Research and conventional wisdom shows that the meetings and events industry has been in seller’s market for several years—and may well be for the rest of the decade. While this gives sellers more leverage, there are ways planners can maximize cost savings and other benefits.
We recently spoke with Terri Woodin, CMP, the senior director of global meeting services at Meeting Sites Resource, who shared some key insights for planners about how to get the most bang for the buck out of sellers.
What factors do you see has led to the seller’s market the meetings & events industry is seeing?
Post recession, there has been very little new hotel room supply, particularly in the four- and five-star categories. Low new supply, combined with greatly increased meeting demand, which started in 2010, and has continued each year, has fueled the big shift to a hot seller’s market. How hot? 2015 will mark the hotel industry’s biggest year ever for hotel occupancy, average daily rate and RevPar (revenue per available room).
Like this content? Register for our next FREE Webinar, “Successful Negotiations in a Sellers’ Market”
What are the biggest challenges you’ve seen for planners as the market shifted to favor sellers?
One of the big challenges is finding quality hotel options for short- term meetings. Hoteliers are turning down three meetings for every one they accept, so it is important that planners have a complete RFP and assess their leverage, based on many hotel revenue management criteria. Additionally, since corporate and association planner budgets are not keeping pace with hotel revenue projections, we are seeing more hotel fees and surcharges being introduced—all of which planners can negotiate, of course.
How can planners maintain a symbiotic relationship with hoteliers in the current climate?
Both sides need to have a conversation, and it has now become more strategic, meaning that planners must track and leverage meeting activity and spend data to maximize success with negotiations, including added meeting value, cost savings, contract-risk mitigation and ROI. Meeting planners are facing more scrutiny, with increased expectations from senior management, to demonstrate ROI. While this has always been a relationship business, now it is also a business relationship, and when planners make the shift from logistics to strategic, they will add more value to their meeting and the bottom line, and in the process, demonstrate more value to their management and stakeholders.
Are there any niches in areas of the industry where the market is more favorable to buyers?
Because of limited availability, increased room rates and F&B costs, many planners are searching and evaluating second tier cities or contracting their meetings in the shoulder season. Hoteliers often do have need dates, so ask what dates and pattern would deliver cost savings and meting value. Also, it’s helpful to have multiple date options and flexibility with peak night pattern and meeting and event space utilization. There is a spike in new hotel development in most major markets, and although mostly in the mid-range categories, pre-opening rates can be favorable.
Are there any indicators for planners to watch out for that would signal the end of the seller’s market?
Industry experts are predicting a strong seller’s market through 2019, but we should view this news with caution, since the global economic and political environment can change quickly, as we have recently seen with a weakened economy in China, and the ripple affect it had on a global level. That said, we believe that hotel occupancy will remain flat, but average daily rates will continue to show slight increases, particularly in the four- and five-star categories.
What strategies can you offer that will help planners succeed in this hot seller’s market?
Success today requires that corporate and association meeting planners have a business plan approach to these investments called meetings, along with a negotiations plan. The art of the deal is changing and planners can succeed when they carefully evaluate their overall meeting needs, revenue contributions (by category), flexibility and key factors such as peak-night pattern, their percentage of the hotel’s meeting space on the heaviest day, other groups in-house and their space and revenue contributions. The seller’s market does not mean doom and gloom, just more strategy to achieve your goals.
To hear all of Woodin’s great advice and suggestions about navigating the current seller’s market, be sure to register for our Sept. 15 webcast, Successful Negotiations in a Sellers’ Market.