Airport Hotels Struggle With Less Flights

Airport hotels traditionally have been a primary home of small, short-term corporate meetings, as their accessibility and generally lower costs lend themselves to quickly planned events. These properties, however, have not been touched only by dwindling meeting lead times, but must contend with a struggling airline market that has led to capacity and flight cuts, limiting the number of potential hotel occupants.

Several hoteliers noted their meeting lead times have dwindled, some greatly, in the past 12 months. Most of the trends that apply to the overall market—including a shaky economy that has led to corporations delaying meetings until financial performance can be assessed—apply here as well.

"Overall, a year ago our average booking window was about 90 to 120 days, but now that's down to 30 to 45 days," said Paul Sharp, director of sales and marketing at the Washington Dulles Airport Marriott. "There are fewer meetings and they're shorter."

"Gone are the days of booking corporate meetings six to nine months out," said Ed Carey, director of marketing at the Hilton Boston Logan Airport hotel. "Most bookings for us are anywhere from two weeks to four months out. We're getting more short-term meetings than we ever had. And we have been getting some pretty good-size meetings within two months. Just this week, we booked a 35-room corporate meeting with two weeks of lead time, and the contract was completed in three days."

Carey said some short-term meeting trends can be predicted by historical data, but only data collected during the past year. "You can't use data prior to Sept. 11, 2001, because it was a different mindset then," he said.

These properties have to deal with other factors beyond general short-term trends, such as fewer daily flights servicing some destinations. If the allure of an airport hotel as a meeting destination is accessibility and convenience, fewer daily opportunities to travel to the airport limits that accessibility and convenience—or could lead buyers to select another destination. As such, airport meeting business can be affected by the performance of the airlines that use the airport. With most carriers hemorrhaging money, the hotels are hurting as well.

"We are dramatically impacted when airlines scale back capacity and flights," said Sharon Capka, director of marketing at the Dallas Forth Worth Airport Marriott. "When the airport gets a cold, we get pneumonia, and that has happened since 2001, even before Sept. 11."

The situation is similar at Dulles, Sharp said. "There has been a 15 percent to 22 percent drop-off in customer deplanements at Dulles," he said. "Much of that is transient, which has been impacted greatly. There's a surplus of supply. The good news is that we've got long-term relationships with a lot of companies, and they've stuck with us."

Much of the typical business that once comprised the Dulles property has evaporated, Sharp said, causing the property's salesforce to seek out new avenues.

"We have seen about eight to 10 companies in the Dulles tech sector go out of business lately," he said. "That business has gone from 80 percent of our business to 40 percent. Our business mix has changed, and we've been looking at pharmaceutical and the federal government."

In addition to shorter lead times, many airport meetings are being staged for shorter duration. Carey said the four- or five-day corporate airport meeting is a thing of the past, replaced by one- or two-day meetings. Many airport meetings feature fewer receptions or related events as well.

The meetings also sport fewer attendees. Some smaller meetings are losing enough attendees after booking to disqualify them from meeting status, Capka said. "If they fall below the threshold of 10 rooms, we have to charge them the standard rate," he said.

Capka added that overall meeting business has increased a bit throughout 2002, led largely by the pharmaceutical and automotive industries.

Even considering the general lack of lead time, corporate meeting buyers still are interested in negotiating, Capka said. "They're negotiating facility service fees and rate," she said. "There's a little competitive pressure because of compression of demand."