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Luxury Hotel
Room Rates Expected to Rise 8.2 Percent in 2007
By Peter Shure
Nationwide hotel rates are expected to rise 5.9 percent
in 2007. But prices quoted to groups will increase even more. Why? Demand in
the full-service "Luxury" and "Upper and Upscale"
segments that host most meetings has far
outpaced supply since 2005. Rates in the former category rose 9.0
percent in 2006 and are expected to climb another 8.2 percent in 2007.
These projections were released recently by PricewaterhouseCoopers as part
of its 2007 Forecast of the U.S. Lodging Industry.
Hotel occupancy reached 63.8 percent in 2006, the highest
figure since 1995. Average Daily Rate (ADR) for the entire lodging
industry climbed 6.8 percent and Revenue Per Available Room (REVPAR)
was up 8.0 percent. Industry profits soared beyond $25 billion. And while
demand leveled off, it still outpaced new supply, which has been
compromised by an increasing percentage of residential and condominium rentals
in high-end construction projects.
Translation: There's no rate relief in sight. ADR increases
projected for 2007 are expected to continue into 2008.
"From a group buyer's perspective," noted
Experient's Executive Vice President and Chief Customer Officer Brad
Weaber, "The key is to differentiate your business from other leads.
This can be accomplished by leveraging spending across an entire chain,
working with a company like Experient to harness
their buying volume and, of course, careful documentation of your
group history.
"Demonstrate that your piece of business
represents significantly more than room revenue alone," he explained.
"Hotels are attuned to 'mix management', the measure of hotel
profitability a group represents. When a group exceeds minimum F&B
requirements, it creates a rate opportunity."
Compounding the cost escalation, according to PwC's Global Hospitality Leader Bjorn Hanson, is the
dizzying array of 'surcharges' hotels have implemented to generate
additional revenue. In addition to guest fees such as mini-bar restocking
charges, baggage holding fees, phone and fax charges, and energy and
Internet surcharges, meeting organizers will increasingly see room
set/re-set charges; master folio billing fees, and, automatic gratuities added
to their bills.
2007 represents "The Perfect Storm" for group
buyers. The only lagging category in the PwC
forecast is overseas travel to the U.S., which still remains well
below Year 2000 when overseas visitors accounted for 12.8 percent of
lodging demand.
Analyzing performance across a five-year window, however,
the lodging industry is still playing catch-up since the last Recession and
the aftermath of 9/11. Following a 3.5 percent rate decrease in 2001, occupancy
bottomed out at 59.0 percent in 2002, "If the Year 2000 Average Daily
Rate had increased at the same rate as inflation," noted PwC's Hanson, "2006 ADR would be 99.91, which is
even higher that our current forecast of $97.06."
Nevertheless, lodging industry profits have nearly doubled
since they hit bottom in 2003.
PETER SHURE is Director of Strategic Marketing for Experient
and Editorial Director of Meeting Mentor.
AHA Deploys RFID to Track 25,000 Members at Annual Convention
By Bob Lucke
Experient engineered one of the largest deployments of RFID
to date at the 2006 Annual Convention of the American Heart Association.
The badges of all “Professional Members”—25,000 doctors and other health
care executives—were tagged with unique ID numbers and RFID portals and
overhead readers were placed at the entrances to 48 meeting rooms.
Attendance was tracked at more than 455 separate breakout sessions during a
five-day period.
Event organizers are constantly faced with two
challenges: deliver more value and better content to attendees, and
demonstrate Return-On-Investment (ROI) to exhibitors who must justify their
marketing expenditures. In order to be better able to meet these
challenges, organizers must rely on robust event information which helps
prove value to all. Historically, capturing meaningful information
regarding attendee behavior was not possible—that is, until the emergence
of RFID (Radio Frequency Identification).
What is RFID? Think about the technology that drives the now
ubiquitous Speedpass “pay at the pump” systems.
RFID consists of a tag and reader which utilize radio waves to communicate
at a distance of up to eight feet. The tag, which can be imbedded in a name
badge, consists of a small silicon microchip attached to a micro-thin foil
antenna, both of which can be laminated between two layers of paper. The
RFID reader, which consists of an antenna and transponder, unobtrusively
records a unique identification number contained in the tag.
Event organizers can use RFID to verify attendance at
sessions; track attendance in and out of the show floor; analyze traffic
patterns; and, calculate the amount of time attendees spend on the exhibit
floor.
Experient engineered one of the largest deployments of RFID
to date at the 2006 Scientific Sessions of the American Heart Association
(AHA) recently held in Chicago at McCormick Place. The badges of
all “Professional” registrants—approximately 25,000 doctors and other
health care professionals—contained an embedded RFID tag. RFID portals and
overhead readers were placed at the entrances to 48 meeting rooms and a
very large portion of the exhibit hall devoted to the display of scientific
posters. Attendance at more than 455 separate breakout sessions was tracked
during a five-day period.
As a result, Experient was able to provide AHA with
comprehensive attendance reports that correlated attendee demographic
profiles (member vs. non-member, domestic vs. international, scientific
specialty, etc.) against session data (subject, scientific category,
format, date/time, etc.). AHA considers this a valuable tool in planning
future educational programming. By gaining a better understanding of who
their customers are and the content of greatest individual interest as well
as the patterns or trends which emerge, AHA will be in a better position to
tailor their event offerings.
This was the second year AHA incorporated RFID into their
annual Scientific Sessions event. The richness of the data collected and
the quality of the analysis gained from the data is greatly increased by
utilizing the system for more than one year—allowing for trending analysis
over time.
Historically, most organizers collect attendee information
in the registration process. However, these fields are limited to “profile”
data—name, title, address, phone, fax, email, product interest and buying
authority. While this represents a good basis upon which show organizers
drive many business decisions, it lacks customer “behavior” information which
is far more valuable. Through harnessing RFID at all the entrances/exits to
the show floor, for example, organizers are automatically able to record
which buyers are on the floor at any given time and how much time they
spend there, etc.
Exhibitors are not satisfied with just being told how many
people registered for an event; they want to know how the potential buyers
behaved while at the event. Some associations, such as AHA, have already
incorporated RFID. Show organizers that are slower to adapt will have not
have access to valuable attendee behavioral information only available
through harnessing the unique features of RFID technology.
BOB LUCKE is Executive Vice President, Product Management,
for Experient. The accompanying article is adapted from EventROI, which can
be downloaded at the Solutions Center of www.experient-inc.com
Measuring The Benefits of Strategic Meeting
Management (SMMP)
By Susan Lichtenstein
In the arena of meetings and events, success is driven by
implementation of an organization wide end-to-end process that ensures the
best possible outcomes at the lowest possible cost. Successful design and
implementation of Strategic Meeting Management Programs (SMMP) offers
process efficiencies, greater control of risk management, cost reduction
and, ultimately, higher return-on-investment (ROI).
Process Efficiencies
Without end-to-end SMMP in place, true consolidation of
processes seldom occurs. Great opportunities exist when multiple work teams
have the benefit of a fully integrated network of expertise and resources.
SMMP leverages everything from contract negotiation and vendor sourcing to
greater efficiency in program design and on-site event management.
Risk Management
All contractual agreements place some type of financial
liability on sponsoring organizations. Implementation of a standard process
to manage contractual obligations can help eliminate unnecessary risk
exposure. Standard elements should centralize contract execution;
standardize SMMP administration; and provide for contract review and audit.
Cost Reduction
Cost reduction is achieved through a combination of direct
cost savings and cost avoidance. Savings are realized though process
improvement-driven productivity gains and improved sourcing and negotiation
leverage and expertise. Cost avoidance results from improved risk
management of costs associated with contract obligation and mitigation,
cancellation and attrition fees and other potential liabilities.
Return-On-Investment
Cost reduction is one indicator of a successful SMMP
program. The ultimate measure, however, is the ability to assess the
business impact of dollars invested. SMMP implementation allows event managers
and top management to access data critical to ROI analysis of both direct
and indirect costs. This enables informed business decisions when making
such investments in the future.
Senior management is increasingly focused on total
organization performance. Consequently, meeting managers must shift their
orientation from project management to process management.
SUSAN LICHTENSTEIN is vice president of Corporate Markets of
Experient.
Editor’s note: Additional information about SMMP can be
found in the Fifth Edition of “Professional Meeting Management,” published
by the Professional Convention Management Association or by emailing susan.lichtenstein@experient-inc.com
How To
Turn ‘An Ugly Baby’ Into an Attractive Piece of Business
By Brad Weaber
Very often, hotels receive an RFP that can’t possibly
achieve a property’s revenue goals. Years ago, those pieces of business were
christened “Ugly Babies.” But having some flexibility can immediately
change the way a piece of business is evaluated. Here are 10 factors that
can turn an Ugly Baby into a Handsome Prince.
Arrival/Departure Pattern. A Tuesday-to-Thursday pattern is
likely to be problematic for a hotel seeking to pair Sunday-to-Tuesday and
Wednesday-to-Friday meetings to fill its group block. Moving arrival by one
day can create significant savings.
Seasonality. Every destination and property have easily-identified peak periods and need periods.
Identify “shoulder seasons” and specifically ask about “need dates” when
group discounts can be maximized.
Lead Time. Determine the booking pattern of the
properties you are considering. In almost every instance where space is
available, anything considered short-term business will always be welcome.
Food and Beverage Revenue. While they generate their highest
profit on room revenue, hotels measure a group’s value in large part by
‘total spend.’ Design your program to maximize F&B revenue to the
property.
Outlet Usage. Often overlooked is the amount of money
groups spend on ancillary revenue sources like shopping, room service,
entertainment, health clubs/spas and other hotel outlets. Track that
history and add it to your group profile.
Single/Double Room Ratio. Can you upgrade your program or
reduce registration fees to attract more “significant others” to your
event? A large number of double/doubles signals that there will be more
people utilizing the hotel’s outlets.
Rooms-To-Space Ratio. “Space Hogs” (meetings that require a
disproportionate share of public space) are problematic for hotels. Revisit
your meeting agenda to see if you can turn back some function space that
the hotel can sell to another group.
Assumption of Risk. No one wants to shoulder potentially
onerous attrition risk. Offer guarantees that mitigate the risk assumed by
both sides.
Incremental Value of Your Account. A “marginal”
piece of business suddenly looks better when paired with additional
bookings for a hotel or chain.
Changes In The Market. Destinations that announce the addition
new inventory require time to absorb it. That may create an opportunity.
And any hotel that experiences a late cancellation can always find beauty
in a once Ugly Baby.
BRAD WEABER is Executive Vice president and Chief Customer
Officer (CCO) of Experient.
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