Remington Hotels' Sloan Dean discusses:
- Strategies for responding to meeting RFPs
- The status of hotel staffing
- Rate projections for 2023
Meetings and group demand for Remington Hotels, a Dallas-based hotel management company with a portfolio of more than 110 properties, not only returned in 2022 but proved to be “better than ever,” CEO Sloan Dean said during a panel discussion at the American Lodging Investment Summit in Los Angeles. Dean discussed the company’s performance and ongoing strategies with BTN’s Angelique Platas. Edited excerpts follow.
BTN: Can you tell me more about Remington Hotels’ recovery in meetings and the business sector? Why is Remington seeing this level of recovery?
Sloan Dean: From April 1–Dec. 31, 2022, our group revenues consumed were up 12.9 percent versus 2019. It's up about 10 percent in rate and about 2 percent in room nights, [equating] to almost a 13 percent gain compared on a nominal basis to 2019—those numbers have only accelerated going into 2023. I just finished our January bookings, and about 30 percent of my revenues are group. We're 70 percent training and 30 percent group, but in the month of January 2023 we are 171 percent over last year. Obviously, omicron kicked up a year ago [and] we've got an easy Q1 comparable, but compared to January 2020, our bookings are up 30 percent. Our full-year 2023 group pace—what we have on the books compared to 2019—is actually ahead. I think you're going to hear a lot of companies talk about how Q4 this past year was an inflection point for group.
We are outperforming in group because there's a change in consumer behavior. Transient business travel is down about 30 percent versus ’19, but corporate group is up. You have a lot more company offsites, a lot of companies have moved to remote work. What has filled [much] of the gap is company meetups or strategic offsites.
One of the things people haven't talked about is, because occupancy midweek is still below 2019 levels, you have more availability. [Previously,] you wouldn't take as much group midweek because you had higher-rated business transient. More of a corporation’s travel budget is going to these group meetups instead of individual trips, so you have more midweek group filling in the gaps.
In 2021, we got our staffing back to 2019 levels. If you really want revenues to get back faster, you have to have sales structured in a way to make that happen. Our group sales organization is actually at the same staffing levels or bigger at most every hotel. Bringing employees back faster than our competitors lent to us converting more group business. We also have instituted several kinds of technology enhancements that helped group conversion.
BTN: As a management company, how do you interact within the corporate market? Do you take an active role in the request-for-proposal process?
Dean: We use AI to fill in requests for proposals for groups, so our response rate is faster. We've seen a higher conversion rate by using that technology. We've moved to electronic contracts so we can move faster—all of which led to our conversion rate in group going up. Our response rate is faster than it's ever been, and our … staffing levels are as high as they ever have been. Our group conversion rate from prospect to definite across the company is just shy of 11 percent, which is actually quite high. We’ve been very intentional about identifying channels and RFPs that are higher-conversion and having more individual focus on those, and then using AI to respond to more of the channels that are low-conversion, where they're just sourcing hundreds [of] hotels, and in some cases frankly we also trained sales individuals to just decline to participate. Sales time is money. We have over 300 people in sales as a company. We want to make sure we maximize their time. I think RFP spam is a big part of sales proficiency that doesn't get addressed in the industry.
BTN: How do you support the brands in your portfolio in terms of responding to RFPs?
Dean: We've really focused on getting the resources back [and] only responding to RFPs that we think are high probability to convert. [We bring] a bit of a more math/analytical approach to responding. We treat branded hotels no differently than independent. The only difference is the branded hotels, you do occasionally get a group leads from their group sales.
BTN: Do you negotiate individually on the level with corporate buyers, or you negotiating on behalf of the brand?
Dean: It's individual. We have a few wholesale agreements that are enterprise-wide. We've got group marketing contracts... that contract at a master service level across the enterprise, but so much of group business is just local—95 percent plus of all group demand is localized.
BTN: How has transient RFP activity been in your group of hotels and how was the season going into 2023?
Dean: It's really been a mix of haves and have-nots. If you're in a non-tech industry or are non-publicly traded—you're a small or midsized businesses—we're expecting them to increase volume in 2023, and the pricing that we got was basically what we budgeted. We wanted to get 5 percent to 7 percent rate lift at least, and I think in most cases we were able to get that. Where there are problems are the Fortune 500s, tech consulting and heavy tech, where you see the headlines of layoffs. Absent a few hotels that we run in San Francisco, we're not heavily concentrated in business transient tech accounts. But we have seen them be very firm on not accepting rate increases this year.
We've gotten really good rate growth, and we expect business transient to expand next year. Business transient is the only segment that is still down for U.S. versus ’19. It finished about 30 percent down for 2022 compared to 2019. We're expecting it to improve 10 percent next year [over] this year.
BTN: Are you looking for anything different in your RFPs than you were in the past? Is there anything that you're looking to include or exclude?
Dean: No. Some companies ask about [environmental social and governance] in the RFP. Still, your standard things: They don't want you to increase their rates. They want flexibility around cancellation—we've tried to push 48-hour cancellation. They still want 6 p.m. day-of-arrival, which is kind of old-school. They still want guaranteed upgrades for some high-frequency travelers. I'd say that's all pretty standard. It’s becoming more common for larger corporations to ask about your ESG, but I'd say it's only about 10 percent. ESG drives little to no booking behavior with the exception of a few companies that require ESG goals to be accepted into their program.
BTN: As you look at your mix of business going into 2023, what are you focusing on?
Dean: I think whoever wins the group game wins market share—our goal is to be slightly more group [business] this year. Hence why I think a strategic advantage of ours was ending January with group up versus ‘19. I think that insulates us some from risk of recession.
The second thing is I think you will continue to see leisure strength. The majority of travel happens with people with $150,000-plus in income level, and they're not going to curb their vacations during a shallow recession. Our expectation is leisure in ‘23 will be bigger than it was in ‘22.
The big focus [for business travel is] not letting our foot off the gas in rate. Our rate was up almost 10 percent in January 2023 versus 2019. That's how we get back to profitability. We can't slow down. I do think sometimes the business transient gets too many headlines. There were three leisure [nights for every one business]. Now there's four leisure for every one business. Everybody seems to focus on the one.