Here are some revealing figures: Hotel revenue at upscale and luxury hotel chains was up a healthy 11 percent in the first five months of 2004, while economy chains boosted revenue by just 3 percent, reports Smith Travel Research, based in Hendersonville, TN. And though consumer spending in June saw its largest drop in three years, business spending was up, according to government figures.
These numbers, combined with anecdotal evidence, suggest there's a healthy return of meetings to the upscale and luxury markets—and not just in low and shoulder seasons when rates are discounted. "Our corporate clients are starting to go back to what used to be considered normal in terms of resort use," says Lynne Tiras, president of International Meeting Managers in Houston, TX. "We're back to booking Ritz-Carltons for them. For a while, it was very limiting when some corporations set rules forbidding meetings from going anywhere that had the word 'resort' in the name—there were some really good deals out there that we couldn't use, so they had to go to a mediocre property and have not nearly as good an experience. That was a real shame."
Pricier hotels and resorts report that increased corporate-group bookings have lessened some of the pressure they had to keep rates low. "I think we're definitely turning the corner. We're not looking at major rate increases, but we are able to push through normal increases," says Mark Barnes, director of marketing at the JW Marriott Ihilani Resort and Spa in Oahu, HI, where rack rates are about $430 for ocean-view rooms. "I think you'll see fewer discounts and deals as time goes on. Those are the things that hoteliers wanted to get rid of, and now they can."
Here's why: "In many recent instances, I've said to a company, 'If you just wait a bit with that meeting, you'll be able to get a much better rate for it,' " says Tiras. "But they aren't concerned with the price as much as the timing of the meeting, and they are willing to pay for that precise timing again." Even cancellation fees are not making firms blanch anymore. "They are willing to pay to cancel, which hasn't been the case for a long time."
But just when it seems that business was moving back to the way industry veterans remember it, Microsoft injects its own dose of reality: In late July, the Redmond, WA-based software firm announced a $1-billion cost- cutting initiative, with marketing and event planning targeted to feel the ax. "We're trying to communicate internally that we have partners we work with and standard contracts with favorable pricing, based on volume," says Jeffrey Singsaas, Microsoft's director of events. "As more people avail themselves of those resources, we'll really save money compared to what we're spending today."