Meeting Mentor Magazine

December 2018

Cover Story

Strong Hotel Metrics Put Pressure
On 2014 Meeting Negotiations

It’s been a strong year for just about every segment of the hospitality and travel industries, and prospects for 2014 appear equally bright. Facing pressure on rates, dates, and space, meeting professionals should expect higher room rates, fewer concessions, and longer lead times for booking.

Hotel demand…keeps rising. The hotel industry reported the highest monthly room revenue ever in June at $11.5 billion, according to STR. Meanwhile, Q2 2013 recorded year-over-year increases in occupancy (+1.3 percent, to 65.9 percent) and average daily rate (+3.6 percent, to $110.47), and revenue per available room (+5 percent) posted its 13th consecutive quarter of growth. Next year, STR projects a 4.6 percent rise in ADR to $116.43.

Looking ahead to 2014, PKF-Hospitality Research is forecasting a very strong 3.3 percent growth in lodging demand, with just a 1 percent projected increase in supply. National occupancy will hit 63.8 percent next year, the highest annual rate since 1997. “We are projecting occupancy levels for the luxury and upper-upscale segments to exceed 70 percent through 2017,” said Robert Mandelbaum, director of research information services, PKF-HR. “Hotels in these two categories accommodate the largest share of the meetings business, so availability will be tough to find. Meeting planners will need to be flexible with the timing of their meetings and look at alternative secondary or tertiary markets if they want to find a bargain at a specific hotel.”

On that note, 33 of the 50 markets PKF-HR tracks in its Hotel Horizons® universe are forecast to achieve occupancy levels at or above their pre-recession peak levels, and 17 markets are projected to see ADR grow by 6 percent or more. Already, “meeting planners are cutting back on food and beverage and other expenditures,” Mandelbaum added. “While hotels may be more inclined to negotiate items like meeting room rental, Wi-Fi charges, and some food and beverage, we expect them to be pretty aggressive with room rates.”

Hotel pipeline…ticks up. STR reported 327,293 rooms in the active U.S. hotel development pipeline in June, 10.5 percent more than June 2012 numbers and a 28 percent increase in rooms under construction. This may not be enough to counterbalance the continuing rise in ADR. The three markets reporting the greatest increases in rooms under construction year-over-year: Anaheim-Santa Ana, Calif. (+402 percent with 935 rooms); Houston (+152 percent with 1,669 rooms); and Los Angeles-Long Beach (+149 percent with 2,132 rooms).

Meeting forecast…is more subdued. The Center for Exhibition Industry Research’s CEIR Index for Q1 2013 increased 1.3 percent, compared to the same period in 2012 — the 11th consecutive quarter of growth. Still, it lagged real GDP gain of 1.8 percent during the period. Projections for 2014 point to modest increases of 1.7 percent each in net square footage and exhibitors; 2 percent in real revenues; and a stronger 3 percent in attendance (which will surpass 70 million industry-wide for the first time). The 2.1 percent growth for the overall exhibition industry next year would be almost double the 1.1 percent projected for 2013.

Group travel spending…remains strong. In 2013, according to the Global Business Travel Association, it will rise 5.3 percent (over 2012 numbers) to $117.1 billion. Group travel volume, though, is projected to fall slightly (-0.3%) this year to 166 million person-trips, driven by continued corporate constraints on meetings activity. Meanwhile, GBTA is forecasting 2014 to be a significant turning point in international outbound business travel as the global economy gets back on its feet. Group meeting activity will show slightly more growth in 2014, when volume will increase 1.8 percent and spending 6.8 percent.

Travel and tourism spending…accelerates. In Q1 2013, it increased at an annual rate of 6.8 percent after rising 2.1 percent in the fourth quarter of 2012, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.Maxine Golding


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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

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