What Goes Down Must Come Up

Planners banking on cheap room rates may need to readjust their checkbooks. "With events that fall during peak times, there seems to be less room for negotiating [than there was]," says Carlos Pelham, meetings manager for the American Association for Clinical Chemistry. "But hotels will still negotiate during non-peak times."

Bjorn Hanson, leader of the hospitality and leisure practice at Pricewaterhouse-Coopers (PwC), says this is true industry-wide. While hotel rates have been on an upward trajectory, he wouldn't go so far as to use the word "recovery." "I'd say there's improvement," he says. Fred Shea, Hyatt's vice president of sales, agrees. "Rates are not necessarily going back up, but we are seeing less discounting," he says. And as far as the balance of power between planners and hotels, Shea says, "It's not back in our ballpark yet, but we are feeling a little more confident."

Hanson says market segments and geographical regions usually see improvement on a linear basis; in other words, those segments and cities that lost the most business during the past two years are now experiencing more of a lift. And barring any additional deterrents, this trend is likely to continue for the foreseeable future. "During 2004, near the end of the first quarter and into the second quarter, hotels will start aggressively negotiating." PwC expects revenue per available room to increase 4.9 percent in 2004 and 3.4 percent in 2005.