Armed With Negotiating Leverage, Resorts Raise Rates

With corporate meetings making a comeback this year, resorts are starting to regain the upper hand at the bargaining table. Although not yet back to the glory days of 2000, hoteliers and industry analysts said 2004 brought a sudden surge in demand that is sending both occupancies and room rates upward at many resorts. For corporate meeting planners who have enjoyed a buyer's market, in which favorable dates and rates were easy to come by, getting what they want when they want it has become a bigger challenge.

"Flexibility is essential," said Jerry Janove, director of sales for the Resort Meetings Consortium, an Orlando-based organization that assists corporations in negotiations with resorts. "We're seeing business getting very strong at resorts. Rates are more difficult, and availability is tougher too."

Bill Briscoe, chief industry relations officer for the meeting planning and site selection firm HelmsBriscoe, agreed. "Sales directors around the country tell us that business this year is much improved," he said. "We're seeing group rates going up by an average of $10 a night. There are still some bargains to be found, but they are not nearly as plentiful as before."

Victor Lopez, divisional vice president for Hyatt Resorts, said meetings volume at many Hyatt resort properties has grown steadily in the past few months, resulting in a marked contrast at some properties over 2003 levels. "For instance, at the Hyatt Grand Cypress in Florida, we had a period of 96 percent occupancy in August, with one large meeting and a whole bunch of smaller ones," Lopez said. "Last year at that time, there were no more than a few families at the resort."

According to Lopez, Hyatt properties in offshore locations, particulalry in the Caribbean and Hawaii, are doing well this year. "Companies are not only willing to meet at resorts now, but they are willing to go a farther distance," he said.

Similarly, Tim Rector, Wyndham Hotels and Resorts area director of sales for the Caribbean, said meetings volume at Wyndham's properties in Puerto Rico, Jamaica, Aruba, the Bahamas and St. Thomas are up by an average of 12 percent this year. At the same time, leisure business also has increased. "Demand is up in different segments, so there is more of a squeeze going on for prime dates," Rector said. "Rates are creeping up, but not back to where they were before Sept. 11. Occupancies almost are."

Along with an improving economy, industry insiders believe companies have grown less concerned about the negative perceptions sometimes associated with resort meetings. "The perception problem is definitely abating," Briscoe said. "After Sept. 11, people canceled meetings or kept them close to home. If it was an educational or training meeting, it was usually held at a downtown city hotel. Now the stigma of going to a resort, even for a training meeting, is much less."

David Richard, director of sales and marketing for the Phoenician, said corporate meeting business is up at the Scottsdale resort this year, but noted the business primarily is meetings with an incentive element. "Companies still are concerned with perception. If the meeting objective has nothing to do with reward or motivation, they likely will choose a lower-tier hotel," Richard said.

With leisure travel also on the increase this year, planners face new challenges to find space in many resort locations, particularly on weekends or during high season. "Leisure destinations are coming back the fastest of all," said hotel analyst Chase Burritt, managing partner of Burritt Associates in Miami. "Business travel is up as well, but it's not as big a factor. It's tougher to get space in leisure destinations, especially in resort areas and at resort hotels."

"Group blocks are being decreased because leisure travel is taking more space," Janove acknowledged. "Weekends are much harder. You can't touch Las Vegas on the weekends now."

While securing weekend dates at some resorts may not be impossible, many resorts now drive harder bargains. "After 9/11, there was plenty of availability and companies could get what they wanted for weekend retreats," according to Nedra Peterson, senior account executive for Renaissance Lodge at Sonoma in California. "Now you really have to bring something to the table. We ask that you commit to a certain level of food and beverage and book a third night."

Seasonality remains a huge factor for determining rates in many resort locations. "There is still a big difference in Arizona between high and low seasons," The Phoenician's Richard said. "If you meet in the summer, you can save up to 50 percent over high season. Many corporate groups are doing this."

Despite the potential savings, however, Hyatt's Lopez noted that demand from groups for dates during high season is growing. "Companies with smaller budgets look for shoulder and off-season, but others whose sales are up look for high season," he said. "There's plenty of demand for it."

Many of these meetings remain short in terms of both duration and lead time. "Over the past few years, the five-day meeting became the three-day meeting," Richard said. "Lead times have been very short over the past year, sometimes just two or three weeks. With space becoming less available, however, the booking window will move out again."

Resort fees, which many properties continue to tack onto hotel bills, remain a bone of contention for planners. Getting them reduced or waived does not promise to get any easier in the months ahead. "Some resorts will simply not budge on them at all," Briscoe said. "When everything is selling as well as it is, the resort can simply figure that another client will pay the fees."