Resorts See Uptick In Biz

Though many resorts, particularly high-end or offshore properties, are suffering a persistent lack of corporate meetings business due to buyers' reluctance to book events at expensive, luxurious locales in a time of generally weak corporate economic conditions, not every resort is dismissed as a meeting location out of hand. Regional resorts have been able to pick up some business from buyers seeking nearby properties that offer leisure amenities.

"Regional resorts are holding up better," said Fred Shea, vice president of sales operations for Hyatt Corp. "They are able to compete with traditional resorts and downtown hotels as well. They allow groups to have something different without getting on a plane to Hawaii. A regional resort may be a premium versus a city center hotel, but it's better than an offshore one.

"The word 'resort' is not poisonous," Shea continued. "The location can be a concern, but not so much for domestic resorts. There's more negativity toward offshore or really high-end resorts that are in their peak seasons." Shea said domestic resorts are seeing business increase as corporate buyers shy away from those high-end destinations: "We're still getting incentive business. Sales meetings are lucrative and companies still have to have them. The booking pace isn't bad."

John McConahy, president of Pittsburgh-based meetings management firm Imagination Plus, agreed that corporate meetings buyers are not necessarily shying away from all resorts. "It all depends on where the resort is," he said. "You're still seeing a lot of people who want to hold their meetings close to home. A lot of budgets have been slashed and some major incentive trips have been eliminated. It's not back to normal and I expect six to 10 months of the same.

"It's probably picking up a bit," McConahy continued. "We were inundated with requests from resorts to take their space, but that has tapered." Though resorts still are offering packages laden with amenities and value for buyers, the time of buyers' greatest leverage probably has passed, McConahy said. "They'll still throw in cocktail parties and upgrades and the prices are right," he added, "but there are some properties that are running at between 70 percent and 80 percent occupancy, so the market is a little tougher."

"Buyers want value, and a lot of them think there's value today for meetings in 2004 or 2005, which is not necessarily the truth," said Jerry Janove, vice president of sales and marketing with Orlando-based aggregate buyer Resort Meetings Consortium. "There is huge value in bookings for meetings to be held before the end of the year. There have been huge incentives from resorts: book a meeting this year, get half-price on your meeting next year; higher commission percentages; a week's vacation at the resort. The resorts want to make up for the first three quarters of 2002 in the last quarter."

Some corporate buyers are biting at the offers, Janove said, particularly for small meetings at regional resorts. "There are more regional bookings now, as buyers still aren't really going for five-star resorts. Perception is everything," he said. "They want regional, cost-effective places. And for the regional properties, the buyer's market may extend until the first quarter of 2003, but the high-end properties are holding firm on that."

Though meetings business has declined at resorts, Shea said, it hasn't declined across the board. "Meetings of less than 100 attendees are relatively flat compared with last year. It's the larger meetings that have declined. Some of that is because some meetings of more than 100 attendees have shrunk in size to less than 100, making up some of that difference."

Last month, Hyatt opened the regional Chesapeake Bay Golf Resort, Spa and Marina in Cambridge, Md. As the property attempts to establish itself in the market, Shea said, it will try to coax business via advantageous short-term rates.

"There must be a trial period," Shea said. "There are typically pricing advantages during that period. People are suspect with a new hotel. Meeting planners can buy at the opening, within their booking cycle, and it can be a tremendous corporate package. Anything is negotiable."

Still, to some companies, booking a meeting at a resort can be a tough sell. "Incentives are less susceptible to economic pressures because they're perceived as necessary, although there has been a trend toward fewer achievers," said Mark Podolski, director of sales at the five-star St. Regis Monarch Beach in Dana Point, Calif. "With sales meetings, there has been less frequency and smaller attendance. There have been cancellations you wouldn't expect, but we have contracts that hold all parties accountable. These are notable companies without a history of cancellation that are doing so. Some of that is a fear of the concept of a five-star resort, but not much." Podolski noted that the resort has been able to recoup some revenues with cancellation damages, "but no cancellation fee can completely cover all revenue."

The St. Regis Monarch Beach is another new property, which opened in the summer of 2001, after the powerful seller's market of 1999 and 2000. However, Podolski said the property was able to make the inroads necessary to attract corporate meetings for the upcoming two years. "We spoke to the corporate market throughout 2000, when there was a stronger economy, and we got a good headstart," Podolski said. "We were thrilled at the pace of meeting demand. We received commitments for this year and 2003, so the outlook looks good for a strong year, especially given the number of short-term bookings out there—2004, though, looks a bit flat."