Coping With Rising Rates

Negotiations are tougher for 91 percent of planners

Are hotel F&B costs increasing as well?
Yes: 89%
No: 11%

chartAs hotel room rates have rebounded in the past year or so, planners are finding their budgets just won’t cover everything they once did. To learn how the firming of rates is impacting meetings and negotiations with hotels, M&C conducted an online survey of 149 planners in April. Almost all of the respondents (93 percent) reported they are seeing rates rise; the average increase is about $16 per night in recent months, representing a fairly significant change.
    Most meeting planners (70 percent) said they are able to negotiate better hotel room rates only “some of the time.” And, as more and more people travel and fewer rooms are available, the majority of planners (62 percent) said it has become harder to find available room blocks.
    According to the survey, this is good news for lower-tier cities, as three in five planners (60 percent) said they have begun to choose such destinations some of the time, where the room rates are not as high. Additionally, about half of those polled (45 percent) said they have begun to choose lower-quality hotels for the same reason. 
chart    It is not surprising, therefore, to learn that 91 percent of planners said they are losing negotiating leverage as room rates rise and room blocks shrink. To offset rising rates, planners said they are choosing less expensive food and beverage items (62 percent), holding shorter meetings (37 percent) and paring down or eliminating coffee breaks (34 percent).
    Another 28 percent of the respondents said they are planning fewer meal functions, and 26 percent said they have reduced or eliminated in-room gifts. Fourteen percent said they are having attendees share rooms.

Art Pfenning is director of M&C Research (