Florida Resorts Still Inclined To Negotiate W/ Planners
Florida resorts have seen some stabilization in the corporate meetings market—some even reported increases in occupancy—but there has been little movement toward stricter contractual terms for buyers, with sellers and buyers alike saying the resort properties remain very amenable to negotiations, particularly for short-term meetings.
Some of Florida's resort operators are reporting similar or better amounts of booked room nights and number of corporate meetings than one year ago, but without a commensurate increase in revenue per available room levels. Some factors behind this include a desire by some U.S. corporations to restrict meeting sites to domestic locales and a brutal winter in the Northeast, causing some buyers to yearn for Florida sunshine.
That's about as far as the good news goes for the resorts. Corporate meeting buyers still are able to negotiate favorable terms, and the word "resort" is still anathema to some corporations engulfed in layoffs, declining stock prices and weak corporate earnings reports.
"The smaller resorts are more conducive to negotiation because the larger properties are going after big annual conventions," said Margie LaBelle, president of Miami-based independent planning firm Meeting & Travel Consultants. "Clients want everything and are getting more demanding of properties, but I'll give them three to five options and they'll typically go with the property that offers the lowest rate, even if another property gives them everything else they want. That doesn't change."
Florida's properties are cautiously optimistic, pointing to increased demand for their corporate meeting services.
"Business is equal to last year," said Randy Griffin, director of sales and marketing at the Eden Roc Renaissance Resort & Spa in Miami Beach, and area director of marketing for all of Renaissance's Florida properties. "We are seeing domestic planners looking at domestic locations instead of the Caribbean or offshore resorts, particularly pharmaceutical companies, which are very frequent users of Caribbean properties."
Conversely, though, corporate meetings from other countries have decreased sharply, Griffin said, due primarily to expectations of military action in the Middle East.
"The international corporate group market has completely dried up," Griffin said. "I just met with 55 corporate meeting planners in Europe, and they're all very cautious and concerned about the impact of war."
Concerns about war have affected bookings at Griffin's properties, particularly for meetings to be held in the fourth quarter of 2003. That booking pace is behind that of 2002, he said, though the third-quarter pace is ahead by a commensurate level. "Planners are holding out because of the economy and war," he said.
Like properties nationwide, Griffin's properties have seen continual decreases in the amount of lead time involved in corporate meetings—in the case of the Eden Roc, down to three months from a typical six-to-nine month timeframe. The change hasn't much affected Griffin's negotiating philosophies, he said.
"Our strategy does not include changing pricing on our meeting space or rooms, but the urgency or response has changed," Griffin said. "We respond to everything now."
Others are still more optimistic. "We're actually seeing an increase in demand from last year," said Dennis Edwards, senior vice president of sales and marketing for the Greater Fort Lauderdale Convention and Visitors Bureau. "Our bookings and room nights are higher than last year's at this time. Last year, we had about 70 percent pickup at this time, now it's about 90 percent."
Similar to many properties, increases in meetings booked do not include commensurate increases in revenue at Ft. Lauderdale's resorts, but Edwards said many such properties are still ahead of their budgets. "I'm not sure why," he said, "maybe because our airport is served by low-fare carriers, so it's relatively inexpensive to get in and out. Plus, whenever there's bad weather up North, we do better on the meeting side. Our community has been very aggressive in negotiating rate and amenities, be it a continental breakfast or room charges. There's more negotiation on attrition and a quicker response to corporate meeting planners."
"We've been pretty fortunate: Our group bookings are 10 percent ahead of last year's, and we project a 12 percent increase for the full year," said Paul Wohlford, vice president of sales and marketing for the Sandestin, Fla.-based Sandestin Golf and Beach Resort. "That's the entire group market, but it is driven by corporate meetings. Our May through July is jammed. We're very fortunate. The Orlando area is getting killed."
Wohlford cited two primary reasons for his resort's relative strength: The property in May is expected to open new conference space, and there has been an increase in direct flights to nearby Destin-Ft. Walton Beach Airport from Dallas Fort Worth, Cincinnati and, in June, Houston. Still, the Sandestin has not been inclined to charge premium prices for its offerings, instead negotiating on ancillary charges and cancellation clauses—the latter a particular concern for corporate buyers, Wohlford said, because of the prospect of war.
"We will try to work with them," the Sandestin's Wohlford said. "We want them to be here, so we let them change dates. I'll need them to come back in two years, three years and five years when the economy is good, so there's no need to irritate them today."
Buyers also cut costs through food and beverage expenses and other leisure-based amenities, Wohlford said. "They are holding the line on food and beverage and are less inclined to hold full dinners," he said. "There's less golf, more meeting and less activities. The length of stay is shorter—on average, a half-day shorter—but they still spend the money when they're here. It's tough to bring people to a Florida resort on the Gulf of Mexico and expect them to do nothing but sit in meetings. They will need to get out."
Yet, not everyone feels the hoteliers' optimism is entirely justified. "Demand for short-term meetings is soft," said Jerry Janove, vice president of sales and marketing with Orlando-based aggregate meeting buyer Resort Meetings Consortium. "It's more consistent eight months to 12 months out."
In Janove's recent experience, the guarded optimism expressed by some hoteliers for the immediate future is without a strong foundation. "It's hard to see that," Janove said. "I can't think that room nights are holding firm. We have repeating groups that are 10 percent to 20 percent off their typical room nights, and people are concerned to travel now. They have been for 60 days." The result, he said, is some buyers can receive better rates at Florida resorts than they may have seen for quite a while.
"You can write your own ticket," Janove added. "They can be 30 percent to 40 percent lower than in the past. If you have a short-term piece of business, now is a great time to book it here. Plus, there are other perks thrown in, including food and beverage, be it complimentary coffee breaks, complimentary welcome amenities or even a complimentary opening reception. There's just much more supply than demand."
Though 2004 business seems to be more sound, Janove said, contracts for those meetings still could be negotiated fairly successfully. "They're so soft in the short term, they just want that production on the books," he said. "So there are still some strong deals to be cut, even three years out. Nobody is taking for granted that the economy will turn. They just want that business on the books."
Other buyers have focused on trimming room nights off meetings or downgrading service quality. "The number of contracts is holding at about the same level, but there is lower attendance," Meeting & Travel Consultants' LaBelle said. "The corporate world isn't sending everyone. They'll send one or two people from each department instead."
Some corporate buyers also have shifted their sights to seeking resorts with generally lower qualities of service and cost, LaBelle said. "Though some upscale resorts will still work with you, much of it depends on the individual salesperson, some will go over and above."
LaBelle's corporate clients frequently prefer to vary the areas of the state in which they hold their meetings, but there is little deviation in the current market throughout the state, she said. "It's a different world now," LaBelle said. "Everyone has cut back."