As meeting professionals look ahead to negotiating hotel contracts and making plans for future meetings, a new report from PwC shows that the power will most likely remain on the property’s side.
“The strengthening of the group segment thus far in 2014 and a strong summer travel season across all price points is encouraging for future occupancy levels and continued industry growth,” Scott D. Berman, principal and U.S. industry leader, hospitality and leisure, PwC, said.
So just how encouraging are the estimates for hoteliers? If the industry remains on this current course, PwC predicts that 2015 will deliver the highest occupancy levels in 20 years. The increase in demand balanced with a relatively steady supply also means that rates are set to jump. In fact, PwC predicts the largest year-over-year percentage increase in average daily rates since before the recession.
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Fees, Fees, Fees
In addition to an increase in rates, another study shows that business travelers, leisure guests and conference attendees are paying more in additional fees for services such as Internet, baggage holding and automatic gratuities. Bjorn Hanson, PhD, Clinical Professor at New York University’s hospitality school, forecasts that hotels will collectively rake in a record-setting $2.25 billion in fees and surcharges. Hanson adds that meeting planners are seeing the increase, too, in the form of charges for bartenders, special charges for set-up and breakdown of meeting rooms and master folio billing.
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Looking Ahead To Your Next Negotiation
Tyra Hilliard, PhD, JD, CMP, professor, speaker and contract expert, reminds meeting planners that most markets are currently seller’s markets, and based on a look at each of these reports, that is not going to change anytime soon.
However, when I spoke with Hilliard earlier this year, she reminded me that average occupancy rates vary based on region and timing. While reports of soaring occupancy rates may be true in certain parts of the world, properties in other regions may be more hungry for your business. Meeting planners can keep a finger on the pulse of occupancy and ADR at statista.com. Some reports are free while some more detailed data sets do cost a fee. Hilliard says that understanding market trends can prove to be very valuable in the negotiation process.
“Knowledge is power in negotiations,” Hilliard told me. “I would love to see planners do more research on the market where they’re looking to host their meeting. Find out how many hotel rooms are within a certain radius and what the average occupancy rates are during your meeting.”
Click here to read more from my interview with Hilliard for helpful negotiation tips.