Lane's DeForrest Weighs Meetings Demand Drop
Lane Hospitality president and CEO Bill DeForrest spoke recently to BTN hotel editor Michael B. Baker about the economy's impact on corporate travel and events at his company's 23 select- and full-service hotels, largely in the midwestern and eastern United States, as well as trends in meeting bookings and management.
Business Travel News: What are your expectations for meetings demand in the coming months?
Bill DeForrest: A lot of our hotels are very meetings-driven, probably over 50 percent. We've taken a hard look at what's important to our meetings customers, making sure we do everything we can to meet the challenges that all clients have today: how they can drive efficiency and how they can get to a place where they feel that they're being good stewards of both their time and their expenses. Every organization is very focused on doing as much as they can while being as lean as they possibly can with the uncertainty in the marketplace today. People still need to drive growth in their organizations, processes need to get reviewed and programs need to be discussed. It's really a very good time to be an organization that can deliver on a meetings experience in a cost-effective and efficient manner.
BTN: Will the ratio of corporate versus leisure travel shift at your properties?
DeForrest: The mix of business may stay the same, but the market that business comes from may shift a little bit. Our customers might be someone closer to where we are than they were in the past. The Doubletree in Annapolis is in a great example, where we would see travelers coming on a domestic basis really from every market. Now we're much more focused on the 300- to 500-mile radius, so those demand centers may shift a little bit.
BTN: Will there be more smaller, regional meetings?
DeForrest: That's absolutely the case. We're seeing a lot of events that have fewer attendees, where an organization may have sent 10 representatives but are now sending two or three. Whatever capital they can preserve by committing those dollars today, they may need in the future. As they look six to 12 months down the road, they're just not sure whether it's going to get worse or going to get better.
BTN: Has the economy accelerated a push for meeting buyers to consider trading down to lower tiers when selecting properties?
DeForrest: Yes. In our portfolio, we work with quality brands—Courtyard, Crowne Plaza, Hilton products—but it's not the luxury or even the upper upscale brands that tended to be the most in favor over the past few years. If you're planning one or two meetings a year, and those are the only chances you get to bring a team together, you don't want to sacrifice the overall experience. You can create a very good experience without necessarily going to the luxury brand assets. Luxury and upper upscale hotels do a lot of things very well. In the long term, they will continue to provide a really nice niche in the travel business. Today, however, it's a little bit uncomfortable for some travelers to make that decision and that choice.
BTN: The so-called AIG effect?
DeForrest: The luxury brands that are well-known are losing business to independents that might not be much more affordable, but are much more palatable.
BTN: Are booking windows getting shorter as well?
DeForrest: Even if a company has made a decision to do something three or four months out, they'll hold a lot of things on a tentative basis, because they're not sure of the changes inside their organizations that are going to preclude them. Or, there might be a delay. They're not just trying to postpone the expense of whatever their meeting costs were going to be, but in so many cases, the business is changing so quickly that whatever they thought their message was going to be at the meeting needs to be rethought and refined. There's so little solid footing under a lot of our customers that they're trying to stay flexible.
BTN: How has the economic climate changed the strategy of your sales force?
DeForrest: We have to really rethink the way we've sold over the past couple of years. Las Vegas is a great example. You read story after story about whose suite was the most expensive, so the competition was to not just have 10,000-sq.-ft. suites but at a price that was unbelievably off the charts.
When you talk to customers today, you really have to talk to them in a way that lets them know that you understand the issues with which they're dealing. We don't necessarily have to do anything different from a delivery standpoint but from an ability to present it and engage with your guests and customers, and to be respectful of the challenges they're facing.
The other direction we've given our associates, whether it's sales or reservations groups, is that they have to be the easiest person with whom to do business. We've got to build the relationships that make it very easy, because people are just overwhelmed with a lot of their activities and responsibilities they have in their own environment. In so many cases, especially with the meetings that we tend to deal with, it's not necessarily the long-term, sophisticated meeting planners who are trying to execute them. They probably have 15 other jobs, and 30 days out, they find out the company wants to bring the sales team together, so they now have to switch to meeting planner mode.
BTN: What are your plans for growth right now?
DeForrest: Today, it's very tough to make a capital commitment and to invest new capital in the industry because it's really hard to understand value on the real estate piece of it. Over the last couple of years, we've spent some very significant capital investments on our assets, so we're fortunate that our portfolio today is in very good condition. Our plan today is to run our existing assets as well as we can, to leverage our leadership talent and make sure we're driving performance of our existing portfolio. Our growth will come more from the management side of our business than the investment side of our business, at least in 2009.