Delays, Booking Trends and Sustainability

SAN FRANCISCO — Group business is beginning to pick up slowly, but capturing wallets and loyalty from this potentially profitable sector comes with a few extra challenges.

The consensus among hoteliers is that the conditions around group demand pre-pandemic are not the same today.

Speaking at the Accor Global Meeting Exchange, Markus Keller, Accor’s chief sales and distribution officer, said during the pandemic it was easy to forget hotel industry trends were still developing and changing.

“It was time when [Accor] could be more fundamental. Not everything was at pace. We took the opportunity to look at ourselves and focused on authenticity,” he said.

Scot Hornick, partner, travel and leisure, at business advisory Oliver Wyman, said for business travelers, loyalty is becoming more important.

Hoteliers needed to “ensure authentic delivery of experiences to earn loyalty,” he said, and group agendas and itineraries needed to have a leisure component.

“Our research reveals strikingly similar need patterns for business and group leisure travel. The need for fun stands out,” Hornick said.

But it’s still challenging for groups and meeting planners. Jayson Hodgkinson, director at Venue Choice — a Leek, England-based site-selection company — said the biggest challenge his clients face is availability.

“There is nothing being confirmed verbally. It takes weeks for replies, by which time the event could have already ended. Some events are for 4,000 people or more. It’s a lack of staff,” I said. “Rates will increase, but don’t expect service to get better, and we’re taking the flak for that.”

Building rapport has been critical in procuring contracts, Keller said.

“People work with people they like,” Keller said.

Jan Freitag, national director of hospitality analytics at CoStar, said group business is coming back faster to North America than it is to other world regions, especially in higher-priced segments. Around the globe, luxury hotel occupancy is 58% in the Americas, 48% in Europe and 40% in Asia-Pacific, with average daily rates at $376 in the Americas, $422 in Europe and $231 in Asia-Pacific.

One significant change is that the traditional separation of a hotel week has shifted, Freitag said. No longer are groups arriving on Sunday or Monday night and leaving on Thursday morning with leisure guests only arriving on Thursday night and leaving on Sunday.

“ADR will continue to go up and booking windows will elongate. Bleisure travel will be clashing with nights groups want,” Freitag said.

In other words, Thursday night is now a battleground.

“Everything in 2020 and 2021 has been moved to 2022, and it is becoming busier. Planners need to book further out in order to get space,” said Heather McCrory, Accor’s CEO of North and Central America.

Currency exchange rates are also beneficial for US groups.

“For Americans, Europe is on sale, but the skies are complicated,” Freitag said, referring to high demand and a lack of labor resulting in flight cancellations, baggage pileups and other airline disruptions.

He added that airfares are rising, and groups need to consider the total cost of travel. But in Europe, group demand in luxury is “back to normal,” boosted by this increase in US visitors.

Freitag said luxury hotel operators are once again selling the same number of rooms as they did in 2019 but at a rate that is on average 27.2% higher, and regional markets are getting in on the action, too.

I singled out Argentina Provincial, where ADR across all segments is $277, up 98% over 2019, and Ohio Area, the home of Hotel News Now, where ADR is $241, an 85% increase over the same period.

In the US top 25 markets, Miami has seen ADR increase by 49% to $618, although San Francisco hotel rates declined 9%.

Another development in the return of group demand is its increased insistence on hotel, hospitality and airline compliance to environmental, social and governance initiatives and corporate social responsibility rules and regulations.

Brune Poirson, chief sustainability officer at Accor, said this matter has four major components to satisfy — law, business demand, staffing and scrutiny.

“Hotels must be the receptacles of green financing, and platforms are pushing hotels towards more sustainability,” she said.

Online travel portals are increasingly developing their own scoring systems so buyers can decide who is the most responsible travel provider.

In terms of this online scrutinizing, “do we want our hotels to be at the bottom of the list? No! This is a huge revolution, a huge, deep change,” Poirson said. “Our responsibility is to introduce things that perhaps guests are not yet asking for.”

Editor’s note: Accor paid for all travel expenses to San Francisco, including airfare, amenities and hotel accommodation. Complete editorial control was at the discretion of the Hotel News Now editorial team; Accor had no influence over the coverage provided.

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