We asked hotel executives from major brands for their thoughts on whether they've seen a shift from a buyer's market to a seller's market, and we received wide-ranging — and sometimes surprising — answers. We also asked if they see the shifting market affecting negotiations for association meeting planners. We even got them to share their top negotiating tips, insights that could be invaluable for cutting your next best meeting deal. Here are their responses.
Trends
I believe the shift from a buyer's market to a seller's market has begun, but it's being driven market by market, and not nationally. If a planner wants to meet in New York, San Francisco, San Diego, Washington, D.C., or Boston, the seller is in more control. My feeling is this cycle starts east/west and typically moves inward. As we get into 2012, expect a more robust seller's market in most markets across North America.
A tremendous part of the hotel industry's success in 2011 has been a resurgence in transient business, meaning inventory will be more tightly yielded and controlled in the near future. The size of future room block commitments may be affected, as will pricing. This will force associations to potentially use more hotel blocks in a destination, which could increase a planner's time and expense to manage the logistics of a convention.
Tips
Planners should be prepared to solidify contracts further out to ensure the best package and terms for their meeting. They should consider “hotel need dates” and shift meeting patterns to these dates when possible. They should also understand and ask about “need years” by market. Even in a high-demand tier-one market, a city can have booking pace problems in a certain year.
Trends
Our industry has always classified the economic climate as either a buyer's or seller's market, but I think those labels create tension between meeting managers and hoteliers. That said, there has already been a definite shift toward a more robust business environment. In the recent economic downturn, rates declined up to 30 percent in some cities. Over the past several months, occupancies have reached pre-recession levels. Rates have increased but not at the same level. However, industry experts predict continued rise in revenue per available room.
There continues to be a focus from planners on risk mitigation and rates. However, with the continued growth in business transient and leisure segments, associations will find less inventory to meet their needs.
Tips
For smaller meetings, be willing to contract for a meeting during a two- to three-week window with specific dates being finalized 90 to 120 days out.
For citywides, consider tiered rates depending on the date of actual reservations. This allows hotels to blend their rates and allows the association to create a compelling reason for attendees to book early.
Trends
Meetings have led our business out of the recession. We've had three straight quarters of growth and expect to see the next three to four quarters' numbers grow. Meetings are a complex process. What do you need? Let's customize what works for you. We're in it for the long haul and I can't react to changes in the market. But from a practical point of view, the last few years have given planners a lot more flexibility.
Tips
The best thing association meeting planners can do is come to me with a lists of needs and wants, and let me know what the five most important items are. I want to do everything I can to give them the big ones.
Trends
We are seeing occupancy start to come back in some of the tier-one destinations, but they will have to come back in more tier-one markets to create compression, drive rates, and trickle down to tier-two and -three cities, in order to become more of a seller's market. I think it's a long way away. We are in a sort of purgatory between the two areas.
Tips
The more realistic associations can be about the amount of space they need, the better. One, they'll have more leverage because they are not tying up assets, and two, it just creates a better partnership going forward.
Be willing to sit down and say, “Here's how much we spend and here's how my association impacts you.” Be realistic about the rate you need and what your growth potential is over the next four years. Associations should pay attention to those partners they had in the down economy and [appreciate those] who had the flexibility to help them weather the storm.
Trends
The marketplace comes down to a simple matter of supply and demand and all indicators, as well as our own group pace indicators, are reflecting an increase in room night demand with little if any change to supply. It's really less of a seller's market than it is a leveling of the playing field. We've seen that occupancies have recovered to 2008 levels and now prices are following, but this recovery varies by market.
Tips
Association meeting planners generally have the advantage of booking further in advance than corporate planners so that is a significant advantage as they have access to more open patterns. We're introducing a “multiple program” meetings incentive package, which offers greater incentives, including a transferable rebook clause, with multiple-year programs.
Trends
The industry is quickly moving into a market where pricing power is returning. This will continue as there is virtually no new inventory being introduced into the meetings arena.
One of the biggest challenges association meeting planners will face with the return of pricing power is explaining to the association's CEO and CFO the rate variances they will witness when comparing year over year. I like to call it the “recovery gap” as it is a challenge during the 18 months after a down cycle to explain that the deals experienced in the down cycle were extraordinary and, most importantly, temporary.
Tips
Association meeting professionals can leverage multiple meetings, including adding smaller board or regional meetings. It is also a great time to ask the hotel if the association can save costs by taking advantage of labor-saving ideas, such as requesting “menus of the day.” Also, look at keeping activities traditionally taken off property on property, adding some creative twists. Many times the money saved in transportation costs and off-site fees can be used toward creating an incredible experience while enhancing the hotel's overall revenue.
Trends
I don't think that the shift from buyer's market to seller's market has begun, especially as it relates to groups. Companies are still accustomed to operating on lean budgets and procurement's involvement has reduced the amount of spend. Secondly, unemployment is a key factor. Until companies start hiring again and have a need for a conference/training center or conference hotel, those facilities will not be able to establish a good baseline of business. My view is we will not see an uptick in training until companies begin the budget process for 2012 when they identify how many folks they will be hiring, which will foster training and other kinds of meetings.
Tips
Associations can leverage multi-year bookings at a property to gain better rates and discounts.