Meeting US$175 Billion Worth Of Demand

Solid growth prospects mean meetings and group business should be a major target for 2007 and 2008.

By Karyn Strauss, Senior Editor -- HOTELS Magazine, 4/1/2007

WORLDWIDE Group and meeting business is already big business for hotels. According to a study released in January by the Hotel Sales and Marketing Association International and PhoCusWright, it will only get bigger. The study predicts the overall market will grow to US$175 billion by 2008. About 54% of that total accounts for travel expenses, so hotels can expect to take away a 35% to 42% share, depending on the type of function. Who gets the lion's share of the proceeds will depend largely on two key factors: the right technology and the right read on what meeting planners want.

Small and elegant meeting rooms such as this one at the Fairmont Olympic in Seattle play perfectly into the trend toward growth in smaller group business.

Think Small
Small meetings will be a key generator for new business. The study forecasts the market for small leisure groups (who book less than nine rooms) will grow at nearly twice the rate of larger group travel from 2005 to 2008. Small corporate meetings represent another major opportunity. Although the major corporate meetings market will be relatively fl at, according to PhoCusWright, corporate meetings with less than 25 attendees are projected to grow an impressive 13% in 2007.

Capitalizing on the sector's full potential will not be easy. "Small meetings are a hot market, but they are a hard market to fi gure out," says David Scypinski, senior vice president, industry relations, in Starwood Hotels & Resorts' Washington, D.C., offi ce. "We all know who the big players are in the meetings sector. We do not know every personal assistant who is going to plan a board meeting. There is a whole new sector of nonprofessional planners to tap."

To expand reach and capture effi ciently, big brands are working with Internet intermediaries and specialty companies that match meetings with hotels. "We will see more of the small meetings business coming from third parties. In some cases, 70% of the business we get is incremental; in others, 40 to 50%," Scypinski says. The battle for small meetings business will be fought largely online. By 2008, 41% of all group and meeting travel revenue will be booked online, PhoCusWright says. Small meetings will be in the vanguard. "Small meeting planners are demanding online solutions that enable them to book more than five rooms at a time, set the food and beverage menus and choose the audio visual setup with one click and the swipe of a card," says Michael Boult, president and CEO, StarCite, the largest on-demand global meetings management company in the US$300 billion global marketplace for corporate meetings and events, based in Philadelphia.

As budgets tighten, Robert Bennett, StarCite's vice president, supplier market, foresees growing demand for a sub-sector of the small meetings market: meetings without rooms. Luncheon and dinner meetings, half-day board meetings and social functions would be pure incremental business. "It gives another way for hotels to market their food and beverage product. This is already a US$6 billion sector in the United States alone," Bennett says.

Large-Scale Potential
In destinations such as Beijing, corporate meetings and incentives are the markets to watch. Melanie Ranoa, director of sales and meetings, incentive, conference and exhibition (MICE) business for Shangri-La's China World, Beijing, projects a 20% increase in meetings business this year. Getting more business means addressing planners' key concerns: downward pressure on pricing, security and perceived health risks. "Because of these issues, more and more international meetings and incentives will take place closer to home. For those of us in Asia, marketing to North America and Europe- still our largest and most important markets-will be a challenge," adds Cecilia Yang, the hotel's director of events.

Shangri-La's hotels are working to offset that with a new range of initiatives designed to build MICE business, including introducing standardized international measures throughout all of its properties, simplifying proposals and contracts, and installing a sales and event management system at its hotels. Its "Super Value Dates" speaks directly to the budget consciousness of meeting planners and procurement departments. This online planning tool allows organizers to buy at very competitive room rates in the hotels' low and shoulder seasons.

Getting more megameetings may come down to a space race, says Randy Miller, Gaylord Hotels' Nashville, Tennessee-based senior vice president of sales. "Organizations are doing more meeting with more attendees. Planners are asking for bigger spaces to accommodate larger general sessions and more break-out rooms so that each sub-group can have its own area," he says. Another priority for meetings small and large: privacy. Whether planning merger talks or mapping out strategy, companies want the assurance that they can be as secluded as necessary.

Creativity counts. Tom McLaughlin, director of sales and marketing, Caleo Resort & Spa, Scottsdale, Arizona, says health-conscious menus with "heart smart" selections and themed meeting packages (a Sun Worship meeting, which uses Rubik's Cubes to stimulate thought and break tension or a Zen meeting that gives guests mini-Zen rock gardens) are helping to build growth across the board.

Personalization will be important in attracting new markets such as IKEA and other fast-growing retail companies and newly competitive banks, says Ann Marie Moayedi, national director of sales, ARAMARK Harrison Lodging. It means having support staff available throughout the meeting, communicating with planners throughout the process (with no lull between signing the contract and the few weeks before the event) and coordinating a seamless experience with semi-weekly banquet event order meetings for hotel staff.

Hotels will have to learn to become fl exible, both in terms of their marketing and negotiations. "Planners know rates are going up," says Jim Schultenover, president, Krisam Group, Washington, D.C., a fi rm which offers personalized service to meeting and event professionals. "So, they are asking what is negotiable. They are looking for hoteliers to be more fl exible on catering and food and beverage prices. Audio visual is a big area of discussion. Reduced set-up charges or gratuities also could be part of the package."