Are You Smarter Than A 5th Grader Hotel Revenue Manager? Tips For Securing 2010-2012 Meeting Venues
This post is written by Dave Lutz, Managing Director, Velvet Chainsaw Consulting. Read more about Dave.
How’s your crystal ball doing these days?
If you’re a Hotel Revenue Manager, you’ve gone through one of the toughest years of your life.
I mean, how many times does it take to lower a forecast before you nail it? Who would have thought that things would get as crappy as they did in 2009? In forecasting or budgeting, you ideally want to exceed your prediction…not by a lot (that’s sandbagging), but by a percent or two.
Last week, Smith Travel Research’s President, Mark Lomanno made a statement that really got my attention. “On an inflation-adjusted basis, it’s going to probably take eight to 10 years to get room rates back to where they were in 2007.”
This means that we’re in for a much longer recovery than any of us have experienced or may be expecting. I for one, think he’s right. Read the full article: 5 Questions Every Revenue Manager Should Be Asking and judge for yourself.
So what does this mean for meeting planners? How can you use information like this to do the best you can for your organization?
Here’s a few of my thoughts and predictions:
- Short-term price, long-term value
You’re in the driver’s seat throughout 2010 as long as you are booking meetings that will occur within a 12 month window. Negotiate hard because your hotel sales professionals will win the battle with their revenue manager on bookings with shorter lead times.If you are sourcing meetings that are scheduled to occur more than 12 months from inking the deal, count on hotels to be more aggressive on rate and more willing to throw in value-adds like free internet, breakfast or room upgrades. Revenue managers don’t have enough data to lower forecasts for dates this far out yet.
- By up, not down
You’ve probably heard that most of the market is buying down. Meetings that used to go to Hyatt’s may now be booking Courtyard Marriott’s or Hilton Garden’s. This evolving trend has caused many hotels to redefine their competitive set.For 2010-2011 and perhaps 2012, you will be able to get some sweet deals at hotels/destinations that were previously unaffordable. Perception issues aside, now is the time to find the most desirable location possible. For most large groups, this means going 1st tier instead of 2nd and selecting destinations with exceptional air access with heavy member concentration. For smaller groups, that means if you’re used to paying $65/gallon for coffee at a $149 hotel you can get a much better hotel for $149, but they may charge $110/gallon for coffee. Do your homework on the ancillary costs!
- The rules have changed
Most meeting hotels have really eased their booking parameters. You may not need to commit to 200 rooms and $80/day in F&B to get 1/3 of the Grand Ballroom. Hotels that previously were hard to get availability, may now really want and need your business. Their transient demand is way down and won’t come back any time soon.
Your mileage may vary, so would love to hear what you’re seeing in the market. Whether you’re a planner, a hotel or CVB sales pro, what recommendations do you have on better booking practices for 2010? What do you see in your crystal ball?