More Availability Doesn't Necessarily Mean Better Deals

<B>More Availability Doesn't Necessarily Mean Better Deals</B>

By Chris Davis

Meeting buyers are finding more availability at airport properties--but not necessarily better deals--as an increase in downtown hotel construction has limited the number of transient travelers pushed into airport properties during periods of high demand.

Although many buyers report not only some softening in room rates but also a greater tendency of hoteliers offering meeting room rental for free, hotels aren't negotiating more with every corporate buyer--just the ones who can provide room night revenue.

Trouble is, many corporations look to airport hotels for meetings that involve only one morning or afternoon, and no guest rooms to speak of. Buyers for these meetings can expect hoteliers to negotiate little, or even reject the business, as they look to replace guest room nights that used to be filled by transient travelers pushed out of downtown areas.

"We use airport hotels a lot, and we've been able to negotiate with them lately, particularly on meeting room rental charges," said Marianne Goodman, corporate travel manager at Boston-based Keane Inc. "We tend to deal with the same airport properties on an ongoing basis, which has helped a lot in negotiations. We direct enough business to them to get that charge waived."

While most hoteliers are willing to negotiate with repeat customers like Keane, even first-timers can get better deals if their meetings have the right components.

"The past few months have been fairly strong for us, but we're not seeing the compression of citywides pushing transients here," said Ken Tippie, director of sales and marketing for the Sheraton Gateway Suites Chicago O'Hare.

The increased availability in the hotel doesn't give meeting buyers with high meeting space requirements but few room nights the upper hand in negotiations. With a reduction in transients, who use rooms but not meeting space, Tippie said, airport properties may become even more choosy when it comes to those types of meetings.

"We look for a good room-to-space ratio to level out the lack of compression," Tippie said. "But the flip side is that buyers with meetings who have a lot of room nights will see the room rate soften, since every airport hotel wants those meetings."

Buyers, however, seem to be moving in the opposite direction. "We've seen more companies trying to arrive in the early afternoon, when flights from both coasts can arrive, stay the night and then have more meetings the next day," he said. The fact that two days of meeting space are needed, compared with only one night of guest rooms, means higher rates or even a rejection of business.

But general industry trends, including more hotel construction in downtown and suburban areas with virtually none at airports, identify a need for hoteliers to expand their base of day-long corporate meetings to fill their guest rooms.

"This market is getting awfully sluggish as downtown and suburban inventory improves," said Don Massagli, director of hospitality consulting for the Chicago branch of PricewaterhouseCoopers. "There's been significant weakening in the past 18 months and we see weaker demand."

Even though airport properties have a stable and significant base of short-term corporate meeting revenue, the increase--and the increase in quality--of the supply in downtown and suburban properties has led to fewer sellouts during large, citywide association meetings, which means little overflow into airport hotels.

That business provided typically more room nights than short-term corporate meetings, which rarely require more than one or two nights per attendee at airport hotels. As such, while meeting buyers' overall negotiating position may be stronger, it's unlikely that properties will become more lax with their meeting-space-only negotiations.

"We're able to negotiate to a point, but there is a point where they can simply turn elsewhere because demand is still strong," said Michelle Rubin, director of Broomfield, Colo.-based meetings consultancy DRS3, which handles the meetings and group travel program for Champion International. "The key is availability, because otherwise the rates are still out of control."

While Rubin hasn't seen any relaxation of room rates, she has noticed that hoteliers are slightly more willing to drop the meeting room rental charge as well. "It's still there, but it has eased a little bit," she said. "Before the seller's market, if you booked 25 room nights at an airport, they would waive the rental charge, but today they still slap one on."

These negotiating styles never have been a complete deterrent to Rubin, though. "These properties cater to business travelers, in some cases, even more than do downtown hotels," Rubin said. "The business amenities, like fax machines and copiers, are quite good, but it comes with a price."

Other buyers said that some airport hotels are willing to negotiate even without room nights, as long as the buyer provides a solid base of ancillary income from other sources, such as food and beverage or audiovisual charges.

"We've seen rates as pretty stable lately, but there is room to negotiate," said Annette Morris, manager of meeting and travel services for Ralston Purina Co. of St. Louis. "We make sure our airport properties keep us notified about holes we can fill, and if we can, they'll give fantastic deals."

Morris also has seen airport hotels more willing to waive meeting room rental charges, even in some cases if her company doesn't book any room nights at all. "Often, the key is food and beverage," Morris said. "If we're ordering full breakfasts, coffee breaks and a full lunch to be served in the meeting room, some hotels will comp the meeting room itself, even if we're not staying the night. Of course, there are some that will budge and some that won't."

Other large convention cities are aggressively seeking compatible corporate meetings business as well.

"We are looking at rates more competitively, but we can afford to be reactive due to the high amount of short-term meetings bookings we have," said Karen Finberg, director of sales and marketing at the Renaissance Atlanta Hotel-Concourse. "But airport properties in many markets are a little more aggressive in looking for business."

While the number of corporate meetings hasn't dwindled, Finberg said, and her property enjoyed a strong first quarter of 2000 even after the city hosted the Super Bowl, there seems to be less of a spillover from citywide conventions this year here too. When downtown properties are booked solid from citywides, the airport properties will fill to meet the demand.

"There's more supply downtown with two new properties," Finberg said. "Where last year we would see compression after 10,000 rooms were booked downtown, this year it's 12,000."

The Renaissance is blessed with a high amount of meeting space that enables Finberg to sell to corporations without necessarily requiring a high amount of sleeping rooms, so the property's base of revenue is still solid.

"There are need times, particularly on weekends and holidays, but our rates are still strong," Finberg said. "We still sell out if we price correctly, because we're able to realize our opportunities and react quickly.