The Future of Hotel Events & Groups

By Ron Shah Founder & CEO, Bizly | September 02, 2018

Traditional group commission rates are headed to zero. Marriott, Hilton, and IHG went down to 7% earlier this year. The "writing is on the wall", and there is no going back. To defend their position, the hotel brands will be forced to resist transparency about their group pricing and inventory. Once group inventory and pricing becomes transparent, then anyone will be able to distribute it, and the brands will give birth to another OTA industry. This is the brands' worst nightmare and an outcome that they will avoid at all costs.

In light of shrinking hotel commissions, corporate travel departments will be forced to reconfigure their funding streams, traditional event agencies will be forced to change their business models, and hotels will have to create new distribution methods. Despite the urgent requirement for change, most of the stakeholders are yet to make a bold move.

A number of brands - notably, Starwood, Kimpton, and most recently, Hyatt - have attempted and failed at offering their own "instant booking" group inventory applications. Why have these attempts failed? What these applications offered still wasn't instant, easy, and most importantly, customers want to compare offers across many brands before purchasing.

While it seems that the competitive landscape is nascent and that customers still rely on hotels when they have groups who need a place to sleep; this could change in a heartbeat. Airbnb could easily offer "room blocks" and combine itself with a modern event day space providers like Convene or the tens of thousands of unique venues and restaurants around the country.

So heading into the future, how does the hotel industry position itself for success?

Focus on ROI

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.