A Government Affair

Did you ever think it was possible to get a room-night at a Four Seasons for the bargain price of $150? What about $99? Think we're joking? For government groups that follow strict per- diem room rates, this is serious stuff. These days, high-end hotels are often bringing down their rates to allow government groups to come in. According to Alex Lichtenstein, senior conference specialist for the Office of the Comptroller in Washington D.C., properties that would not traditionally consider government business are now "banging on the door." Apparently with the abundance of hotel availability comes the desire to accommodate government groups, a sector of the meetings industry that was once considered small potatoes to even three- and four-star hotels, and which was definitely not given a second glance from the five-star properties. The reason: The per-diem rate government groups are required to abide by often comes in below the acceptable range of luxury hotels like Ritz-Carlton and Four Seasons. The per diems (monetary allowances placed on room rate and meals) are established by the U.S. General Services Administration (GSA) and vary from state to state. But now with hotel occupancies quite soft, government meeting planners are starting to see some changes in the way many hotels approach their business.

On the Prowl

Many upscale hotels are not only responding to government planners' RFPs, they are actually seeking out government groups. Says Lichtenstein, "I have started to receive promotional material from JW Marriott, Ritz-Carlton, Westin, Hyatt, and InterContinental Hotels," quite a leap from the limited-service hotels and government-funded buildings where many meetings typically take place.

However, while the hotels are eager for business, each property assesses groups on a case-by-case basis. For instance, a high-end property may be more receptive to government meetings in Washington D.C., where there is a great demand from government agencies and where the per diem is a cushy $150, but in Oregon, with its per-diem rate of around $60, government business may not look quite so appealing to hoteliers.

Something on the Side

While many government planners are relishing the increased interest in their business from high-end properties, executives from Ritz-Carlton and Four Seasons are quick to note that government groups are not typically their target market. Ellen Terry, D.C.-based regional director of sales for the mid-Atlantic Ritz-Carlton Hotels, notes, "Government business can be extremely profitable for our hotels, however, we can only work with groups requiring these [lowered] rates when we have a low demand." Simon Firmin, director of marketing at the Four Seasons in Philadelphia, agrees. "During high-demand periods, we don't pursue government business aggressively -- ;with our type of hotel we have to be very careful about the groups we take, so that potential revenue is not lost." But if there was ever a time of low demand, that time is now.

Except for the business that's coming from government agencies. "The hotels are starting to see the value government business has to offer," says Kathleen Strickland, president of PJAdvisors, a meetings management firm in Marietta, GA. "It is a pretty stable market -- when every other meetings segment fell apart, government was the one area that stayed solid. It is great to see the high-end hotels recognizing this and showing interest in doing business with us."

While not all groups are going to be pursued by five-star properties, most can expect the three- or four-star hotels to be receptive to their business. Typically, even properties in the upscale but not luxury segment are not hotly interested in government groups, says Strickland, but that has all changed in the past year. According to Fred Shea, VP of sales operations at Hyatt Hotels Corporation in Chicago, the chain is marketing itself as a major player in the government meetings market. At this year's Society of Government Meeting Professionals (SGMP) Conference in Orlando, FL, Hyatt was the most represented of all the hotel chains, sending 54 representatives to the conference -- just two years ago, they sent only two. "Government business meets year around," says Shea. So, unlike seasonal meetings like fraternities or sporting events, government meetings can come in at any time, often working with the hotel to fill space on a last-minute basis. And while many hotels view per diems as an obstacle, Shea notes that such standards can be beneficial to the property because they make negotiations much simpler.

While increased interest in the government market is obviously a result of the soft economy, this does not necessarily mean government groups will be tossed aside once the hotel market comes back. The hotels know that it takes a while to develop relationships and that over time, these can lead to increased and more profitable pieces of business for themselves. What's more, some of the most profitable business can in fact come from groups related to government. For Hyatt, becoming more government friendly has helped them host groups as high-level as the Secret Service. Once the host property was checked out by the Secret Service and deemed secure, Hyatt was even able to have former presidents George Bush and Bill Clinton stay at the hotel.

Image is Everything

When it comes to using high-end hotels, government meeting planners have a gray area to deal with: managing the perception of groups staying at a luxury property that evokes a sense of recreation and relaxation rather than a serious business atmosphere. "We are very conscious about perception," says Lichtenstein. "We don't want our clients to think we are frivolous, spending their money as if it is a vacation." However, he does note that as a planner, his main concern is finding a property that is the best value for the government and his attendees. "We like that we're able to make the attendees more comfortable at a high-end hotel."

While many planners are eager to bring their groups to an upscale venue, most admit that sometimes the location may give off the wrong message -- even if they are getting the per-diem rate at the property. Barbara Ann Cox, president of Meeting Makers in Tallahassee, FL, remembers a Department of Education summer conference at a golf resort in Florida some years back. Since it was summer, the hotel was "practically giving the rooms away," says Cox. However, when the public heard about the group meeting at a "resort" the conclusion was that the group was wasting tax dollars.

Perception can be a tricky thing, says Stacy Janecka, a conference manager for the Austin, TX-based Office of the Attorney General. "We don't use properties with the word 'resort' in the name, although a Ritz-Carlton or Four Seasons hotel would be fine for our groups as long as the rate is right." But different agencies may respond in different ways. Cox has groups that usually meet in Miami, where many hotels cater to tourists. Says Cox, "If we didn't use hotels with the name 'resort,' or didn't go to places because they were on a beach, we would be very limited as to where we could meet."

Sometimes using a high-end property can be a great perk for groups that are used to meeting in no-frills hotels. "The attendees love it when they can stay at an upscale property," says Strickland. "They are so appreciative, and I enjoy that. It makes you feel good to be able to give them the amenities and services that they are not used to having." As Cox puts it, "If you can get bigger bang for your buck, why not book a great property and give your attendees a better experience?"