Fla. Resorts Flexible Short Term, Stand Firm For 2003

With the corporate meetings market still in flux, Florida's resorts have seen significant shifts in the nature of negotiating and booking as lead times have shrunk to levels not seen in years. Though corporate buyers have been able to find deals while booking quickly, even at high-end properties, the market may sharpen tightly by this time next year.

Corporate meeting cutbacks, the lingering impact of Sept. 11 and the reluctance of some corporations to impart a message of perceived extravagance by booking events at resorts all have contributed to a changeable negotiating climate, and hoteliers have responded by offering better deals for meetings through the rest of 2002.

"Resorts are extremely flexible and very aggressive with short-term business three to eight months out," said Jerry Janove, vice president of sales and marketing with Orlando-based aggregate buyer Resort Meetings Consortium. "That flexibility will continue throughout 2002 for short-term events, but next year resorts will try to raise the bar to get some of it back."

While there has been rate flexibility, Janove said, there has been more attention paid by resorts to individual accounts, and more customization of each corporate group's discounts and contracts. "There's more special consideration for value-adds, including complimentary suites, upgrades to suites, rebates to food and beverage master accounts, complimentary golf, spa and health club," Janove said. "There used to be no flexibility at all there. Everybody thinks rate, rate, rate, but there's so many ways to save money."

Five-star properties have not been as flexible, with four- and four-and-a-half-star resorts somewhat more so and lower-rated properties significantly more willing to negotiate, "but they always are," Janove said.

"There must be flexibility right now, and there are great opportunities for corporate buyers to take advantage," said Greg Hauenstein, area director of operations and general manager of the Lake Buena Vista-based Wyndham Palace Resort and Spa at Walt Disney World. "Rate is a strong driving force, and it's the first thing planners want, followed by F&B, but we can customize to budget restraints."

Frank Cavella, regional vice president of sales and marketing for Ritz-Carlton Resorts of Florida, said his properties are creating customized contracts for some of their high-volume corporate clients, including constructing blanket cancellation clauses that allow for the rebooking of events at other Ritz-Carltons should a cancellation occur, instead of restricting the buyer to the same property. "We're more flexible than we've ever been on price and menu cost, and we've loosened attrition to give everyone a little more time," Cavella said. "It makes it easy for planners."

There are many buyers who have capitalized on the softer market by shopping around for the best short-term resort deal, Cavella said, but there are also a good number who take the first resort that meets the meeting's needs, as the price is often pretty close to acceptability.

"We've been flexible on short-term business and shown leniency on contractual terms," said Jim Mostad, director of sales at The Breakers of Palm Beach. "We look at that on a case-by-case basis, since what buyers look for varies. Certainly, though, they all are seeking value for their dollar, and there's a myriad of value-added propositions, including flexibility with recreational amenity charges, that we can discuss."

Buyers choose Florida resorts for a reason, the suppliers said. If they were concerned strictly with rate, they could just as easily book a non-resort hotel that is less expensive but that cannot supply the amenities or leisure options a resort can. "Unlike some of our competitors, we don't lead with rate," said Randy Griffin, director of marketing at the Eden Roc Renaissance Resort & Spa in Miami Beach. "First, we try to help determine what the objectives of the meeting are and how we can meet them. It's more important than just rate, because the service and amenities make us that much more valuable. We're finding buyers looking at the total package, and if the rate is within a ballpark of $20 to $30, then they'll take the best package they can find."

However, buyers probably shouldn't get accustomed to the current climate. Almost across the board, resort operators said their occupancy levels not only are rising past anticipated levels, but demand looks strong for 2003. "Everything is so short term that there's some weakness in the midrange from May to September," Griffin said. "Traditionally, that's our softest period anyway and we look to other markets than corporate, but 2003 looks awesome right now."

There is some growth in 2002 as well. "Demand gets stronger every day, but we're still not near 2000 levels or the first part of 2001," Mostad said. "There are positive indicators, but the market is so short term that it's unprecedented, so resorts need to be very responsive. Our policy is to respond to RFPs in the same day, if not the same hour, because first in gets the business. When you're shopping world-class resorts, service, efficiency and responsiveness could be the difference."

Mostad said The Breakers has kept up a solid booking base throughout 2002 thus far, buoyed by strength in the resilient pharmaceutical market and financial clients "creeping back," he said.

Cavella said the three Ritz-Carlton resorts—in Naples, Palm Beach and Amelia Island—collectively have earned more business in January and February than was budgeted. "They were pretty underwhelming budgets, though," Cavella said.

Janove's client list of buyers also has been active. "We've been busy," he said. "Of course, we saw much of it fall off in the fourth quarter but people are getting back on their feet. We're booking anywhere from three months to four years out, and business is consistent. The technology and financial markets have been hurt, but we're not market-specific and our client list is diversified."

"Group business is almost back to normal, but we've all had to be creative and harder-nosed," said Kathy Cattoor, director of sales and marketing at the Orlando-based Hyatt Regency Grand Cypress. "There's been more discounting on rate and on food and beverage. Hotels and resorts have had to look at business differently, and that's not necessarily a bad thing."

Cattoor cautioned, though, that even given the consistent strength of the pharmaceutical market, those companies are particularly prone to avoid resorts because of image and perception issues. "It works both ways," she said.

Those perceptions have been both a blessing and a curse to Florida's resorts. Though companies enduring cutbacks, layoffs and depressed stock prices often are loath to risk criticism by booking a luxury resort, the properties also benefit from those corporations that rebook meetings scheduled in the Caribbean or overseas for the exact same reason. "It is absolutely happening," Janove said. "Image is very important to corporations, and they're very conscious of a property, like the Bahamas resort Atlantis, that gives off that total resort feel. The East Coast and Florida can benefit from that, since it's an easy destination to travel to."

"We've seen both," The Breakers' Mostad said. "Corporations with budgetary or stock price issues may have a perception that booking a Ritz-Carlton, Four Seasons or a five-star resort may not be sending the best message, and we have to deal with that. When compared with Europe or Hawaii, however, Palm Beach becomes a better option. There's a lot of value in a domestic five-star property, compared with other areas."

Others were less concerned about the trend. "We hear about it every once in a while, but that seems to be affecting resorts that are in pure destinations, like the Caribbean, and not so much Florida," Wyndham's Hauenstein said. "In Florida, it's not that prevalent."

One perennially controversial aspect of resort meetings is the resort fees charged by some properties, a per-day per-attendee charge that covers certain amenities that vary by property (see story, above). Though some buyers have embraced the fees as a way to offer cost certainty and streamline bills, others have decried the fees as charges for amenities not necessarily used. Though there are just as many opinions on the negotiability of such fees, some resort operators are taking less of a hard line.

"We do negotiate our resort fee, and rightfully so," Griffin said. "It covers entry into our 55,000-sq.-ft. spa, but also phone, continental breakfast and salon services. The fee is $12 for guests. There are groups that are going to be here for only one day, who may not want that and we'll negotiate it down. But multi-night stay groups usually like it. It's never been etched in stone."

Others said there's been little change. "We don't waive the resort fees, but we're not asked to," Cattoor said. "We think it's a great value, because it covers local and toll-free calls, health club, driving range, pitch and putt and water sports. We developed it two years ago, and it seems our clients enjoy it."

Either way, the negotiability of those fees likely will be as volatile as the state of the rest of the Florida resort meetings market, as development, property openings and demand continue to grow and hoteliers look to the future.

"They are not nearly as flexible for long-term as they have been for the short-term meetings, and they're not nearly as flexible on that business as a lot of buyers hoped they would be," Janove said. "They are not banking on a bad 2005."

"We can't mortgage the future," Cavella said. "You have to stand behind the product."