A Blueprint for Cost Savings

How do you hold meetings within budget in today's suppliers' market?

U.S. hotel occupancy is near year-2000 levels and rising steadily. RevPAR, a key measure of the health of hotels, grew 8.4 percent in 2005, the biggest gain since 1984. Smith Travel Research reported a 5.3 percent increase in the average daily room rate for 2005, while PricewaterhouseCoopers last month forecast a 5.6 percent price jump for this year.

If PwC is correct — and its forecasts have been presciently accurate since the company began making them in 1991 — the anticipated $5.08 average increase would be the largest in 24 years.

It's no secret that the pendulum has swung back with full force in favor of suppliers, after meeting planners had the market advantage for the better part of the last five years.

In fact, the executive director of group travel for a major island destination said that one of his market's large properties told him flat-out that it was not motivated by the group market because of the current strength of the more-profitable leisure market.

While most hotels haven't forgotten that meetings business helped save their bottom lines from worse declines during the recent travel slowdown, there's no getting around the fact that rates and dates are at a premium.

"Hotels haven't been inflexible, but there's always another company waiting at the door to take your place or clients willing to pay a higher price," said Jenny Besser, director of meetings for planning company MAC Meetings & Events, based in St. Louis.

Which brings us back to the question of the moment. What can planners do to find new value for their meetings in today's climate? Here are some tips:

Book early. Besser has been trying to get her clients to book more than a year ahead, whenever possible. But with short lead times more often the case, she's had to accept less-than-adequate meeting spaces. "We'll take the space but then look for alternative ways to seat the group," she said. "If classroom-style doesn't fit, we'll try a different configuration to make it work."

Be flexible. "If a group comes in on a Monday and is out on a Wednesday, it's not so good for us," said Scott Flexman, director of sales and marketing for Benchmark Hospitality's Landsdowne Resort in Leesburg, Va. "But if they can come in on Sunday and leave on Tuesday, we'll knock a certain percentage off [the Complete Meeting Package rate]."

Consider using a conference center. While some see conference centers as more expensive than traditional hotels, CMP pricing can help when it comes to food-and-beverage costs.

"We offer coffee-break kiosks and warm cookies, from 6 a.m. until 20 minutes after the meeting ends," said Flexman. "It's about the value-add. Also, at other places, people get killed on menus. They'll do chicken one night and decide that they have to do beef the next, but their budget is only $40 per person and that choice just bumped the price up to $68."

Improve your bargaining power. "We added a legal workshop to our program last year that teaches planners better negotiating skills, especially with hotels, which is a tricky area," said Beth Petersen, show manager for Hospitality Sales and Marketing Association International's Affordable Meetings series, which is run by George Little Management, based in White Plains, N.Y.

Change location. "People are looking at other cities that aren't pricey, especially in the Midwest," said Petersen. "Chicago is high in price, so people are now looking at Wisconsin and Indiana. And Atlanta is coming along. If the city is easily accessible and it's cheaper, it's a great place to have a meeting."

Greg Malark, Scottsdale, Ariz.-based executive vice president for site-selection firm HelmsBriscoe, agreed: "Rate increases vary substantially by market. Organizations that are budget-constrained, particularly associations, are looking for alternative cities. For the past nine or 10 months, we've seen people look at multiple destinations more than ever before."

Use multi-year contracts. "Especially if returning to the same city or using the same chain for multiple destinations, a two- or three-year contract allows us to negotiate for the same room rate and be able to get the same concessions year to year," said MAC's Besser.

Obtaining concessions adds value, but Besser warns that they've also become more difficult to negotiate.

"Hotels aren't as willing to give five VIP upgrades, nor are they eager to give welcome amenities to all the VIPs. They'll give only to a portion of them," she said. "It's difficult to explain to clients why they're not getting 40 comps this year when they were able to last year. To compensate, we'll work out a discount on baggage handling or something else non-hotel related."