What do successful weekly Smith Travel Research (STR) reports across regions and hotels have in common? A well-executed group strategy, which answers the question, “What amount of group business, along with all other segments, constitutes optimal mix for your hotel?” Of all the market segments that make up a hotel mix, group segments form the strongest foundation for most hotels’ pricing strategy.
Group segment trends for 2018
1. Shorter booking windows and increasing Average Daily Rate (ADR)
As per STR reports, group segments are growing slightly faster this year when compared to last year and the booking window is tightening. This gives hotels the opportunity to increase rates or offer alternate dates to unforecasted groups that fit the short-term optimal segment mix.
Another opportunity within this segment is that group ADR is trending at a 13.9% increase, nearly two points higher than transient ADR growth.
Group ADR trending up at +13.9% YOY
Source: STR 2018
2. Rising group acquisition costs
With several external group booking platforms, hotels are now paying close to 15-25% of guest-paid revenue in total customer acquisition costs. By 2022, this number is forecasted to increase to 20-30% of guest-paid revenue*. Increasing group acquisition costs make a strong case for the use of hotel data as a source of lead generation for groups.
*Source: Lead Strategies report by RainMaker and Social Tables
3. Embracing digital technology
A recent Skift article noted that hotel acquisition, labor, and staffing costs are increasing along with third-party expenses associated with traditionally sourcing and hosting group business. As a result, you should embrace innovative methods of lead generation to save time and find the right fit for your properties.
Deciding to accept or deny group business
For all group business, pricing is based on internal and external demand data. Internal data includes hotel occupancy, pace compared to last year, and forecasts. External factors include congestion in the city due to conventions, events, and competitor data in group performance.
General internal and external sources of data
- Delphi Group Meeting platform (internal)
- Historical Group Booker Lists, key to include business lost/declined (internal)
- By Market Segmentation (Corporate, Wedding, Entertainment/Production)
- By Meeting Planners (Sales Database)
- CVENT (external)
- Helmsbriscoe (external)
- Amex Meetings (external)
- Conference Direct (external)
- Starcite – Lanyon (external)
- Tour Connection – Entertainment (external)
- Local Convention Bureau
Revenue Management Software (RMS) technology is ideal to calculate displacement and acquisition costs based on current costs and forecasted demand. In addition to total group revenue, the revenue from food and beverage and other ancillary spend are key factors to consider.
Using historical data, each hotel should know their meeting space to guest room ratio so they can focus on groups that meet the criteria to avoid selling out of a meeting space before guest rooms. The Sales and Revenue Management teams should collaborate to sell to the right group at the right ADR, which is key to achieving a hotel’s revenue per group room or per square foot of meeting space.
Strategies for closing the right group business
1. Understand the sales incentive structure and align it with your hotel’s goals. Here are some things to keep in mind:
- Group goals should be broken down by group segment (i.e. Corporate, Conventions, Entertainment, Weddings, etc.) and aligned with the budgeted ADR and number of room nights
- Higher incentives can be offered to groups closed over hotel need dates
2. Tap into your hotel database to generate leads. In addition to groups that booked and stayed at your property in recent years, your hotel database also includes businesses that were turned away. In the future, you can reach out to these properties that were lost or refused business with targeted campaign offers to help you recover lost revenue.
Subject Line ideas for Holiday Meeting/Group Offers:
- Work together, play together [Hotel]
- Reimagine your next meeting
- A Special Offer for Your Next Meeting
- Attention Meeting and Event Planners
- Exclusive Group Meeting Offers
- Book your Group Meeting Today and Save XX%
- Book This Meeting Package and SAVE!
- Strengthen your team at [Hotel Name]
- Upcoming Holiday Party: Special Offer for your Event
- Book your Epic Party Today
Take a look at some successful group business campaigns from our customers:
The Garland Hotel
The Paramount Hotel
The Graylyn Estate
With rising acquisition costs from third parties that previously helped you produce direct group booking leads, turning to your own internal database to generate direct leads is making more and more sense. Your key to boosting conversions is closer and easier than you think. To learn more about generating group business, reach out to us at Revinate.