Resort fees—long a controversial topic among meeting buyers—now frequently are being dropped upon request. Despite a relatively stable base of corporate group incentive events and additional new business from companies avoiding overseas locales, domestic resorts remain extremely negotiable on many corporate meeting terms.
The flexibility is most prevalent in the short term, as resort operators seek methods to coax to their properties corporate buyers who are hesitant to book internal meetings due to concerns over the economy and war.
Yet, a few segments of the market—corporate group incentive meetings and sales meetings with a leisure element—largely are holding up, said Kathryn Jurgensen, president of Irvine, Calif.-based meetings management firm Premier Meetings. Those meetings frequently land at resorts. "There's demand for spa and golf," she said, "and we're seeing more incentive-type activities in sales meetings. It gives the salespeople a little flavor of what a five-day incentive would be like, and makes them want to achieve that."
Those meetings are indicative of a relatively healthy domestic incentive market, Jurgensen said, buoyed by corporations seeking methods of increasing sales and booking them at North American locales, instead of those overseas.
"Sales are down at corporations, but many managers know that they must incentivize," Jurgensen said. "Our clients are spending an average of $3,000 per person on them, and we're not seeing them looking to downgrade properties. They are looking at Mexico, Canada, Alaska and Hawaii, which are perceived as safe in a volatile world situation."
Corporate group incentive business, injured by weak corporate financial performance and the currently dicey motivational appeal of travel, nevertheless remains a factor in several industries. "I'm amazed, but the finance and insurance world is doing pretty well," said David Ryan, director of sales and marketing of Avon, Colo.-based Ritz-Carlton Bachelor Gulch, a resort that opened in November. "It's quite strong. They still have a need to motivate in a tumultuous industry."
"Meeting volume is showing life, with the exception of the first few weeks of March," said Rodger MacDonald, vice president of strategic sales at Destination Hotels & Resorts. "The number of programs booked in 2003 should exceed last year's number at many of our properties."
The positive trends for resorts end there, though. MacDonald pointed to continual resort development as a trend that drives down prices for meetings— given new properties' tendencies toward aggressive pricing and heavy negotiation with buyers—citing DHR's Hotel del Coronado in San Diego as an example. "There's been shifts in a couple of different areas," DHR's MacDonald said. "There's more competition, the supply side is changing and destinations that you might not think would compete for this type of business are. The del Coronado, for example, has been hurt by new supply in Phoenix and Scottsdale, Ariz. The new product is priced for an oversupplied market, and that has an impact on buyers' decision making."
Traditional corporate meetings without an incentive element, however, do not seem to consistently include resorts in their site considerations. "We're not seeing as much interest in resorts from corporations," said Lynne Tiras, president of Houston-based independent meetings management firm International Meeting Managers. "Most of the interest is for very small, short-term meetings for the higher echelon of executives."
That situation has led to a spate of aggressive deal-making by resorts, as they offer buyers space with less emphasis on revenue generation than in previous seller's markets.
"We've been more flexible with groups booking further out," Ritz-Carlton's Ryan said. "We want to build a base of business. We love meetings that fill holes, but, typically, those planners all want the same dates. We want that base built beforehand and we will appease them to do so." Ryan also has seen meeting buyers interested in shorter lengths of stays, typically a three-day event that extends from Thursday to Saturday. As a result, the resort particularly has been aggressive in selling Monday through Wednesday packages.
Buyers' primary negotiation focus is still room rate, MacDonald said, although DHR's chain of high-end hotels and resorts has sought to accommodate other requests to tip site selections in its favor. "The CEO is aware of rate, so that's still the benchmark," MacDonald said, "but there are sway issues."
DHR also has been flexible with its cancellation policy, while not going as far as competitor InterContinental Hotels & Resorts—which eliminated cancellation fees on many 2003 meetings at domestic properties (Meetings Today, Feb. 10)
—the chain nevertheless has and will waive the fees. "One of our high-end competitors came out with a program that offered greater flexibility, but our properties have already embraced the same concept," MacDonald said. "It's not a blanket policy, but we offer those with issues the same flexibility."
The flexibility extends beyond rate and contractual clauses.
"The resorts are very amenable to what we need. There's lots of negotiating room," Jurgensen said. "They're negotiable on rate and on meeting space. We'll use presidential suites for receptions or private meetings, and the resorts used to want to charge us for that, but now there's no fight when we say no."
In addition, many resorts have eliminated resort fees from their meeting charges. Once an immutable feature of resort meeting contracts, the charges often vexed buyers (Meetings Today, Dec. 6, 1999)
and even sparked lawsuits (Meetings Today, March 25, 2002)
but now can be negotiated away without much difficulty.
"Some resort fees are going away, and the resorts are proud of that," Jurgensen said. "They knew the fees irritated everybody. I used to ask them to roll it into the room rate, because I hated showing it to clients. Now, in some cases, it's gone."
Tiras said she typically can delete resort fees from contracts, unless her corporate client prefers their inclusion.
"Resort fees are definitely negotiable," MacDonald said. "They're geared to travelers who will take advantage of a lot of amenities. So, based on meeting schedule and content, there's flexibility. If it's an all-day meeting with little time to go to the spa, there's flexibility. If it's an incentive, the fee can be agreed upon beforehand."
"We do not have a resort fee," Ryan said. "Clients do not want to be nickeled and dimed. We lay everything out beforehand and we don't add a lot of curveballs. There's rate, tax, food and beverage and other charges like audiovisual, all of which we're upfront with. We don't want to bait and switch people with additions to the room rate."
Some resort operators also denied that there was much of a problem with corporations avoiding resorts or downgrading properties due to potential perceptions of extravagance.
"The word 'resort' hasn't hurt us," Ryan said. "We can talk about our function space and our ability to drive attendance. There are those who think the Ritz-Carlton brand sends the wrong signal, but corporate buyers want to know their hotel will deliver, as meetings are more important now."