Maximizing Group Revenues and Profits

By Greg Pesik President and 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.

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There are strong moral and ethical reasons why a hotel should incorporate eco-friendly practices into their business but it is also becoming abundantly clear that “going green” can dramatically improve a hotel's bottom line. When energy-saving measures are introduced - fluorescent bulbs, ceiling fans, linen cards, lights out cards, motion sensors for all public spaces, and energy management systems - energy bills are substantially reduced. When water-saving equipment is introduced - low-flow showerheads, low-flow toilets, waterless urinals, and serving water only on request in restaurants - water bills are also considerably reduced. Waste hauling is another major expense which can be lowered through recycling efforts and by avoiding wastefully-packaged products. Vendors can be asked to deliver products in minimal wrapping, and to deliver products one day, and pick up the packaging materials the next day - generating substantial savings. In addition, renewable sources of energy (solar, geothermal, wind, etc.) have substantially improved the economics of using alternative energies at the property level. There are other compelling reasons to initiate sustainability practices in their operation. Being green means guests and staff are healthier, which can lead to an increase in staff retention, as well as increased business from health conscious guests. Also, sooner or later, all properties will be sold, and green hotels will command a higher price due to its energy efficiencies. Finally, some hotels qualify for tax credits, subsidies and rebates from local, regional and federal governments for the eco-friendly investments they've made in their hotels. The May issue of the Hotel Business Review will document how some hotels are integrating sustainable practices into their operations and how their hotels are benefiting from them.