The packed room of meeting planners who attended a panel on the U.S. hotel industry last week at The Krisam Group’s forum and in Chicago left more educated about hotel occupancy and rate trends in the U.S., but noticeably more somber.
The planners heard that hotel rates would continue to rise, despite a slowdown in demand and occupancy, for at least the next two years. Increased construction projects are feeding the hotel pipeline, explained Jan Freitag, vice president–global development of Smith Travel Research, but because hotels are taking longer to build, the supply has not affected demand enough to flatten or decrease the rate.
What’s driving the high rates? The transient guest, those business and leisure travelers who pay top dollar because they have to go where the business—and action—is in the top 25 markets in the U.S. (For more on STR’s research on hotel trends, click here.)
It makes sense, then, for planners looking for deals to look to the secondary and tertiary markets, says Freitag, who adds that you may want to pay particular attention to San Antonio, where a high increase in new hotel supply could mean some softening of hotel rates.
Any other good news from the panel of meeting planners and hoteliers? It does appear that there’s been a more conciliatory approach to negotiatingand other sticky clauses.
But there was a familiar lament from planners who were told by both hotel and planner panelists that relationships are still king: Sales staff turnover at hotels seems worse than ever, so that while planners would like to develop relationships to get better deals for their meetings, they instead find themselves educating a new sales manager every few months. —Betsy Bair