Supplier Lead Management

Goodbye and good riddance.  That’s the message that Mark Lomanno, president at Smith Travel Research, conveyed as STR recently revealed the year-end data reports for hotel markets around the world.  He blames the deadly combination of both the down economy coupled with panic from hotels that caused RevPAR to plummet “to levels that were virtually incomprehensible just a year ago,” according to Lomanno.

Here are the key statistics from the research:
• U.S. industry experienced double-digit drop in RevPAR in 2009:
       o Metric fell 16.7% to US $53.71
       o Occupancy fell 8.7% to 55.1%
       o Average daily rate dropped 8.8% to $97.51
       o New York had largest drop in RevPAR: fell 21.8%
       o Norfolk-Virginia Beach & Washington DC had smallest drop in RevPAR: fell 8.5%

While the worst does appear to be over, hotel leaders don’t exactly expect it to get better anytime soon.  They believe that recovery is still going to be a slow process as hotels struggle to come back from low occupancy rates and decreases in RevPAR, particularly in regards to the group market for hotels.  However, the industry as a whole is “cautiously optimistic” about what 2010 will have in store.

In fact, nearly 100 hotels are expected to open this year in the U.S. While this number is attributable to the reasoning that hotel growth cycles do not quite sync up with economic ones, it still lends a somewhat hopeful tone to the industry’s road to recovery. 

New York alone plans to open up 46 new properties, followed by the Houston market debuting 30 hotels.  This is good news for customers, because these new properties are expected to feature deep discounts in order to gain initial market share. 

What else can we expect in 2010? Lodging analysts predict a range of revenue and occupancy trends to dominate the industry this year, with one saying that RevPAR would drop 5% and occupancy rates would remain flat, to another forecasting that RevPAR would in fact rise 4 to 5% with occupancy increases majorly contributing to that number, according to an article in The New York Times.

But for now, everyone can breathe out a little sigh of relief.  Because after all, the worst year in the history of the modern hotel industry is over, and that’s definitely something to be optimistic about. 

With all the latest data and statistical reports flowing in about the fate of the travel industry as we enter into 2010, it’s difficult to determine what will actually hold true over the course of the next year.  However, one thing is for certain: the traveling habits of both business and leisure travelers have shifted to a more modest, low cost mode of air and hotel usage, according to the most recent findings of the Ypartnership and the U.S. Travel Association.  

Due to the hard hitting effects of the recession and the fear of losing their jobs, Americans have skimped and stashed: we now uphold the highest rate of savings observed in eight years.  Add to higher savings rates the tendency to be more cautious with spending habits, and the US is now undergoing an adjustment to the way we travel.

Both at home and abroad, the trend towards luxury vacation and travel destinations is fading in accordance with the mood the current economic state has cast across the travel industry.  Business and leisure travelers alike are moving away from luxurious hotels and resorts in stereotypically opulent destinations, and opting for more modest hotels and atypical vacation destinations.  Expending on extravagant trips and vacations is no longer in good taste with the economic climate, which explains why destinations like the Caribbean and Hawaii have seen more severe decreases in hotel occupancy and RevPAR than other markets.

Instead of splurging on high cost trips, first class air fare, top notch transportation services, and world class hotels and restaurants, the attitude towards business and leisure travel is now more subdued, more wallet friendly, and more inclined to accentuate simplicity and value.  Hotels have made it easy for travelers to find affordable rates thanks to their aggressive discounting and promotional campaigns, which typically have included free room nights, giveaways, and other perks and benefits for choosing their hotel. 

That being said, hotel rates aren’t expected to rise significantly in 2010.  In fact, PricewaterhouseCoopers forecasts that room rates will be even lower this year than they were in 2010.  Obviously, the economy as a whole will be the ultimate determinant in what will have people traveling more and increasing the demand for rooms. 

Regardless, the new trend in traveling may reveal a whole new set of perceived destinations in 2010, bringing increases in revenue to markets that formerly took the backseat to their more luxurious counterparts.  While the notion of luxe is surely not entirely tarnished, it may take on a new luster as our idea of travel evolves along with the economy. 
 

• Asia-Pacific: 232,680 rooms>Shanghai with 13,057 rooms
• Europe: 97,266 rooms>London with 5,154 rooms
• Middle East and Africa>119,560 rooms/United Arab Emirates with about 48,000 rooms
• Central/South America>19,292 rooms/Brazil with about 7,700 rooms
• Caribbean/Mexico>18,291 rooms/Mexico with about 11,000 rooms

According to PKF Hospitality Research’s recently released edition of Hotel Horizons®, there might be more to look forward to in 2010 than we previously expected. 

The U.S. lodging industry is projected to experience recovery from the economic downturn an entire quarter earlier than PFK originally anticipated based on their 2009 forecasts, thanks to increases in demand, RevPAR, and occupancy rates.   That’s not to say, however, that the hard times are completely over; 2010 is predicted to be a year still suffering somewhat from the losses incurred in 2009. But based on the year-over-year growth of the several key measurement factors mentioned above, the losses will not nearly be as detrimental as they were originally expected for 2009 and 2010.

Key Improvements:

·         Average daily room rate declines: 2009 decline of 8.8%, with 2010 ADR forecast minus 1.5%; compared to declines of 10.4% and 3.1% originally predicted

·         Lodging demand to grow up to 1.9% in 2010, up from the 1.6% forecast

·         Lodging demand to end eight consecutive quarters of declines with a quarterly year-over-year increase during Q1 2010

·         .4 % increase in hotel occupancy to end three year decline of occupancies

·         Most hotel markets to experience year-over-year increases in RevPAR for 2010

·         Improvements in the outlook for profits: decline in Net Operating Income down to 34.9 from 39.1, which is good news for hotel owners and their bankers

Although hotels will continue to feel the sting of the recession into 2010, there are many improvements and positive growths we can look forward to that will hopefully get the industry on the right track and really start experiencing a full recovery. As for now, we will embrace the good news of more buyers entering into the market, which can only lead to sales and more growth, and hope that the forecast holds true for 2010. 

Do the math: by now, it is well understood that technology is an integral part of the meeting planning process. For any company to be more efficient, cost effective, and ultimately successful, technology must be employed to ensure productivity and results. In fact, nearly one third of meeting planners surveyed in 2008 reported that technology is crucial for them to perform their jobs more effectively. 

The one area where technology has been especially beneficial for meeting planners is RFP’s, particularly when it comes to a standardized RFP that can save countless hours of the time and energy spent rekeying data in different hotel websites. Not only are planners able to do their jobs more efficiently, but hotels are able to conduct better business with complete, informative RFP’s because no critical data is lost in the process. 

The bottom line: for the meetings, events, incentives, and hotel industries, technology is not being used to replace human interaction or eradicate the relationship between planners and hotels. On the contrary, technology is simply being applied to enable these entities to do their jobs more seamlessly, effectively, and efficiently (not to mention the resulting savings and boost in profits as a result.) As we progress into 2010, we can look positively to the growth and success of the meetings, events, and hotel industries. Happy new year!

Despite the current economic climate and hotels everywhere experiencing a plummet in profits, Brazilian hotels have emerged relatively unscathed with a record performance in revenue available per room, or RevPAR, for 2008.

According to the Jones Lang LaSalle Hotels annual survey, Lodging Industry by Numbers-Brazil 2009, Brazilian hotels enjoyed an increase in RevPAR of up to 9 percent annually for the past four years, and in 2008, Brazilian properties achieved their highest RevPAR ever with an increase of 7 percent from the previous year. 

Further bolstering the success of Brazilian hotels in a challenging market is the increase in gross operating profit, which grew by 2 percent from 2007 to 2008, and departmental profit inceases across the board, with departmental profit margins increasing by 15 percent at resorts alone.  This can be contributed to superior expense management and favorable exchange rates during the peak tourism season in 2008.

With extensive plans for new properties and rooms to be opened by 2012 in Brazil, this upward trend in growth is projected to continue, maintaining Brazil's position as a stronghold in the global hotel market.

For the full story, click here.  To read more about Brazil as a destination for meetings and events, click here.

By Barry Goldstein, Chief Revenue Officer, Dolce Hotels and Resorts 
For nearly an entire year, there has been virtually no industry that has escaped the grip of the economic recession. As a result, the worlds of meeting planners and host venues have been turned upside down.  The recession eviscerated event budgets, and the AIG Effect inhibited companies of every stripe from conducting meetings off site, particularly in perceived leisure destinations including Las Vegas and the Caribbean.

As a result, meetings were cut back and canceled outright, and hotel, conference center and meeting planner positions eliminated. Those who remain employed on the client and provider sides of the meetings equation are shell-shocked and reticent to make future commitments given the shifting sands of budgets that can be reopened and further cut without notice.

These financial and political obstacles notwithstanding, there remains the perennial need for people in business to get together, face-to-face, to brainstorm, solve problems and learn. Happily, the creative spirit of the meetings industry was not extinguished by the recession or Washington politicians, and innovative people are finding ways to get together.

Dolce Helps Clients Cut Costs

Date flexibility can make a deal-breaking difference when buyer and seller are negotiating a meeting. As everyone in this business knows, function space is priced on a supply-and-demand basis, with prices peaking during high-demand periods and dropping back during shoulder seasons and selected “soft spot” dates throughout the year.

Dolce and other progressive suppliers are working with their clients to schedule meetings at times when facility occupancy is down and costs are lower. To take advantage of these lower-cost dates, planners filing requests for proposals should indicate they are open to discussing alternate dates. 

A corollary tactic is to break the “Tuesday in,” “Thursday out” meeting pattern, which results in higher-cost accommodations and airline seats, due to the economic forces of supply and demand.

Third, meeting planners are rethinking their F&B needs. At our American Airlines Training & Conference Center in Fort Worth, Texas, Director of Sales and Marketing Karen Gillingham helps her clients shave dollars off food-service costs by opting out of breakfasts in favor of morning break service upgraded by adding a hot food item.

Great Ideas from the Dolce Team Nationwide

Sometimes it’s possible for planners to get meetings approved by demonstrating an altruistic or community service purpose. At Dolce’s Seaview resort near Atlantic City, N.J., Director of Sales and Marketing Mike Tidwell helps his clients organize team-building exercises to benefit charities. Some of his groups have assembled bikes and donated them to charities.

More great ideas are cooking at our William F. Bolger Conference Center in Potomac, Md., where Valerie Gordon, director of sales and marketing, and her staff whip up culinary team-building exercises including pizza-making classes, cake-decorating events and chili cook-offs utilizing in-house culinary talent to minimize costs.

“Meeting planners respond to those activities because they enhance the value of the money spent to bring attendees together,” she said. Bolger also offers a low-cost ropes team-building experience on its on-property course, which eliminates the cost involved in transporting attendees to a remote venue.

Introducing "Make Us an Offer...Anything Goes"

On the corporate side, we introduced a revolutionary concept called “Make Us an Offer … Anything Goes” as an experiment in more effective, more responsive pricing.

For years we had followed the usual routine: responding to client RFPs sent to many brands and hotels, telling planners what we would charge based on their specifications then engaging in the traditional back-and-forth banter to see who would be first mover, particularly on price. 

“Anything Goes” changed all that, cutting to the quick by challenging clients to reveal their budgets and strategy for conducting meetings.

Armed with that information, we determined what we could do. Then – and this is key – we got back to them right way, without the usual lag necessitated by the need for multiple approvals. Our clients told us what they could afford, and we responded in a fraction of the usual time by telling them what we could provide within their budgets.

While this concept seems to turn the relationship between supplier and client upside down, the important point is that it worked! We’re got a lot more attention from our existing customer base, especially those who have not stayed with us for awhile, and we attracted several new customers.

For some clients, “Anything Goes” opened the door to consider meetings at a time when their greatly diminished budgets threatened to pre-empt them. To everyone’s surprise and delight, “Anything Goes” proved to be much more than a creative pricing play. By stripping away much of the complexity that is inherent in bidding, it dramatically simplified the way that we, as a supplier, interact with you, our clients. One of our clients said, “I can’t believe it’s that easy.”

Looking Toward the Future

While we’re proud of the program’s success, it does not replace CMP. Meeting planners like CMP because they know exactly what they’re going to spend. All elements of the meeting including meeting rooms, accommodations, meals, breaks and audiovisual support are included. At a time when budgets are important, planners can be assured of the final cost.

So what happens after “Anything Goes” officially ends Dec. 18?  We have examined the feasibility of continuing this program and will extend the program through Feb. 28, 2010. StarCite customers are the first to receive news of this extension.

We hope you will take advantage of “Anything Goes” by adding “AG” to the “Comments” field when forwarding your RFPs to Dolce Hotels and Resorts.

Whether you choose “Anything Goes” or CMP, we always welcome your business at any of our 25 global Dolce hotels, resorts and conference centers.