Staying Competitive in the Hotel Group Meeting Market

Maintaining Momentum and Honing Strategy

By Jim Vandevender Chief Marketing Officer, Knowland | September 10, 2017

Selling to the right group segments is important. Achieving the right mix of group and transient is also key to success. The variances in rate structures, for example, for the transient and group segments (often in stark contrast to one another) are key to maximizing revenue opportunities in a high-demand market.

Transient pricing strategies are, of course, designed for individual guests staying at a hotel, whether for business or for pleasure. High demand enables hotels to quickly raise these rates as high as the market will tolerate. More or less, there is almost no limit as to how high hotels can raise transient rates if the demand is strong enough, as long as the hotels have rooms to sell. Effective pricing and the right segment pricing strategies, therefore, allow inventory management to drive ADRs higher and higher. Group pricing, coupled with variances in booking pace, can present rate ceilings that hinder revenue maximization strategies if careful analysis is not applied.

Group vs. Transient: A Strategic Balancing Act

In order to take full advantage of the lucrative returns possible in a demand economy, hotels must make crucial decisions as to what mix of transient and group room allocations will maximize those returns. The same careful consideration of market demand used for transient business has to be applied to a hotel's group strategy and group sales deployment decisions when pursuing the meetings market to ensure the best possible returns on those diligent group efforts. In other words, the group segments a hotel pursued one year may not be the best group segments to go after the next year. For example, a hotel in Chicago that relied heavily on pharmaceutical business may need to reevaluate its group strategy if it notices stagnant trends in its group business and increasing technology and manufacturing meetings going to its competitors.

When demand is high like it is currently, hotels enjoy being in the driver's seat and choosing among the best meeting opportunities that maximize group revenue. Every hotel has a "best-fit scenario" when it comes to a group's date patterns, room nights, space usage, and food and beverage spend. In today's market, a group that requests lower room rates or asks for an unfavorable mid-week arrival, for example, is likely to be greeted by a hotel with an apparent lack of excitement and interest in that meeting opportunity.

Will demand stay strong enough in 2017 to allow hotels dependent on group business to continue being so selective? If it doesn't, how do sales teams rethink their group game plan?

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