LONDON — With operating costs getting more onerous, hoteliers are considering every possible revenue stream to greater extents.
High on the list is how to better measure potential upside from groups and meetings, incentives, conventions and expositions — or MICE — business. The demand segment has been steadily recovering in the past few years since its drop-off during the pandemic.
During a panel at the Hotel Industry Development Event, hoteliers said at the heart of the issue is gaining more consistency in data.
“Groups get put into the same category as MICE, but they might not have any events,” said Peter Heath, founder of business advisory Venue Performance. “Do calculations include delegate or day-by-day rates, beds, [food and beverage]? It is not only about how many people you can stuff in a guestroom.”
United Kingdom hotels have seen a 6% year-over-year increase in meetings and events business, Heath said.
“The industry talks about revenue per square meter. How about revenue per delegate?” he added.
Henri Wilmes, chief investment officer at hotel owner LRO Hospitality, agreed.
“That depends on asset and location. Is it a room factory, or not?” Wilmes said, adding that a lack of consistency adds to the difficulty of underwriting new hotel development or refinancing loans on existing hotels.
Michelle Walder, vice president of operations for Europe at Standard International, said with meetings and events becoming more important, there is a need to reevaluate hotel spaces again to increase revenue.
“We do [food and beverage] just as seriously as rooms. It is about 50% of our revenue, so you really need to invest in to get it right. The customer now wants more flexible spaces … [and] you need the operations logistics to make that happen. [Food and beverage] is difficult to keep in the eye of the guest and the attention of the press,” she said.
One of Standard International's hotel brands is The Standard, which is known for its food and beverage and public-space events and offerings. Walder added The Standard has marketing, programming and music managers solely for its food-and-beverage offerings.
“It is big revenue but also big investment,” she said.
Even if a hotel does not have dedicated spaces for food and beverage and events, it does not mean that group business, meetings and events cannot be a measurable quantity for that hotel, said Peter Haaber, CEO of Danish hotel firm Core Hospitality.
Core Hospitality operates properties affiliated with Marriott International's Fairfield, Moxy, Residence Inn and Element by Westin flags. In January, its 14 in-house-created Zleep hotels were rebranded as Four Points Flex hotels.
Hotels close to large event venues obtain revenue from meetings and conference guests but do not define it as such, Haaber said. He added hoteliers should continually take note of what events are happening in proximity to their properties in order to try and capitalize on visitors who are likely to eventually spill out from them.
It's also useful to have staff members who have their fingers on the pulse of their cities and destinations, Wilmes said.
“Investors first focus on rooms and then on revenue flow-through,” he said.
Bent on events
Finding use for every square foot of a hotel can help add revenue, but it also comes with costs, panelists said.
One tip is to look at a hotel’s demand curves and quieter times during the day and week. Wilmes said the few hotel operators who do this are going the extra mile.
“Mostly, they are very comfortable in their zone. The people who can deliver on this are few and far between,” he said, adding that a business model should also have a strategy for optimizing a hotel public space.
Tuesdays to Thursdays often are dead days at hotels, but mathematically they constitute almost half of the week, Heath said.
“They equal 43% of your occupancy. Perhaps have a different focus on events you are holding on those days, ones you can feed off,” he said.
For Standard International’s restaurant programming at its hotels, success comes down to the people behind the strategy, Walder said.
“The people, also the concept, seasonality and the partners we work with. We also do not take ourselves so seriously,” she said.
The economics of a successful hotel restaurant are still a tough sell as margins are tight, Haaber said.
Wilmes said events spaces and venues at hotels need to be shared by different users. That concept can add revenue but often is a difficult concept for hotel owners to grasp.
“It is not just a question of revenue but the [capital expenditure] behind it, and CapEx makes investors nervous. I would say in the hotel industry there are not a lot of success stories,” he added.
Standard International has separated its marketing and sales team, which Walder said has brought forth new ideas about how to reach different types of hotel guests.
“That allows us to bring in guest segments that might not be the standard hotel-restaurant guest. Also important is to have the humbleness to know that sometimes [your idea] will not work,” she said.
Wilmes said that type of structure might work better with innovative or smaller hotel chains.
“But when [that ground-up idea] is sold to investors, they might be nervous that the DNA will not be possible in a new ownership camp,” he added.