Group Pricing - Getting the Best Revenue While Keeping Bookings in the Block
By Juston Parker President & CEO, Parker Hospitality Group, Inc. | June 15, 2010
To group, or not to group, that is the question. It doesn't take William Shakespeare to pose the quandary facing many hotels of how much group business is good business and when does a group pose a risk to maximizing revenues at a property. To begin to answer this, we must first uncover the principles that hospitality pricing has always been under.
Hotel Revenue Management has been and many times, still is, under the "department" of sales and marketing and the Director of Revenue, most of the time still reports to the Director of Sales. The Director of Sales has a mandate to fill the house and most sales managers focus on group business, so therefore the thought is "if we want a sales team, we want them to sell and they need to sell group". This then leads to the thought of "take group business and then if we get the transient to fill in the holes". These thoughts are fundamentally unsound and cost many properties hundreds of thousands of dollars.
Let's look at the definition of a group. According to Wikipedia, the word "group" has many different possibilities of usage (see http://en.wikipedia.org/wiki/Group). From group identifiers in Unix to group travel to groups of business, Wikipedia shows 44 different identifiers to "group". Group Travel is defined as:
A set of individuals traveling together and involved in similar activities. There are two types of groups:
Individuals usually travel in groups to benefit from lower product group rates. Group rates can be contracted for Hotels, Airlines and other forms of transportation, ticketed events and other miscellaneous items.
With that uncovered, let us look at the very root of the word, under Mathematics, group is defined as a set with a binary operation that satisfies certain axioms. For example, the set of integers with addition is a group. What does this mean? Actually, it means and combination of numbers that satisfies a need. Now, do the hotels use this definition? They would tell you no, but I say most actually do. Many hotels identify a group one of two ways, 1) if they have more than "X" number of rooms (many times 8 or more); 2) if multiple rooms also take banquet space and catering needs.