Meeting Costs – The Recovery Gap Effect

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Meeting planners and Hoteliers are under no illusions about how much the MICE industry has changed over the coming years.  While the future is showing signs of recovery, many arte still having to put on a brave face.  The point is though, they need each other and unless, the two parties can address the reality of a shift from a seller’s market to a buyer’s market that seems not to show any sign of easing. Business is business, but placing hotels in a position of lowering prices and quality may not be in the best interest of either planners or hotels in the long term.

While is is very likely that hotel chains will rationalise, merge and those that are less well placed may have to face unenviable decisions, the difference between the meeting market and seasonal tourism impact on cost negotiations.  So, is there a shift in the market affecting negotiations for meeting planners. We have looked into the issue and found some intersting insights that could be invaluable for negotiating your next meeting deal.

 

Firstly, there does seem to be a shift  a buyer’s market to a seller’s market, but it’s being driven within regional markets, and not nationally. One Hyatt executive has suggested that 2012 If will see a more robust seller’s market in most markets across North America. They also suggested that Planners need to look further ahead as hotels have stepped up transient booking loads that could compete with meeting block dates.  This sentiment was confirmed by Starwoods, where occupancies have reached pre-recession levels and industry experts predict continued slow rise in revenue per available room.

The takeaway though from many hotel executives seems to be – “Be willing to sit down and talk”. Planners need to understand the long-term role of the hotel business and how it can impact negotiating value. Building partnerships with those who had the flexibility to help them weather the storm of “down years” is a win-win.
Meetings can be a complex process and often the hotel will work with the planner to customize what works, understand that they are in it for the long haul. The best thing association meeting planners can do is identify their lists of needs and wants.

Association meeting planners generally have the advantage of booking further in advance than corporate planners and the advantage is that they have access to more open formats. 
Look for meetings incentive packages that offer greater downstream incentives, including a transferable rebook clause, with multiple-year programs.

A common thread among hotel representatives was that one of the biggest challenges meeting planners will face with the return of pricing power is explaining to the CEO and Event Department, the rate variances when comparing year over year. There is likely to be a “recovery gap” after a down cycle,  to explain that the deals experienced in the down cycle were extraordinary and, most importantly, temporary.

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