X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

Two surveys of meeting planners say many corporations and associations are finding the continuing rise in room rates nonnegotiable with hoteliers, as the group-meeting business has shifted from a buyers’ to a sellers’ market. Associations and corporations are cutting costs in food and beverage, the number of meetings held and attendance, and also considering second-tier cities to curtail costs.

In the past, meeting planners could often call the shots, as major hotel sales teams tried to win business, offering concessions on rates, beverage and food, off-site events or modern audio-visual technology. Two separate surveys by PKF Consulting and MeetingNews magazine show that planners are finding their clients, for the most part, willing to bite the bullet and pay the rates with little cuts elsewhere. But for others, finding savings is a top priority. PKF predicts room rates will rise, on average, 4.2% in 2008, the fifth consecutive year that room-rate increases outpaced inflation. The surveys consisted of 121 meeting planners polled by PKF and 250 by MeetingNews.

“With rising room rates, the lodging industry is seeing historically strong occupancy numbers,” MeetingNews managing editor William Ng tells GlobeSt.com. “For now, the properties have the advantage in negotiations for group space. A lot of planners are trying different things” to cut costs, including “looking at second tier cities,” shorter meetings, fewer meetings, exact travel dates and bulk negotiations with hotel chains, he says.

In what Ng calls “necessary evils,” his analysis shows that 30.6% of corporate planners and 55.8% of association planners have limited efforts at cost-savings to offset room rates and will just cough up the extra money. For others, reducing the number of meetings is the option for 44% of respondents for corporate planners, while less than 20% of associations are considering meeting cuts.

Both corporate and associations come in at 22.4% and 22.2%, respectively, saying they are considering the option of meetings at hotels with limited services and amenities. In the corporate world, one big price control is cutting the number of attendees, which 28.4% of the respondents said is an option on the table. Only 4.2% of associations are considering reducing attendance. Ng says planners will face these market conditions for the “foreseeable future, but it’s not going to be a sellers’ market forever.”

PKF’s report titled “Meeting Planners Resigned to a Seller’s Market,” written by Robert Mandelbaum, director of research information services for the group, shows that only 10.6% of meeting planners surveyed are even attempting to control costs by room-rate reductions. Instead, the majority are pursuing savings in other areas: 21% are looking to save in food and beverages, 16.6% in audio visual services and 12.8% will cut off-site events.

While the MeetingNews report indicates the savings by using second- and third-tier destination cities, savings in other areas may be returning groups to top-tier locations. PKF reports that from 2004 to 2006, the percentage of meeting planners who responded that they would consider second- and third-tier cities to chop costs rose from 31.5% to 40.3%. Only 30.8% of planners responding to this year’s survey said their clients are pressuring them for less expensive destinations in 2008.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.