percent or more—because they took the biggest hit in the down market and will be looking to play catch up. In some second-tier cities, or cities with more availability and healthy competition, like Dallas or Houston, rate hikes might be lower than average and planners might still be able to negotiate rates downward. According to PKF Consulting, Atlanta, the South Central and the North Central regions of the country have the lowest projected occupancy rates and ADR for 2005.
Pamela Frana, meeting planner with Piper Jaffray Inc., Minneapolis, has already had some trouble, particularly in New York, where she books most of her meetings. "You used to have more options," says Frana. Where a year ago she would to have the pick of her top three options in the Big Apple, now there might only be one property with availability. With regard to rates, she says the increases are a little steeper for 2005, but adds, "I never really felt they went down that much."
What’s driving the change is an uptick in the economy in general and business travel in particular. "After 9-11 when things got so bad, it was just—don’t travel," says Hicks. "Now its travel carefully, travel if you must, travel with appropriate expenses, but they’re not saying don’t travel. So that has helped loosen things up."
What does this mean for planners? For starters, the climate for negotiating better rates for everything from rooms to meeting space to F&B is going to be more difficult going forward. "2005 will seem in many ways to be more of a challenge in negotiations than 2000," predicts Bjorn Hanson, global hospitality industry managing partner, PWC.
For more on the return of the seller's market, see the January issue ofand Incentives.