Low hotel rates are bringing negotiating
opportunities to meeting buyers looking to secure events for 2011 and
beyond, but some are reporting resistance from hotels in locking in
rates and terms too far down the line. Consultants, meanwhile, are
recommending a few extra levels of protection with advance bookings,
such as reciprocal cancellation clauses and deposits.
U.S. hotel rates last year were 8.7 percent lower than
2008 levels, Smith Travel Research said, and some meeting buyers are
seizing the opportunity. Kirsten Olean, director of meetings for the
Association of American Medical Colleges, told MeetingNews in
December that although she typically books 18 months in advance, she has
been trying to book as far ahead as 2012 to take advantage of current
deals. However, some cities' hotels, such as Chicago, are not showing a
willingness to bid on small pieces of business that far in advance, she
Large group business, however, is having some success
with advanced booking, said Steve O'Malley, vice president of
Maxvantage, the strategic meetings assessment program born of the
alliance between American Express Business Travel and Maritz Travel.
O'Malley said he's seeing hotels respond to advance requests for
proposals without reticence. Corporate meeting buyers, however, often
are not able to book as far in advance as usual because of their own
policies, he said.
"In many cases, we were working with customers to book
four years in advance for automobile shows, product launches and
corporate meetings, but a new normal has been set," O'Malley said.
"Still, we do have many customers we're working with looking at two- and
three-year plans, and hotels are very desirous for that business."
George Odom, senior consultant for BCD Travel
consulting arm Advito, said he sees few on the corporate meeting side
booking more than 18 months or two years out. Like O'Malley, however, he
said there are savings opportunities for those who are doing so.
"Hotels are offering good rates and are glad to have
the business," Odom said. "A number of hotels are actually guaranteeing
rates years from now. Even if you look at transient rates, a lot of them
are doing them for two years flat."
Omni Hotels vice president of sales and distribution
Tom Faust said he's seeing an increase in advance group bookings. "The
savvy meeting planners are recognizing that there are a lot of deals to
be had," he said. "2011 is not that far away, and as demand increases,
those prime available dates are going to go away."
Cities like New York that are gaining pricing power
make advance bookings more difficult, but there are opportunities in
secondary cities and major meeting venues, such as Las Vegas, O'Malley
Advance bookings are not without risk. Olean said she's
seeing hotels show more resistance to signing reciprocal cancellation
clauses, which specify compensation from hotels to meeting planners for
costs related to a cancellation of the event by the hotel, such as
finding another venue. The concern for meeting planners would be that if
rates rise significantly in the next few years, hotels might find it
advantageous to cancel a planned event to bring in business at higher
Reciprocal cancellation clauses in the past were not
standard, but Odom said they are becoming more prevalent, particularly
as legal and procurement departments become more involved in meeting
Odom said a hotel canceling a meeting for financial
advantage is not out of the question but that "it probably wouldn't
happen in 90 percent of the cases. In the 10 percent that it would, it's
really a shortsighted whim."
Omni's Faust concurred, saying it's the hotel's
responsibility to evaluate data so that it does not lock in deals that
put it at a disadvantage in the future. "Not to suggest that it would
never happen, but if you've committed to an event and signed a contract
with the client, it's your obligation to fulfill it."
Planners also should be diligent in analyzing and
benchmarking bids for advance bookings, O'Malley said. "There's a number
of hotels that are probably going on a fishing expedition, just
throwing out a price and seeing if they'll bite," he said.
Hotels also could try to allow rates for advance
bookings to adjust with market conditions, but O'Malley advised against
such a policy.
Advito's Odom said many planners try to eschew
deposits, but they can provide an extra level of security for advance
bookings. "They can protect your interest in the future and make it less
likely that hotels will change your rates," he said.
Should there be a significant recovery in 2011 or 2012,
O'Malley said meeting planners with secured bookings might find some
new opportunities for savings. Rather than canceling , hotels looking to
maximize revenues sometimes offer sweeteners to planners to move an
event's location or time.
"If hotels are willing to be gracious enough to offer
alternate space, we can find ways to make that work," he said. "They
might move to a sister property and offer discounted food and beverage
or audiovisual services.
Originally published Feb. 15, 2010 by Michael B. Baker via MeetingNews.com