InterContinental Hotels & Resorts on April 5 announced that it would offer an even euro-to-U.S.-dollar exchange rate for meetings booked and held through February 2006 at 13 European properties. The program was launched swiftly to capitalize on internal research that indicated more U.S. businesses and associations were interested in holding meetings in Europe, said InterContinental's vice president of sales in Europe and architect of the euro-dollar program.
"It works out to a 30 percent discount, which is a massive discount when you consider the sorts of products that we're talking about," said Jonathan Mills, vice president of sales in Europe for InterContinental. "We're aware that there are company cost pressures throughout the world, and we felt that we just wanted to take away any currency or cost pressure to entice our U.S. customers to come and experience the meeting product that we have."
Mills approached the InterContinental board of directors with the euro-dollar program after seeing a rise in U.S. inquiries of European properties. Rather than waiting to see if the inquiries converted into actual sales, Mills said he proposed quick action.
"Inquiries obviously are one thing, the materialization of that is another," Mills said. "We could wait and see if it does convert, but I wanted us to be proactive and send a very strong message out into the U.S. market that we're taking away any exchange pressure." Early last week, US$1 was worth only E0.77.
Mills said meetings business from the United States dropped off sharply in Europe after the Sept. 11, 2001, terrorist attacks, but that overall inquiry growth in Q1 versus last year is a double-digit percentage. U.S.-based inquiry growth within that number is single-digit percentage growth, he said.
Meetings business makes up about 30 percent of revenue at the properties, Mills said, and before 2001, U.S.-based group business accounted for 50 percent to 70 percent of group corporate sales at some European InterContinental hotels.
"We're now seeing significant interest coming back and we wanted to get back to the levels of old," Mills said. "Pharmaceutical is an important segment and we're also seeing association business coming from the States."
Although InterContinental has 26 hotels throughout Europe, the 13 participating are the only properties in countries that have adopted the euro.
"We wanted to make it simple, rather than having people get their calculators out," Mills said.
At press time, a E1,000 charge would equal a savings of $292 under the new program. Although the dollar is expected to continue to lose ground, Mills said the program would extend to February 2006, regardless of fluctuating exchange rates.
"We've been very open with the offer and we're aware of how far the market can fluctuate. The reason isn't necessarily about how much the exchange rate is, the reason is to take the issue of the exchange rate away. Whether it gets worse, better or stays the same, it's just to alleviate the exchange rate totally," he said.
Mills said he expected increased volume to offset the discount.
"We're expect that revenues will increase as a result and, most importantly, that the U.S. guests in the meetings market are coming back," he said.
InterContinental also has opened new European properties and invested in upgrades and renovations in Europe to attract U.S.-based business, Mills said. "We have many properties that have had substantial revenue for enhancement or brand new openings," he said.
The chain has launched a marketing drive to promote the new program and Mills said verbal feedback from meeting buyers has been "exceptional."
Mills said the InterContinental board of directors also has been supportive of the program. InterContinental has been aggressive in hunting corporate group business within the United States. In early 2003 the chain eliminated cancellation and attrition fees at 16 properties in North America and Puerto Rico (Meetings Today, Feb. 10, 2003).
The euro-dollar program was created in the same spirit of aggressively going after group business, Mills said, especially with the extended length of the program's offer.
"Offering it to the end of February is a significant message because normally offers are for a very short space of time," he said. "To be able to offer this for nearly a year is a significant statement on how serious we are in attracting customers from the States."
Mills said he pushed for quick action on the program, before waiting for more complete data supporting his theory that U.S. groups are going back to Europe.
"In a lot of instances there's a tendency to react afterwards if the conversion hadn't been right, but I thought this time because there's so much in Europe that we should be proactive," Mills said. "By monitoring the exchange rate and hearing what our global sales team and customers are telling us in the United States, we've moved very quickly on it."