Buyers Increasingly Scoring Preferred Hotel Mtg. Deals

More buyers are developing preferred hotel deals specifically for meetings, according to a new Meetings Today survey, as buyers' concern with the level of discounting they receive from hotels continues to grow.

According to a Meetings Monitor poll of more than 100 corporate buyers, exactly half said they have established preferred hotel deals for meetings, up from the 39 percent that said they did so in early 2002. In addition, about 31 percent of respondents said they are receiving even greater discounts for meetings from hotels than they were last year, with only 14 percent indicating they see smaller discounts.

The polls, taken together, illustrate a few trends that characterize the current group and meeting hotel marketplace. The buyer's market clearly remains strong, but there also is a growing movement to account for and leverage the entirety of a corporation's meetings business. Though many preferred meeting hotel deals seem to piggyback on established preferred transient deals, it seems clear that the ability of corporations to direct meeting spend is increasing.

However, there still are complications. Cancellations—due to the military action in Iraq, concerns about severe acute respiratory syndrome or economic factors—limit corporate meeting buyers' abilities to accurately predict and commit volume to a particular property or chain for a particular amount of time, which is a hallmark of nearly all preferred deals.

"People are trying to bundle their volume and are seeking ways to maximize their spend," according to Dave Scypinski, senior vice president of industry relations at Starwood Hotels & Resorts. "Intuitively, there is more interest. People are asking us what we can do for them if they put all of their eggs in our basket. I say, 'It depends on how many eggs you have.' "

Scypinski said any preferred meeting hotel deal that would draw Starwood's interest would have to include the corporation's ability to direct site selection. Even then, he said, meeting cancellations still happen, making it difficult to commit to providing a chain or a property with a certain dollar amount of meeting business.

"It's all predicated on how much they can mandate—and that's the word—specific hotel usage," Scypinski said. "Until transient travel comes back, we will see more of it."

There is no trend governing the meeting volume directed by corporations that have signed such chains.

The number of respondents who indicated that they direct less than 20 percent of meetings to preferred chains was about equal to those who said they direct more than two-thirds of events to their preferred chains.

"It's still probably a ways away," said Roger Dow, senior vice president of global and field sales for Marriott International. "There's no real comparison to preferred transient, which is about location and rate. Yet, when it comes to meetings, there's location, availability and many more factors. Preference on the individual travel side does drive meeting business, but we're still not seeing a real strong push for it. We do have loyal meeting customers, and our competitors have the same thing."

"We haven't developed a preferred hotel meeting deal," said Angie Pfeifer, director of travel and meeting management services at Winnipeg, Manitoba-based Investors Group Financial Services Inc. "We have preferred transient hotels, and we try to go there first with our meeting requests for proposals, but there are so many factors for meetings, with dates, availability and flexibility all driving rates. Plus, with everything so short term, it's hard to do."

The inability to predict which meeting might be canceled and when complicates any preferred meeting hotel deal that Investors Group might sign.

"It's not only difficult to guarantee meeting volume, it's more difficult to predict when a cancellation will happen," Pfeifer said. "Plus, if the preferred property is full, we'd end up paying higher at another hotel."

Also avoiding such deals out of necessity is St. Paul, Minn.-based AgriBank, said manager of meetings and travel Barbara Stark. The nature of the company's business, farm credit services, would make such a setup difficult. Adding to the difficulty is the makeup of AgriBank's meetings, which tend to be planned with 60 to 90 days of lead time and tend neither to follow a predictable geographical pattern nor be held exclusively in major cities, Stark said.

"It's difficult to predict exactly where our meetings are going to be because the sites follow our course of business," she said. "We hold meetings in secondary or tertiary cities, and sometimes it's at a chain hotel and sometimes a boutique. If I could focus on a particular city or chain, I think designating preferred meeting hotels would be a good idea."

Even without preferred deals, many corporations have found even stronger deals from chains than in the recent past.

"It's the same or better," according to Pfeifer. "It's dependent on the situation, but we've seen more partnerships with hotels in the past year. They're looking at the totality of our business, and I think they're realizing the industry wants total account management. We don't want three or four sales representatives from the same chain, we want one who understands the totality of the business."

"It's all situational," Starwood's Scypinski said. "Some hotels are doing very well, and others are not doing well at all. Yet, one year ago we did not have a war and we did not have SARS. That has led to more cancellations and so, to fill those holes, our rate is shrinking. Even if we discount more, it doesn't necessarily yield more room nights."

Other buyers said the value they are finding is less due to discounts on rate or space, but ancillary charges.

"They are more willing to cater to what I request," Stark said. "It's not always a discount on rate. They're much easier on attrition and cancellation, and they are more apt to offer other service concessions, like parties or parking, but they are still looking out for themselves, too."