Hoteliers, data experts and planners all agree that demand for meetings and events at hotels has surged in recent months, though it's not even across hotel types or group sizes.
Along with meetings and events planners for other corporations, technology firm HP has right-sized its hotel program for its nearly 30,000 business travelers to accommodate the shift in travel patterns.
Hotel brands such as Marriott International are reporting a roughly 25% increase, compared to 2019, in hotel demand from smaller corporations booking meetings and events.
But demand and rates at luxury hotels are falling year over year as travelers begin to downgrade on their purchases.
Experts shared their thoughts on these trends and others during a webinar presented by BTN Group titled "Transient Lodging in 2024: Insider Tips for Savvy Buyers."
Meetings and Events Demand Surge
Tammy Routh, senior vice president of global sales at Marriott International, said demand and the business mix has shifted again in the years coming out of the pandemic. While leisure remains robust, “meetings and events have exploded” to an all-time high at Marriott hotels.
“You’ve heard so many times that small and midsized businesses came back first [from the pandemic] in business travel, and they continue to be very strong for us and our competitors,” she said.
Meetings and events demand from smaller corporations is up roughly 25% at Marriott’s hotels compared to 2019.
This means business travelers will be competing for availability with other meetings and events attendees.
However, demand from larger corporate accounts is down 20% to 25% from 2019. Routh said it varies by customer and business segment.
Leaning deeper into business partnerships and relationships is more important than ever, she added.
“We will always need and want business travel,” she said. “Especially for our hotels that are built to take business travel and group business. They’re not set up in their facilities and their amenities and their staffing to be full leisure hotels. That’s a very different kind of traveler, very different behavior.”
Routh said transparency with pricing and metrics is key to establishing partnerships. Outside of price and amenities, hoteliers must also have a value proposition for groups, and vice versa.
“When [hotels] have to decide, with this limited inventory, what business [they are] going to take, we want your business case to be the strongest. That takes a lot of communication,” she added.
Marriott is keen on hybrid pricing, which protects top accounts and markets with static rates while negotiating requests for proposals for hundreds and sometimes thousands of hotels one at a time. Often, the RFP process can take up to six months, and many hotel teams lack the resources to accommodate that.
“This idea of combining a small piece of static, and the rest of it being some form of dynamic is very exciting for us. I know it’s hard to make this change, especially when for years you have certain kinds of metrics that you can measure year over year with cost savings, cost avoidance,” she said. “Something to keep in mind in the hotel industry … we cannot charge more than the market bears. Our [global distribution system] or our websites, they show you our retail rates, our public discounts and our loyalty rates. They’re out there for you to benchmark … it's [the] traveler's choice, and if we’re overpriced, they’re going to choose someone else.”
Meeting Planners Right-Size Offerings
Adam Turetsky, global hotel and meetings category strategist at technology company HP, said the company has nearly 30,000 regular travelers. Its 2023 travel program consists of static and dynamic rates in primary and secondary markets, and chain-wide discounts to support tertiary markets.
“Our highest hotel volume is centered around our larger sites, which include Houston, Palo Alto, Singapore and Barcelona,” he said.
Turetsky said his priority for entering the 2024 travel planning season is traveler duty of care.
“We really learned this during the pandemic, but ensuring our travelers are safe and secure while on the road is always top priority,” he said. “During the pandemic, I made very few changes to the hotels selected for the 2020 program because we just didn’t know.”
Now, emerging from the pandemic, his team has taken the opportunity to right-size its program to align with new travel patterns. This has meant parting ways with some hotels that have been in HP’s travel program for years.
This has also resulted in strengthened relationships with many of its hotel partners and the ability to shift more traveler volume to those.
Customers More Willing to Downgrade Chain Scales
Routh said groups have more of an appetite for select-service hotels that are more price-friendly. Conversely, there’s also an appetite for luxury hotels among executive groups.
She said many groups will say: “This is my rate cap. What will you do for me?”
Emmy Hise, senior director of hospitality analytics for CoStar, said she is seeing a slowdown in luxury hotel demand, but not from corporate travelers. Instead, it’s a slowdown in weekend leisure business.
Hise said there's been an uptick in demand for city-center locations, though it’s not necessarily in convention hotels, which are generally the higher-end hotels. It's more so select-service hotels.
In terms of average-daily-rate growth by day of week, it's mostly coming from the business traveler between Monday and Wednesday. U.S. hotel rates on the weekend are decelerating year over year, according to CoStar preliminary data as of June.
Also, each month since the start of this year, there has been year-over-year occupancy growth in midweek business, she said.
"While the growth rate is starting to normalize, it's still positive year over year," Hise said. "On the flip side, if you're looking at the weekend, Friday and Saturday, for the past four months that is showing occupancy decline."
By chain scale, each one is showing rate growth except for the luxury chain. Luxury branded hotels had the highest rate growth over the past two years, and while it's having a year-over-year decline, it's still "20%-plus above 2019 levels," she added.
"The other segments such as upper upscale and upscale are starting to get those rates back to where they were," she said. "They have a slower uptick because the leisure visitors were going to luxury.