Pressure For Attractive Group Deals Heats Up In Hawaii
<B>Pressure For Attractive Group Deals Heats Up In Hawaii</B>
By Chris Davis
The effects of the Asian economic flu of 1998 and the subsequent tourist decline are wearing off, but diminished occupancy and slower rate growth at Hawaiian resorts still offer a solid buying opportunity for meetings and incentives.
The Asian economic problems that gripped much of the continent nearly two years ago may be just a part of history now, but the number of expected tourists who stayed home has forced Hawaiian resorts to look elsewhere to recoup that revenue. In many cases, they have targeted corporate meetings. Without any major recent resort and hotel developments, competition has increased for corporations that include Hawaii as a possible group incentive destination.
Still, competitive contract negotiations do not always an inexpensive meeting make, as air travel can be cost-prohibitive as well as inconvenient.
"We have lots of opportunity now and rates are very attractive, even in the short term," said Marla Kelly, regional director of group sales for Sheraton Hotels & Resorts Hawaii. "Both 2000 and 2001 will be rather soft, so there is plenty of opportunity." Kelly said the island's properties still are recovering from the international leisure travel drop off from the economic crisis, although it is on the upswing. Another factor is the lower-than-typical threshold of guest rooms needed to book events in the Hawaii Convention Center in Honolulu, which opened in 1998.
"We have good contacts in Hawaii, and there is availability, but the rates are higher," said Dawn Pratt, vice president of meeting and incentive sales for Owings Mills, Md.-based meeting and travel management firm Travel Destinations Management Group. "Many clients can't afford it."
Despite the availability for group incentive trips and meetings in Hawaii, some of Pratt's clients, which are primarily pharmaceutical companies, are hesitant to consider the islands because of the potential to perpetuate an image of largesse.
"There are some cases where Hawaii and Europe are out of the loop because of cost and image problems," Pratt said. "We have clients who won't use any properties with the word 'resort' in their names, regardless of the cost. But meeting budgets have been shrinking for a few years, and there's still the image of resorts as costly."
There are other reasons besides the perception of extravagance that can keep some corporate buyers from considering Hawaii, allowing hoteliers to offer better deals to attract others. One factor working in buyers' favor in Hawaiian resort negotiations is a general trend toward shorter group incentive trips, said Jerry Janove, vice president of sales and marketing for the Resort Meetings Consortium of Cherry Hill, N.J. Shorter programs provide less reason to board long flights to Hawaii, pressuring suppliers to offer attractive deals, he said.
"We're seeing three-, four-, or five-night incentive trips as opposed to the usual seven-day trip," Janove said. "I think it makes the properties a little more aggressive to make themselves a more attractive package, since more shorter-duration programs means less consideration of Hawaii."
On the flip side of that, though, is that more companies seem to be considering Hawaii, or at least placing the state's resorts among a rotating schedule of incentive destinations, for their week-long group incentive programs. "It does limit our options," Janove said. "But there are deals to be had if you are flexible enough to consider their offseason in September instead of their inseason from January through March."
Other buyers agreed that there seems to be a sporadic, slight softening, if not a marketwide one, in the resort operators' negotiating position.
"It seems the resorts are getting a little less traffic from Asia, which has freed up some space, and there hasn't been any major development of late," said Judy Franzblau, president of Los Angeles-based meetings management firm Global Events. "There's no huge, new property to create new competition, and I'm still seeing a seller's market, but there's no true overall trend. It seems each property is different. If you call around, some resorts really want your business and some don't."
Despite some situations where there are resort deals to be had, Franzblau warned that a Hawaiian meeting or group incentive still can be an expensive proposition due to the limited number of direct flights. "The air lift is not what it needs to be," she said. "There can be problems getting people there, especially to the outer islands."
Nevertheless, some hoteliers haven't felt the pinch. "That hasn't been our experience," said Katy Britzmann, director of sales and marketing for the Hyatt Regency Resort and Spa in Koloa, on the island of Kauai. "We've actually been real consistent, and our corporate group business has grown every year since 1997."
Britzmann said about 35 percent of the resort's revenue is due to group and meetings business, about 60 percent of which is corporate. "That's a level we're comfortable with and we don't want to strive for much more, due to the amount of leisure business coming in."
Britzmann is issuing more of a mix between business and incentive meetings, particularly in sales meetings involving the pharmaceutical and insurance industries. "We are still seeing a good share of pure group incentives," she said. "We're also seeing more incentive programs where attendees are bringing their families, either in programs designed for the entire family or in situations where the attendees tack a few days on to the trip at their own expense."
While Sheraton's Kelly has witnessed a drop off in seven-day group incentive trips, she, too, has seen many attendees compensate by tacking on a few days of leisure at the end of the trip at their own expense. "There's not a whole lot of locations left on the West Coast for that type of event, and there's so much better direct air service here from all the major carriers," Kelly said. "So we're seeing the standard sales meetings, product launches, even annual company meetings.