Hoteliers are making big profits in every corner of their properties, right? Wrong.
A new survey from PKF Hospitality Research, LLC shows that hotels are facing new challenges as guests tighten their belts on spending. While the return of more business travelers has allowed hotels to enjoy a 6.3 percent increase on room revenue between 2011 and 2012, data from the Atlanta-based research firm shows that hotels are struggling to earn revenue in other add-on areas. Revenue from food and beverage increased by just 2.5 percent.
“To keep control of their meeting and travel budgets, limitations have been placed on the amount conventioneers and business people can spend on ancillary services and amenities,” R. Mark Woodworth, President, PKF-HR, said in a statement. “We already have seen hotel owners and operators react to this trend by reducing the levels of food and beverage service at their properties, along with an enhanced focus on building select-service hotels.”
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What the Numbers Mean for Meetings
As meeting planners work to negotiate lower room rates and discounts on F & B costs, it’s important to recognize that hoteliers are working to adjust to these new norms. They need to determine how to staff appropriately and how to estimate what kind of additional revenue they can earn from attendees when those attendees have limited expense accounts. While big meetings do represent big revenue opportunities, hoteliers may not be quite as inclined to offer concessions if they know they’ll struggle to make up for that revenue in other areas.
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Cheap Room Block Competition
Outside of working to ensure that luxury properties are properly equipped to handle attendees, planners and hoteliers alike are dealing with a growing roster of more affordable accommodations, too.
“Managers will continue to be challenged to grow other revenues sources, especially since travelers will be offered an increasing inventory of select-service properties,” Woodworth added.
That inventory puts more pressure on a meeting marketing plan. Attendees can easily use online price comparison tools to determine how to save money on their expenses. While an “exclusive attendee discount at the host hotel” is a starting selling point, it may not be enough to close the deal.
“In today’s world of price competition, it’s important to make sure all your attendees recognize the real benefits of booking within the block,” Kelly Peacy, senior vice president, education & meetings, PCMA, says. “It’s the place to be where attendees will find themselves in the middle of all the action and where they’ll be able to make those valuable one-on-one connections.”
To learn more about hotel revenue trends, click here to view more data from the PKF report.