Meeting Mentor Magazine

December 2018

Cover Story

Group Business the Driving Engine for Hotels, Conference Centers

Numbers don’t lie. Except when they do.

Group room nights, according to Smith Travel Research (STR), showed a 5.2 percent increase in the first six months of 2010. But that figure is what some economists refer to as a “false positive.” In real numbers, the beleaguered hospitality industry sold 24.7 million fewer group room nights compared with the similar time period in 2008.

In a wonderful series of articles published in www.hotelnewsnow.com, STR’s Vice President of Global Development Jan Freitag presents both sides of the argument regarding the health of the hotel sector. On the bright side, transient demand was up 8.4 percent through June. But while corporate profits were up, the flip side is lingering uncertainty about whether that trend will continue through the rest of the year.

Some observers are seeing light at the end of the tunnel.

In a report issued in early July, Steven Kent, lodging industry analyst for Goldman Sachs, wrote that “group and conference/convention activity is accelerating. Group business is important,” he noted, “because even though it accounts for (only) 35-to-45 percent of a full-service hotel’s room demand, it is set far in advance; when rooms are set aside for conferences, hotel managers can afford to wait for the higher-rated, last-minute transient traveler.”

While transient travel has picked up, especially on the East Coast, Average Daily Rate (ADR) for groups remains anchored near 2009 levels. Across-the-board rate renegotiation, according to STR, has contributed to a 4.7 percent year-over-year decline in group ADR; overall ADR is off 8.6 percent.

The most staggering number behind the numbers is the performance of the conference center sector. Largely dependent on corporate meetings, conference centers reported a 43.5 percent decline in net operating income in 2009, according  to the Trends report compiled by Colliers PKF Consulting USA. This underscores the historic value of association business.

While attendance and sale of exhibit space remain sensitive to economic conditions, “associations show up.” Destinations and hotels/resorts that don’t have a deep well of association business in the pipeline will be the last to recover from the recession. That’s one number you can take to the bank. — Peter Shure


Free Subscription to
Meeting Mentor Online









Continue

About ConferenceDirect
ConferenceDirect is a global meetings solutions company offering site selection/contract negotiation, conference management, housing & registration services, mobile app technology and strategic meetings management solutions. It provides expertise to 2,500 corporations and associations through our 325 Associates globally. www.conferencedirect.com

About MeetingMentor
MeetingMentor, the leading publication for senior meeting planners, is circulated to the clients, prospects and sales associates of ConferenceDirect, which books more than 3.87 million room nights. www.meetingmentormag.com

Design by: Loewy Design