As hoteliers have enjoyed record-breaking occupancy rates over the past few years, some business events organizers and meeting professionals have faced challenges with higher room rates, smaller blocks and fewer available concessions. If you’ve been struggling to secure your room block at the right price, 2017 may bring a cause for celebration. According to a new report from the Jonathan M. Tisch Center for Hospitality and Tourism at NYU’s School of Professional Studies, buyers can look forward to flexing more muscle at the bargaining table in 2017. “As the corporate and contract rate negotiation season is about to begin, the 2017 outlook is for a change in the balance of power from sellers to buyers,” Bjorn Hanson, PhD, Clinical Professor, wrote last week.
Corporate contract rates for 2016 soared with increases between 5.75 percent and 7 percent. Now, Hanson predicts that the increases for 2017 will be much smaller, ranging between 3.25 percent and 4 percent.
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Is Direct Booking Partially To Blame?
Hoteliers have been working to motivate more individual guests to book on their websites so they can avoid forfeiting commission fees to online travel agents, but it appears that some important decision-makers aren’t as happy about direct booking discounts. “Some corporate travel managers and convention planners have been surprised at the published ‘member rates’ and non-refundable rates published on brand websites because they can be lower than the corporate, contract or convention rates that were expected to be lower than rates available to the public,” Hanson wrote.
Outside of competing with OTAs such as Expedia, Priceline and booking.com, convention organizers also recognize that attendees are embracing the newest kid on the housing block: Airbnb. The peer-to-peer rental company enjoyed impressive growth over the past year, and new partnerships with American Express Business Travel, BCD Travel and Carlson Wagonlit Travel show that Airbnb will continue to be in the consideration set for business travelers and conference attendees.
The environment may shift to more of a buyer’s market in 2017, but hoteliers still have plenty of leverage — particularly in destinations with limited supply growth. As meeting professionals and business event organizers look ahead to upcoming conversations with hotel partners, “The Most Valuable Trait You Should Have In Negotiations” is recommended reading.