Meeting News - April 12, 2010 - (Page 16)

MeetingNews Research continued from page 1 By Michael B. Baker mbaker@meetingnews.com Cancellations Slow As Hotels Start To Tighten Attrition Screws for groups during the downturn could be valued at about $11 billion. The groups most prone to cancellations are incentive groups booked directly, not through a third party, which typically MN book 16 to 18 months in advance. Research Pharmaceutical groups, which need to book in advance due to their large size and often must react quickly to marketplace conditions, also are prone to cancellations, MeetingTrader’s Brooks said. Otherwise, cancellations have dwindled largely because of the constricted booking window for meetings.Large hotels,particularly those in meetings-heavy markets like Las Vegas, Orlando or San Antonio, continue to run at low occupancies, rates remain low, meetings that are booked are generally smaller and large events canceled a year ago have left an occupancy vacuum in several dates for certain markets. All these conditions make it easy for planners to wait until the last minute to book, leaving cancellation unlikely, Brooks said. “There is a trend toward just-in-time procurement,” he said.“Why should they take the risk if they can just find the space 90 days out?” Conditions allowing for short-term bookings do not appear to be dissipating. New York University Tisch Center associate professor Bjorn Hanson said while there are signs of strengthening group demand, the recession was so severe that percentage growth can be deceiving. For example, if a hotel saw its group bookings drop from 100 to 10, an increase back up to 20 meetings would be reported as an impressive 100 percent growth, even though it’s still 80 percent off the original levels. These short-term bookings also have lessened attrition, said Kevin Iwamoto, vice president of enterprise strategy for meetings management technology supplier StarCite. Headcount is not likely to fluctuate in the short term, so even though costs end up being a little higher, it’s outweighed by the low risk of attrition, he said. Additionally, large groups booking in advance 16 MeetingNews April 12, 2010 have adjusted their attendance estimates to coin- is seeing a move away from attrition concessions. cide with recession-era travel levels, he said. “In “The agreements certainly aren’t getting any the old days, if you thought you’d have 1,000 peo- more lucrative for corporate,” according to ple, you’d ask for rooms for 1,500 to 2,000, but Odom. “They’re going back to percentages of now, if anything, they’re going to be more conser- attrition. In some cases, they’re not changing, but vative,” Iwamoto said. they’re not getting any better or sweetening those Corporations putting tighter controls around deals any.” their meetings programs also led to a decline in Cancellation activity from late 2008 and early cancellation and attrition, Iwamoto said.“Cancel- 2009 also has left a bubble of credits that could ing meetings and canceling travel has had a huge present opportunities for meeting planners as impact on their books,” he said. “With demand well, according to MeetingTrader’s Brooks. Often, management controls, they’re starting to factor cancellation agreements stipulate that a portion those things in.” of the penalty paid can be credited to future meetAdditionally, avoiding cancellation and attri- ings, he said. Those credits almost always have tion is becoming more critical for planners. As expiration dates, and a large number are set to group travel levels plummeted last year, hotels expire this year. Planners who are unable to use were offering attractive attrition clauses. Omni those credits in time often are willing to sell them Hotels, for example, continues to waive attrition at a discount to other planners, he said. clauses entirely for meetings booked and conducted through Room Block Agreement Failures Dec. 31. Most hotels, however, Organizations That Failed To Meet Obligations In The Past Six Months now are moving in the other direction, according to NYU’s Yes 23% Hanson. “Last year, there was a high degree of flexibility,but hotel execNo 77% utives in general have increased their enforcement of cancellation polities,” Hanson said.“The moveSource: A MeetingNews survey of 220 corporate, association and independent planners ment has been back to strict enforcement of contract terms.” Hanson estimated that about 20 to 25 percent “If they can’t find another department in their of current meeting contracts have made cancel- company to use the credit, whey should they let lation policies stricter. Hotels also have become the money go if they could recover 20 cents to 50 stricter in some cases for the number of days cents on the dollar for them?”Brooks said.“If they required for changes such as food and beverage sell the credit, they no longer are a liability for the service, he said. hotel,the customer with the credit gets something “The decline in group and convention travel back for the money and the new customer gets a was the most severe of all the segments,” Hanson master account credit that is, in effect, the monesaid. “There was an increasing pattern in not tization of another company’s credit.” meeting block numbers, and there needs to be a Planners also can try to convince hotels to message that that’s behind us.” extend those credits, but hotels will resist that, he George Odom, senior consultant for BCD said.“If I’m a hotel owner,” Brooks said,“I’ve got Travel consulting division Advito, said he’s not to close my books for the year, and this is an seeing as much change in cancellation clauses but asset issue.” ss www.meetingnews.com http://www.meetingnews.com

Table of Contents for the Digital Edition of Meeting News - April 12, 2010

Meeting News - April 12, 2010
Contents
Meeting Post
Newsmaker
Meetings Spotlight
Viewpoint
MeetingNews Research
Event Profile
Association Watch
Meeting People
Construction Cites
Theme Parks
MeetingNews Roundtable
Conv. Center Showcase

Meeting News - April 12, 2010