Resort Negotiating Opportunity Varies As Occupancy Dips

<B> Resort Negotiating Opportunity Varies As Occupancy Dips</B>

By Chris Davis

As a generally healthy Corporate America continues to pump meeting and incentive revenue into resort properties, an overall dip in occupancy rates, combined with a continued increase in room rate, has led to a volatile negotiating climate for corporate buyers.

Overall occupancy at resorts dipped about 2.6 percent in the first half of 1999, compared with the first half of 1998, according to the hospitality research group of New York-based PKF Consulting. The average room rate, however, increased 4.1 percent.

While nobody suggests that planners are shying away from resorts for meetings, opinions vary on the state of negotiations between planners and resorts.

"Resorts still just don't want to negotiate certain things, like room rate, and they're very tough with attrition," said Jane Ambrose, corporate meeting planner at Santa Clara, Calif.-based Guidant Corp. "It's more difficult lately. They think this seller's market will keep up."

Others are noticing changes that differ by region and property. "There may be just a slight softening in some of the markets," said Patricia DeLuca, meeting and travel manager at San Francisco-based law firm Brobeck, Phleger and Harrison LLP, who books resorts in Arizona, California and Hawaii. "There seems to be a little more leeway for negotiations, but they seem to still make it up on the back end."

DeLuca also noticed an overall increase in rates at resorts. "I can understand high rates in the seasonal times, because they need the revenue to sustain them through their slim months," she said. "But I'm seeing it year-round."

Not everyone is suffering through meeting negotiations, though. "I'm seeing more competition and there's more room to negotiate more creatively with resorts, with the room rate, amenities or even sponsoring receptions," said Linda McNairy, general manger of Carmel, Ind.-based Navigant Meetings and Incentives, North Central Region. "There may be some softening in Hawaii or Central America, but the Caribbean is very hot now."

Perhaps not surprisingly, resorts themselves differ on the topic of market weakness. "I haven't seen any softening," said Stephen Bartolin Jr., president and CEO of The Broadmoor resort in Colorado Springs, Colo. "If there's a trend happening, we're a year behind," he added, citing increased interest from high-tech and financial services corporations.

The five-star Broadmoor may be less vulnerable to a downturn than others. "We're vulnerable, but we've not been hit as hard as in previous times," Bartolin said. "We've put $100 million in capital into the facility over the past eight years, and $56 million more for the next two years. That helps our market position."

Topnotch at Stowe Resort and Spa in Stowe, Vt., has undergone its own recent renovation. "All the resorts are working hard to make quotas and business levels," said Reggie Cooper, vice president and resort manager. "It seems resorts are seeing more meetings but the size has decreased somewhat. It's a trend we watch closely.