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by Tim Brown | September 4, 2015

The post-recession years have been called the biggest era of change in the meeting and hospitality industry, which clearly has impacted how planners plan and execute meetings and how hoteliers and suppliers sell and deliver service. Add the growing expectations by senior management for improved planner productivity, added meeting value, cost savings, contract risk mitigation and ROI, and you can see why corporate and association planning teams now must take a strategic approach to meeting management.

Still a Strong Seller's Market

Meeting demand remains high, and there is limited new hotel inventory, so this remains a hot seller's market. How hot? 2015 will mark historical highs in hotel occupancy, average daily rate and revenue per available room (RevPAR). Additionally, hoteliers are turning down three meetings for every one they accept. Success today requires that planners use a strategic RFP process and evaluate their leverage on each RFP, based on many hotel revenue management criteria, including room block (biggest profit center at 77 percent gross profit), peak night pattern, group F&B contribution (second biggest profit center at 38 percent gross profit), rooms-to-space ratio, and ancillary spend (technology, audio visual, business center, etc).

Contract Risk Mitigation

In the Strategic Meetings Management (SMM) environment, hotel contract risk mitigation and cost containment have become important metrics. The best way to achieve success is to create a custom contract which can be modified for each meeting, big and small, and be distributed to the hotel. Your custom contract should include all contract components, concessions, hotel fees and surcharges (eliminate or reduce), performance clauses (based on profit, not revenue), and company legal and liability language. This puts all requests on the table at one time and allows your hotel partner to evaluate all components and make counteroffer, which not only adds more value, but expedites the overall contracting process.

Track and Leverage Meeting Spend for Maximum $uccess

It is essential for planning teams to track and leverage all meeting activity and spend. This allows teams to assure value-based outcomes and to have a value and financial reporting process for senior management and stakeholders. This can best be achieved by tracking all revenues (by category and by individual hotel and chain). When a hotel evaluates a meeting RFP, their value assessment is based on revenue management criteria over each set of dates, including your RFP spend. But when you have easy access to all past spend, it can be leveraged to enhance saving and value by five to 15 percent, and improve contract terms, including eliminating or reducing hotel fees and surcharges. (In 2014, added hotel fees were $2.35 billion in the US alone; they are projected to be $2.47 billion in 2015).

Conclusions

We can all agree that the bar has gone up -- way up -- on the need to demonstrate meeting value and ROI to managers and stakeholders. Additionally, planning teams must carefully evaluate their current meeting management processes, systems, preferred suppliers, and technology resources, and implement SMM standards. Planning teams must track and leverage spend to assure success. The entire meeting and hospitality industry is undergoing significant change, and to survive and thrive, we must be proactive and view change as an opportunity. I like this proverb: "When the winds of change blow, some people build walls, others build windmills." Go for the latter!

Tim Brown is CEO of Meeting Sites Resource. MSR is a global strategic meetings management solutions organization with a 20-year track record of meeting excellence. This includes global hotel sourcing and custom contract negotiations, professional meeting support services, SMM consulting and advanced meeting technology.
 
Tim contributes articles to industry trade publications and speaks at many industry events. MSR also designs custom strategic education for planning and procurement teams. MSR is a recognition recipient of Meeting Professionals International's Golden Paragon Award, MPI's highest recognition for meeting excellence.
 
For a complimentary copy of Tim's "Meeting Value & ROI Analysis," contact him at tbrown@meetingsites.net.