Downturn Deals Blow To Resorts, Brings Buyers Leverage

Booking expensive meetings at extravagant resorts is hardly in vogue now among corporations trying to squeeze savings out of their meeting and travel programs. The economy, though, has created major short-term leverage for meeting buyers, as resorts cut rates and offer free amenities to get people through their doors. However, enough optimism exists for a 2002 recovery for many resort operators to hold the pricing line for long-term bookings.

The dramatic changes in the resort meeting marketplace have left many planners unable to do much but stuff their newfound leverage into their collective pockets: Though short-term opportunities are plentiful, many are prohibited from laying out the money for events other than sales and group incentive events long since on the books. But for those companies that haven't stuffed their meetings in a lockbox, opportunities abound.

"Resorts right now will do almost anything to get corporate group business because that business is down," said Bill Boyd, president and CEO of Dallas-based Sunbelt Motivation & Travel. "They've been very aggressive over the past two or three months. While room rates themselves haven't necessarily been impacted drastically, there have been other creative ways they've tried to bring prices down—better amenities, complimentary golf—to get groups to come."

Boyd said the relative steadiness of resort rates are symptomatic of corporations' desire not to downgrade the sites for their resort meetings. In other words, planners aren't moving their events from resorts to airport or suburban hotels, for example. This was bandied about some months ago as a possible tonic for meeting budgets, but most buyers trying to save seem more inclined to cancel or postpone rather than downgrade (Meetings Today, April 23).

"We're not seeing any cancellations of resort meetings with the purpose of downgrading and rebooking," Boyd said. "If they cancel, it's because they're completely canceling the meeting. So, if a resort can make it past the first round of the planner's consideration, then amenity deals become very important, since the competition is between resorts."

Boyd's publishing, insurance and computer software clients still are holding meetings at resort properties, he added, as these sectors still are employing incentives and conducting regular senior management meetings. Both types of groups often prefer to include an element of nearby golf during the meeting, making resorts a natural fit.

Beyond long-standing events, buyers have the ability to capitalize on short-term rates. "This has been a very short-term cycle," said Michelle Purser, director of sales at the Howey-in-the-Hills, Fla.-based Mission Inn Golf and Tennis Resort. "We've had events that usually were booked one year out done just six weeks out."

That dramatic shift, in turn, affects the resorts' ability to negotiate. "We are able to negotiate the short-term piece very hard, and there's excellent value because there's been such attrition and some cancellations too," said Jerry Janove, vice president of sales and marketing at the Resort Meetings Consortium of Cherry Hill, N.J. "There are advantages to holding a pop-up meeting at a resort now."

Janove said there's pressure not only on rates but on amenities as well, including complimentary breaks and hospitality suite offerings. "Resorts are very aggressive right now," he said. "They keep us in tune with cancellations and attrition opportunities and make sure we have a good handle on what the possibilities are. There was a time when hotels didn't even call us back. Now, they call us and work hard for the business, which is healthy and what they should have been doing the whole time. They want to know what it's going to take to book."

That differs, though, from more typical long-term corporate meeting resort negotiating, according to Janove. As many properties and chains sense a possible rebound sometime in the final six months of 2002, they are less inclined to offer sterling deals for space that far in the future. "They're holding firm on negotiations long term," he said. "They think there will be a turnaround."

Despite the availability, caused in no small part by cancellations, Janove said there are large pockets of industries that still are holding meeting and group incentive events. "There are some financial companies that have dropped their business to next to nothing," Janove said. "But, in other industries, there are still a lot of dealer shows and the like. Those industries have to have those kind of meetings." However, there are concessions in meetings designed to spur sales efforts. Janove pointed to spending cutbacks in theme receptions, for example, and downgrades in such amenities as free, full-liquor bars during entertainment.

"We're having a decent year, but our pre-sell last year was very good and it gave us a foundation," said Jeroen Gerrese, general manager of the Laguna Cliffs Marriott Resort at Dana Point, Calif. "Next year, of course, the pace is off. But there's a massive amount of tentative business, where corporate meeting planners sit and wait for official word. Because of that, we are holding space for far longer and pushing back release dates. We have to be that flexible to get the business."

Gerrese agreed that lead times for meetings actually held have decreased, and that meetings booked are shorter on the type of creativity that tends to mark resort events. That, however, has forced resorts to compete not only with other resorts but with every property in the area, he said.

"We're competing with every category," Gerrese said. "Even midmarket segments, because these meetings are held without any bells and whistles, so everyone wants a piece of that business. Everyone has rooms. Everyone is a competitor. There is no more business coming in and, with new builds, supply has increased and will continue to."

Corporate buyers, Gerrese said, have been very clear in elucidating their spending power. "They've been very forthcoming with their budget numbers, and that has not been the case over the past six or seven years," he said. "It changes the guidelines."

Mission Inn Golf and Tennis Resort's Purser said there also is a growing number of independent planners and third-parties entering the negotiating picture. "Planners have less time, and such independents as the Krisam Group and HelmsBriscoe are more prevalent," she said. "To us, that's good, because we are happy to pay the commission since we have the sale. Plus, we have good relationships with the independents, so they can be specific with us about what their client wants, be it a lower rate or free meeting space or upgraded amenities for their VIPs."

Until the market changes, the resort operators said, there is little choice but to grab what business they can and wait for a turnaround.

"First we thought it would be this fall, but now it looks like next year, and some even say a year from this fall," Purser said. "I'd be really happy if it ended this afternoon."