Maximizing Group Revenues and Profits
By Greg Pesik President & CEO, Passkey International | November 17, 2008
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.