Resorts enjoyed a banner year in 2005 and have raised rates in response to skyrocketing demand, according to suppliers who advised meeting buyers to book early and be flexible as availability tightens.
Corporate group business has increased by "an unbelievable" 60 percent from 2004 levels, said Michael Kell, director of corporate and government sales in the Americas for Sol Melia Hotels & Resorts. The chain has aimed for a "healthy" sales mix of 30 percent corporate group sales and 70 percent leisure. In Puerto Rico, a top destination for large pharmaceutical events, Kell said corporate groups account for 55 percent to 60 percent of total sales.
"In 2006, we're going to be looking to even increase this number to over 60 percent group business—which is a mix of 70 percent of incentives with some of the incentives having limited meeting activity, and the rest is corporate meetings," he said.
Jerry Janove, director of sales for Orlando-based Resort Meetings Consortium, an organization that assists corporations in negotiations with resorts, estimated that resort room rates are nearing 2000 levels (Meetings Today, March 21).
Group rates have gone up an average of $10 per night, said Bill Briscoe, chief industry relations officer for meetings management firm HelmsBriscoe. Rates in 2006 may go up further as the market continues to shift to vendors' favor.
Though 2003 signaled the start of recovery and 2004 was strong, this year is "a banner year" for Sol Melia, Kell said, adding confirmed 2006 bookings already total 70 percent of 2005 group business.
Rates have increased in heavy demand areas, but Sol Melia prefers to negotiate packaged services rather than a la carte pricing. "If you have your act together and offer good services, they'll pay for it because they want quality," he said. Most demand comes from pharmaceutical, insurance and financial services companies, Kell said. Buyers should allow for longer lead times, as availability may be limited, he said, especially in Puerto Rico.
"While a few years ago we saw lead time shrink to around one month, we recommend that it should be a year because we have already booked major groups in Puerto Rico for May of next year," Kell said.
As the resort industry recovers, Kell said he has seen the influence of corporate procurement departments. Sales representatives work with clients to define return on investment and cost of amenities. "An incentive trip for 500 people is a big investment, they want make sure every dollar is wisely spent," Kell said.
Corporate group demand has risen 7.5 percent over 2004 and revenue has risen an estimated 10 percent at resort properties of Wyndham International according to senior vice president of sales D. Bradley Kent. Wyndham has used yield-management techniques to schedule groups around peak transient dates, he said. "We've done a better job at selling patterns," Kent said.
Wyndham was acquired on Aug. 16 by an affiliate of New York-based investment firm The Blackstone Group (BTN, Sept. 5).
As part of the merger, a collection of 14 Wyndham properties and seven hotels and resorts from Blackstone's Boca Hospitality Collection and Prime Hospitality holdings were packaged into a new brand: LXR Luxury Resorts. The Blackstone Group is expected to invest more than $400 million in the LXR properties over the next several years.
"We aim to respect the integrity and unique offerings that each of these trophy assets has to offer and will strive to heighten the distinct personality of each while offering our guests and unfailing commitment to excellence and a consistent, highly-personalized standard of service throughout each property," said John Tolbert, president of sales and marketing for LXR in a company release.
Rising resort fees have been one component of higher hotel surcharges and fees in 2005, according to Bjorn Hanson, head of PricewaterhouseCoopers' hospitality and leisure practices (Meetings Today, July 18).
Resort fees at Wyndham/LXR properties remained flat, Kent said, while more services, like free Internet access, have been added. "We've added value, but the fee is the same," he said.
Sol Melia's Kell advised buyers to request a breakdown of any resort fees. "If someone charges a resort fee customers should be asking, 'What do I get for it?' Just because the hotel is on the beach is not justification enough to charge a resort fee," Kell said.