Hotels are ready to deal. Forecasts for the lodging industry keep getting worse and now predict 2009 will be one of the toughest years for hoteliers in memory. Industry consultants expect revenue per available room to plummet as much as 14 percent this year vs. 2008 and occupancy to slide by anywhere from 4 percent to 8 percent.
For meeting planners, this is an interesting backdrop for contract negotiations.
"People who have meetings not booked yet for the short term really are in a nice position," says Gary Schirmacher, senior vice president of strategic sourcing for Experient, an integrated meeting services company based in Twinsburg, Ohio. Planners can expect to find hotels more flexible on most contract provisions, from attrition to rebooking clauses to overperformance incentives. As Joan Esneault, vice president of resort sales for Foxwoods Resort Casino, in southeastern Connecticut, puts it: "Everything's negotiable."
Robert Mandelbaum, director of research information services for Atlanta-based PKF Hospitality Research, says hotel salespeople are particularly focused on getting revenue on the balance sheet for 2009. "Things have gotten so bad so quickly, any cash is good cash," he says.
According to an M&C survey conducted in January for the Research column ("Hotels Are Bending," March), 71 percent of 110 planner respondents said hotels have been "somewhat" or "very flexible" during recent contract talks. (When M&C polled planners on this subject back in May 2008, only 60 percent reported this level of flexibility.) Fifty-five percent of planners said they had won concessions on room rates, and 35 percent of planners managed to eliminate attrition fees, cancellation fees or both. More than half of planners who asked for discounts in exchange for larger deposits were successful.
The buyer's market has its limits, though, Mandelbaum notes. Planners looking to book a few years out, by which time the economy will have had a chance to recover, might not find the same flexibility from hotels as they would for 2009 meetings. Additionally, planners looking to secure peak dates in first-tier cities still will have to work hard to win concessions.
Some hoteliers even argue that they will not repeat mistakes made after 9/11, when they heavily discounted rates and made other concessions to groups, pledging to be tougher this time around to protect their own business needs. Terry Sloan, director of Carlson Wagonlit Travel Meetings & Events, based in Minneapolis, says he's heard hotel salespeople take this stance, but he doesn't believe it. "Hotels are all trying to outsell each other," he says. "Hotels are sitting in a position where they're quite eager for business." If planners are booking a meeting for 2009 or 2010 and tell hotels that a certain clause in the contract is a deal-breaker, hotels will be flexible, Sloan argues. "Hotels are listening and they're willing to work. Things are totally different today than they were two years ago."
Just like hoteliers, planners are facing an uncertain year with respect to budgets, attendance and cancellations. Consultants, planners and their lawyers agree there are a number of clauses in hotel contracts that should be rewritten to reflect today's economy -- in many cases limiting the risk planners take when they sign on the dotted line.
How far are hotels willing to go to attract business? Individual properties and corporate sales teams have been devising creative offers for groups, particularly for those booking short-term business. Some offers expire soon but nonetheless give insight into the mindset of hotel salespeople.
Hyatt Hotels & Resorts, for instance, launched a corporate initiative to give groups a 6 percent rebate off the master bill. The Hyatt Regency St. Louis Riverfront, emerging from a $63 million renovation this July, upped the rebate to 20 percent off the master bill for certain meetings held before June 1. At the Hyatt Regency McCormick Place in Chicago, the 6 percent rebate is valid through March 31, 2010.
The Hamilton Park Hotel & Conference Center in Florham Park, N.J., has devised discounts of up to 30 percent off the master bill, depending on how the Dow Jones Industrial Average performs on the day of the meeting -- the more the Dow drops, the bigger the discount -- valid through June 30.
The Miramonte Resort & Spa in Indian Wells, Calif., has cut group rates by 40 percent for Sunday arrivals and tossed in a host of other freebies, such as complimentary breakfast and meeting breaks. Meetings must be booked before Aug. 31 and held before Dec. 31, 2010.
The Homestead, in Hot Springs, Va., has offered to throw in a free golf tournament or other recreational activity for groups booking 75 rooms or more by June 30, for meetings held by the end of 2010.
Omni Hotels, in addition to waiving attrition penalties for qualified meetings, has extended through the end of 2009 its 10K Flyaway program, which gives planners or corporate clients up to 10,000 frequent-flyer miles on Delta, United or American Airlines for every 100 room nights used -- planners can earn up to 25,000 miles per meeting -- plus 5 percent off the master bill. -- T.I.