Mr. Pesik

Meetings & Conventions

Maximizing Group Revenues and Profits

By Greg Pesik, President and CEO, Passkey International

We know why hoteliers look to bring groups to their venue. That answer is simple: Revenue. As I have said in past articles, group events represent a $30 billion+ market opportunity for hotels, and over 30% of a hotel's total revenue on average. Many hotels rely on group events for over 50% of their revenues. In order to tap into this opportunity hotels are scrambling to line up their calendar of events for the year ahead.

One question I get from many customers, colleagues and friends in the business is the following: "Once we have booked a healthy amount of group events, are there any additional ways to identify and generate more revenue from each event so we can take our group revenue up to the next level?"

These folks are always glad when I answer that question with a firm "Yes." What I tell each of them is that today hotels are focused on attracting events and then making sure they are all a success. This is essential. What they need to do now is identify potential new sources for creating additional revenue from each individual event. The question is how, and some of the answers are below.

Increase Pick Up

When a contract gets signed, the planner is tasked with forecasting how many rooms they will need to accommodate guests, which is based largely on an estimated percentage of anticipated bookings to contracted block (pick-up). Generally this "pick-up estimate" is based on the history of past comparable events, type of event, time of year and other factors. What both sides, the hotel and the planner, strive for with all events is for the contracted room block to reach, or what I often tell them is doable, to exceed 100 percent pick-up. A failure to meet this number often results in the planner having to pay costly attrition fees, and the hotel being stuck with empty rooms that could otherwise have been filled.

Leveraging collaborative group technologies that provide an ability to track pick-up in real time and that send email alerts at pre-set pick-up milestones enables hotels and planners to maximize pick-up and make sure it reaches or exceeds the contracted block. Another way to maximize pick-up is to tie the hotel reservation site to the event registration site which ultimately creates a seamless, one-stop scenario for the guest. In doing so, the event attendees are much more likely to book their hotel rooms in the block contracted by the planner versus shopping around for hotel rooms via other channels, and in doing so, jeopardizing the fulfillment of the contracted block. This is indeed a proven practice- the best way to increase pick up is by making the process as streamlined and simple for the guest as possible.

Offer & Promote Extended Stays

When an event planner selects your venue, the contract not only includes a block of rooms but also a block of dates over which the event is scheduled to take place. For example let's say company X is having their annual meeting at your venue on October 8th, 9th and 10th. It is natural for the hotel to focus their attention on maximizing bookings on those days, after all that is when the event is taking place.

So the question now is what else can hotels do? Most meeting planners count on technologies such as online group reservation solutions to help them execute their events to perfection. In fact many planners will not work with a hotel if they do not offer such a solution. For those hotels that have embraced this technology, many are not tapping into its full potential. For example, online booking solutions offer hotels the ability to offer and proactively promote extended stay packages to all guests. What this mean is that for those planning to stay two nights, the 8th and 9th, the hotel can easily offer them a discounted package that lets them transform the meeting into an extended stay, or to bring their spouse or family along.

Just think about it. You can keep guests for four nights instead of two and all the hotel has to do is offer the opportunity to book that extended stay on the event booking website. It's a simple step that can bring in a significant amount of additional revenue that previously was not being tapped. In fact, it has been proven that offering such extended stay inventory or packages to group attendees can generate 10% or more in incremental revenues for hotels, which can add up to tens or hundreds of thousands of dollars in incremental revenue over the course of a year

Offer & Promote Room Upgrades

Building off the example above is the next opportunity to fully maximize group revenues from your next event-room upgrades. In most cases when a guest is presented with a room block, they choose a room within the block and that is that. The question I ask is, "where is it written that a guest has to take a room in the block that has been set up by the planner?" Clearly the room block, and the successful management thereof, is an essential part of a winning event, but hotels are missing out on potential revenues opportunities. What hotels must do is offer flexibility in terms of the room options presented to guests when they are making reservations, even if some of the room types are not included in the contract with the planner.

With the online reservations solutions available today, there is an opportunity to add a step that presents alternative room type options to the guests that are looking for something a little different. Similar to the idea of encouraging extended stays, the room upgrade offer gives each guest the opportunity to select a room that might enhance their overall experience or even better meet their accommodation needs. Perhaps it's a suite that gives them additional space to conduct work meetings or a luxury room with an ocean view that helps them more fully enjoy their time away from home. In either case, giving guests an opportunity to upgrade their rooms, all through one easy step in the online reservation process, presents enhanced revenues to the hotel that let them fully maximize each event.

Offer and Promote Amenities

Once a guest has booked their room, whether it is in the original block or an upgrade, the hotel's ability to generate additional revenue does not end there. Today's hotels offer guests a myriad of top-notch amenities, both in and outside the hotel. Amenities include on-site restaurants, entertainment shows, day spas, golf outings, or even day trips to local area attractions. To tap into these additional revenue opportunities hotels must explore new ways to sell these items to their guest.

Of course vying for the attention of guests is not as easy as it might seem. Hotels are under stiff competition, primarily from local areas businesses. Many of the most popular hotels are located near major cities or in extremely popular tourism destinations, which in many instances is the reason they selected the location in the first place (i.e. the better the location, the easier it is to bring guests and events into your venue). The challenge is that selecting a location can be a double edged sword because popular locations bring with them an abundance of local area attractions that can pull guests out of your venue. As a result, hotels often lose out on potential revenue generating opportunities. For example, after an event's agenda is wrapped up for the day, it is fairly commonplace for guests to "hit the town" for the evening's festivities. To stop the bleeding hotels need to go the extra mile in their effort to keep their guests on site. To do so they must promote the hotel's amenities and offer special deals at the time the guest is booking their room. Special offers may include a discount at one of the hotels restaurants or a deal at the in-house spa. While it is hard to expect that people will not spend some of their time outside the hotel, going on the offensive gets guests to commit some of their free time (and money) to staying on site and in doing so creates additional avenues for bringing in money.

Group events present a major revenue generating opportunity for hotels. The problem is that these businesses focus 99 percent of their effort on landing top events and ensuring they are executed to perfection. While the commitment to event perfection cannot waver, hotels have to begin realizing that they miss out on some other potential revenue channels that can take their successful event program and bring it up to the next level. The good news is that the fix is fairly simple. Take a look at your venues and what you have to offer. Then work with your booking and online reservation solutions as well as meeting planners to proactively approach guests with opportunities to turn their annual company retreat into an enjoyable and memorable getaway.

Greg Pesik is President and CEO of Passkey. He served as SVP of Transport, Travel, and Hospitality at Talus Solutions. Where he helped position the company as a leader in profit growth technologies. Greg has overseen a portfolio of hotels, passenger airlines, cruise lines, cargo, ocean shipping, rail, trucking, and rental cars. He was VP and Director of Business Development at Aeronomics, held lead positions for Andersen Consulting and KPMG Peat Marwick. Greg holds an MBA from the Johnson School at Cornell and a BS from the Cornell School of Hotel Administration. Mr. Pesik can be contacted at 617-237-8200 or gpesik@passkey.com Extended Bio...

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