I’ve been reading a lot of industry articles lately that are focused on revenue growth for hotels and, more specifically, how they are achieving that growth at the expense of the consumer. It has me really thinking about how the end result is less value and lower service levels for guests all while they are paying more for less.
The first article I read with interest was from The Points Guy and focused on the end of the era of bargain rates at hotels. On the heels of a year resulting in a profit of over $1.3 billion, Hilton boasted that this profit was not driven by high occupancy but by a change in revenue strategy focused on escalating rates during a time when their hotels were running with lower occupancies that in 2019. Normally this trend would be a cause for concern for a property, but in an inflationary environment, as we are in currently one, can double digit rate increases be justified?
This leads to my next question, are we ok paying more for less? Marriott recently announced that they are reducing service by eliminating daily housekeeping service at 11 of their brands altogether and, instead, are offering “tidying up” every other day. Mid-tier hotels like Marriott, Sheraton and Renaissance will receive a daily “tidy” while only luxury brands will receive full housekeeping service. Travelers seem to come down to two distinct opinions on housekeeping – you either love it or you want people to stay out of your room. Personally, I LOVE having housekeeping daily – not because I’m a messy person, but I love coming back to a perfectly made bed, a dust-free room, clean towels and my toiletries neatly organized for me. For obvious reasons, at the worst of the pandemic, hotels suspended housekeeping services for safety reasons, but now it seems they’re using it as another area to reduce headcount and drive profit to their bottom line. Not only is there an economic impact for those whose jobs are directly impacted by this change, but the consumer/guest ends up paying more for less service.
Finally, with the above strategies of driving profit through rate, eliminating services and building smaller hotels will present challenges to planners down the line. Two of the “Big 3” brands have decided to turn their focus to developing more hotels in the select service segment while a third, Hyatt, is going all in on the luxury traveler. Sure, their existing “big box” hotels will remain open while growing their select service portfolios but without developing any larger meeting and convention style hotels during a time of such high demand will certainly this will surely create bottlenecks in popular markets. I think we can all guess what the result will be in this scenario.
What is a planner to do in this sort of rate, supply and demand market? I recommend the following:
I know I may sound like a broken record but start planning for your larger/annual events further out. While planning two or three years in advance may seem overkill, starting early will give us the ability to negotiate based on today’s rates and lock in your food & beverage pricing based on today’s pricing as well
Consider smaller markets that may provide the same type of experience you’re seeking in a destination. Instead of Nashville, consider Louisville. Instead of Austin maybe give Houston or San Antonio another look. Instead of Phoenix – why not look at Tucson?
“Right size” your meetings. Base your future RFPs on your actual pickups for your most recent year; especially if you were close to incurring attrition damages for your last meeting or didn’t achieve your food & beverage minimums
Consider “off-season” or “shoulder-season” dates. If you plan incentive travel, maybe consider moving those trips from March to May in order to achieve greater savings on your programs. Fall dates are often less expensive in traditional “sun & sand” destinations. Alternatively, consider something different than “sun & sand”. There are some beautiful and incentive worthy destinations in the US, Canada and Mexico that are non-traditional, but are sure to provide amazing experiences for your attendees
Consider booking a brand you’ve not worked with in the past. Everyone loves their Bonvoy, HHonors or World of Hyatt points, but there are brands that are actively building and developing larger meeting style hotels that may be able to fill the void created by the other three. And they offer planner points too!
Work with a trusted third-party planner who can keep you up-to-date on emerging destinations, new builds in markets and special rate offers and rebates targeted to planners. We have our fingers on the pulse of many markets at once. I, for one, keep a list of destinations/properties offering “hot dates” or special terms to my clients
Lastly, if you have multiple teams/departments within your organization that plan events, strategic meetings management (SMM) is going to be more important than ever. If one team incurs attrition or needs to cancel, that may be an opportunity for another division in the same company to assume that contract or use any rebooking credits for a different meeting that can help drive additional savings to the company. Leading back to my theme for this post – who wants to pay for something when they’re not receiving maximum value for those dollars
For sure, the next few years are going to be interesting for the hospitality industry but after COVID anything is manageable with clear goals, a strategy in place and the right team on board to help you achieve those goals.
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