by Michael J. Shapiro | August 13, 2019

Hotels in the United States face a challenging market ahead for group bookings, according to the newly released Q2 Cvent Group Business Outlook. The quarterly forecast, which is based on booking activity through the Cvent Supplier Network, assesses business on the books for the next 24 months.

"While group booking pace has picked up slightly compared to last quarter's report, the overall 24-month view is still fairly weak," said Jeffrey Emenecker, senior director of analytics at Cvent. "As we look at the next two years, our sourcing data shows a relatively flat awarded group-rooms pace and a slight downturn in awarded RFP activity within the U.S. market. Supply continues to increase, but booking pace is not keeping up, which means a drop in group occupancy across the board. Our hope is that hoteliers can use this outlook to develop and adjust their group strategies to drive more business."

The awarded group business pace for the fourth quarter of this year is down 1 percent from a year ago, although that decrease improves to just half a percent for the first quarter of 2020. The pace picks up for the second quarter of 2020, which is currently trending 1.2 percent higher than the corresponding quarter did a year ago. Looking ahead further, the pace drops for the third quarter of 2020 (down 1.6 percent) before gradually improving and showing signs of growth beginning in the second quarter of 2021.

The overall awarded request-for-proposal activity in the second quarter of this year was below the average and a decrease from the first quarter. Cvent previously attributed the first-quarter softness to third-party commission changes taking effect at the start of this year -- which might well have pushed bookings earlier, into Q4 2018, accounting for the surge in activity at the end of last year. The continued decline, according to Cvent, could represent both general market softness and residual effects of the commission cuts.

Caution in the group-booking segment is in line with the projections of the latest Business Travel Index Outlook report from the Global Business Travel Association, which points out that group business travel is typically more sensitive to the levels of economic and political uncertainty that have been created by trade disputes.

Room-block size for future bookings averaged 222.8 rooms, which marked a slight decrease (-0.6 percent) year-over-year. That's in line with expectations, notes Cvent's report, a return to the general trend following the previous quarter's unusual 4 percent surge in room-block size. The average peak room night per event was 74.8 for the quarter, which was flat versus last year, while the average event duration of 3.3 days was a bit down (-0.9 percent) from a year ago. The average booking window was 183.6 days, also a 0.9 percent decrease year-over-year.