The events industry at best is stressed. Budgets have been restricted and an immense pressure has been placed on organisers to deliver a return on investment.
A huge chunk of cash is spent by all those involved in an event on hotels. And now hotels are feeling the pressure from those organisers who want to feel some support from hotels which they believe should be working as partners with them in difficult times.
How is the hotel sector working with the events industry?
There is lots of discussion around ‘adding value’ as opposed to just ‘rate cutting’. EW spoke to a number of brands worldwide to get their thoughts.
The hotel landscape is extremely broad ranging from budget to the high end brands. The Rocco Forte Collection is certainly not focusing on price cuts. The Collection is a family of 13 high-end luxury hotels spread across Europe and the US, each individually designed to reflect the character of the city in which it is situated. Although they do not cater for the needs of mass delegate numbers, the collection markets itself to the needs of the high level executives who attend these events.
“Even though we do not rely on the knock on business of an exhibition, we suit the needs of VIP delegations and tailor packages for this market,” says director of group and incentive sales, Patrizia Di Patrizio. “If someone uses our services, they have a very clear understanding of our brand and certain expectations.”
“There is of course a fair amount of rate dumping going on, too, by venues looking to pick up short lead business, which I feel is a far riskier strategy as it can devalue the brand, lead to poor service and product offering.”
For Rocco Fortes’ Di Patrizio, it is all about brand loyalty rather than promotions. “We deliver an ad hoc response to a company’s or individual’s needs so they come to expect that standard every time. We can demonstrate a real return on investment via our service, quality and values demonstrated throughout the collection of Rocco Forte hotels.”
“The key to securing this business is listening closely to our clients needs and responding with flexible and innovative solutions that demonstrate a high return on investment. If we demonstrate an organiser’s message throughout the stay, it will leave an imprint.”
No deals to be done there, it seems however, some other hotel chains are more pragmatic.
“The more strategic groups are looking to offer reduced rates in return for guaranteed volumes of business,” says venue sourcing agency Grassroots HBI’s Des Mclaughlin. “In the past, promised levels of business from corporates have often not materialised and hotels are now tightening up terms to protect themselves from this.
“There is of course a fair amount of rate dumping going on, too, by venues looking to pick up short lead business, which I feel is a far riskier strategy as it can devalue the brand, lead to poor service and product offering.”
In Abu Dhabi, where the Abu Dhabi Tourism Authority (ADTA) anticipates an additional 4,000 hotel rooms by the end of 2009, there is an example of an exhibition dictating rates for its delegates. Participants of Gastech 2009, 25 – 28 May, enjoyed a capped rate for their stay following legislation by the ADTA. The show, under the patronage of HH Sheikh Khalifa bin Sayed Al Nahyan, was hosted by Abu Dhabi National Oil Company and organised by DMG World Media.
For director of sales for Europe, Middle East and Africa for the Four Season Hotels and Resorts, Jane Burnell, the hotel must be strategic in its dealings. “The key is to keep an eye on the market and to remain competitive. Four Seasons remains innovative even in difficult times and never think we’ve got it right the first time.
“If the same event is going to be held in different locations over different periods such as Tokyo one year and San Frasisco the next, we have the general manager from the San Francisco attend the event in Tokyo and observe how the event should be replicated. The handover is then seamless.
“At the moment, to assume that a rate cut will turn up business in a decline would be naive. We do not compromise on what we are delivering.”
Starwood’s head of MICE UK and Ireland, Stephen Walker understands how much support an event organiser needs in difficult times and that a “key element for conference organisers is knowing exactly what is included in the delegate rate with no hidden extras.”
Due to open its 1,000th hotel this year, Starwood Hotels and Resorts represents a handful of well-known brands, including the Sheraton chain. Walker believes this year will be challenging for the event market “but equally it will bring opportunities for those venues, which are able to add value for their clients and minimise costs.
“Long term, venues which can provide flexible, efficient and cost effective event services can use this time as an opportunity to grow business and gain repeat clients,” he adds. “We are very flexible with our food and beverage offerings and can easily set up an informal buffet lunch or a formal sit down meal. This saves both time and money and also offers great networking opportunities.”
Each year the InterContinental Group of hotels hosts over 120 million guests with 556,000 rooms in 3,700 properties worldwide. The largest global hotel group in terms of rooms, it operates seven individual hotel brands ranging all levels of service from upscale resorts to family-orientated hotels. Such brands include Holiday Inn, Crowne Plaza and InterContinental and all have their hand in the events industry’s cookie jar.
“IHG is a big supporter of the mantra, ‘meetings means business’,” says IHG’s director of meetings for Europe, Middle East and Africa, Denise MacDonald. “By demonstrating the potential benefits to overall performance and the great value added to both internal and external activities when they hold events, we can provide the best customer experience to our guests.”
MacDonald sees a unique ‘experience’ at the hotel helps deliver a return on objectives. “We connect our guests with what is special about a destination, by sharing our knowledge so they enjoy authentic experiences that broaden their outlook, which helps enhance events.”
Seeing the potential of the industry in direct correlation to its business, IHG has implemented in the last year boosted its national meeting teams in the UK, Benelux, Germany, France and Italy. With a clear understanding of its purpose, MacDonald says they are effectively a ‘one stop shop’ for organisers.
“This ensures we're best equipped to handle enquiries as efficiently as possible while providing friendly service,” adds MacDonald.
“With 50 years of experience, we find the exhibitions market is an important component of our business and have spread our sales team globally from Mexico and London to Singapore, ready to encounter any enquiry,” says vice president of international sales, Hyatt, Louis Kievit. “Hotels cannot be ridged in business and meeting delegates needs”
Hyatt says it aims to be more promotionally-driven rather than cutting rates. “We are mindful of a company’s needs so have offered incentives such as rebates for organisers to add value to their booking.”
Grassroots’ McLaughlin says the reason for every meeting and the choice of every venue is being questioned. “Whilst this will inevitably lead to those looking for a deal by some corporates, others will be far more focused as to whether the venue it fit for purpose and offers value for money.”
Brand seems particularly vital to how the accommodation industry markets itself, representing not only how the hotel is positioned in market but at what level it can sell itself. “The Four Season brand is an important component to the way we do business,” says Burnell. “When we opened the Four Season Cairo, the first in that region, we encouraged our loyal business travellers to try the same level of comfort they had come to expect in an unknown destination. The hotel is now celebrating its 10th year in Cairo and we have currently nine hotels in the region, with a new hotel due for completion in Beirut in 2010.”
“We are constantly brainstorming ideas to improve but for a successful event you must as the right questions initially. Delivering objectives for an organiser is essential.”
However, Budget-style brand Premier Inn has seen its business customers are buying smarter when it comes to business accommodation. Premier Inn’s Steve Conway says: “In these challenging times, businesses are looking at ways to make their money go further. Premier Inn is in an excellent position, appealing to businesses looking for great value which does not compromise on quality. We’re attracting larger business clients with total accounts up 48 per cent year-on-year and total sales up 26 per cent.”
According to market research company BDRC’s British Hotel Business Guest Survey, budget brands have made significant investments into their portfolios to close the gap in standards with the mid-market brands.
Director and author of the report, Tim Sander says: “Budget brands will not escape the current downturn unscathed. However, the marker indicated that they would take less of a beating than their more upmarket counterparts.”
Premier Inn owner Whitbread has increased its advertising to aggressively take on hotel chains of supposedly higher quality. The company says there will be a flight to value this year as companies look to cut costs.
Ensuring repeat business can be a tricky subject after all is said and done. Hotel booking website, Hotels.com, has increased the number of properties listed on its site to 100,000 worldwide highlighting the sheer excess of rooms available. How does a hotel ensure its clients are not poached in a competitive market?
Starwood’s regional director of sales, North West Europe, Evert Schuele believes good relationships are key. “Personal relationships are the absolute key to generating any business and this is even more the case now. We can’t take anything for granted so the best way to try to secure repeat business and therefore loyalty is to make the clients feel they have had the experience they were hoping for.”
Core to any event is the service and product. What is essential to Four Season’s Burnell is that the group do not force the hotel’s culture on its surrounding environment but rather in different operations embrace and relate to the local market. “Even though we are a global brand we manage on a micro-level, changing our ways of working dependant on the market. Generally, we work on the 80/20 rule, 80 per cent of your sales come from 20 per cent of your clients.
“We are constantly brainstorming ideas to improve but for a successful event you must as the right questions initially. Delivering objectives for an organiser is essential.”
As Walker sees it, 2009 will be a challenging year for the conference and event market “but equally it will bring opportunities for those hotels which are able to add value for their clients and minimise costs.” He warns that in the long term, venues should use this time as an opportunity to grow business and gain repeat clients.
When figures seem to suggest a drop in leisure tourists in some regions, hotels it seems are ever more mindful of the value of business tourists. Let’s hope this focus remains when the economic upturns beings.
