Mr. Lewis-Purcell

Group Meetings

The Key to Unlocking the MICE Industry for Hotels

Global Distribution Systems

By Jason Lewis-Purcell, Vice President, GDS, SiteMinder

A lot is said about maximizing hotel revenue per available room, but what of revenue per available square meter?

It is a broadened mindset that may be needed from any hotel that aspires to attract the world's several million business travelers to their property but doesn't quite know where to begin. Indeed, as Hotel Analyst's Katherine Doggrell recently observed: "MICE has been a thorn in the side of the sector since windowless rooms with biscuits were invented. Any hotel worth its salt has to have them, but selling them is ... hardly an efficient process. Dead space in which many go to die."

What many hotels fail to realize is that behind every business traveler is a corporation. This means in essence that every booking is a lead to pursue bigger sales - from ancillary spend to, of course, group meetings.

According to the GBTA BTI™ Outlook - Annual Global Report & Forecast, global business travel spend approached $1.3 trillion in 2016 to represent a 3.5 percent year-on-year increase. Spending is also expected to accelerate over the next three years, advancing 6.1 percent in 2018, followed by around 7 percent growth in both 2019 and 2020.

Closer to home, in the U.S., for every percentage change in business travel spending, the local economy now gains or loses 74,000 jobs, $5.5 billion in GDP, $3.3 billion in wages and $1.3 billion in taxes. HotelsCombined estimates business travelers contribute $111.7 billion to the U.S. tourism industry each year, while, in the UK, Expedia estimates 60-65 percent of the 1.5 million meetings and business events that take place each year take place in hotels.

The stats are certainly aplenty and are evidence of the need for hotels to ensure the corporate market appears in their business mix. And, amongst the many ways, undeniably one of the most effective - albeit often-overlooked solutions in today's digital age - is the global distribution system. The GDS.

GDS: Still the Dominant Force in Hotel Technology

The GDS market is today valued at $30 billion and is used by more than travel agencies, but - perhaps surprisingly to some hotels - also OTAs. In fact, when it comes to attracting group business, many independent hotels are unlikely to look to OTAs to complete the equation.

In a world that is gone almost entirely digital, the GDS is the often-forgotten tool for hotels in search of a lucrative, high-performing marketing and sales channel. In spite of growing claims the GDS is on the decline and no longer relevant in today's digitally-based booking landscape, Sabre reports that GDS bookings increased by 11.6 percent from 2015 to 2016.

Core to the GDS's success is its unique, innate ability to attract business travelers who typically:

  • Spend more than 16 hours each day connected to Wifi and expect it to be available at every hotel, especially during a group meeting that can last several hours or days. For business travelers, Wifi is more than a luxury; it is a necessity to complete their work away from the office. All of this is to say that while they expect Wifi to be free, if they have to pay extra for it, they can and they will.
  • Maintain their fitness regimes during trips and would happily pay more to access a fitness center, if a hotel has one.
  • Are heavily attracted to rewards as affirmation of status, so they are almost guaranteed to stay again at a hotel if given a loyalty incentive. Hello, repeat business and lowered costs of guest acquisition!

Business travelers today spend up to 50 percent more on ancillaries than any other type of traveler. Importantly for hotels, business travelers are not as sensitive to changes in room rates and pricing, simply because the corporations they represent are compensating their travel. It is for this reason the GDS generally produces the highest average daily rate when compared with other distribution channels, as business travelers are more likely to upgrade themselves to a better, more expensive room type than the average leisure traveler. Combined with ancillary spend, this means tremendous incremental value for hotels.

Through GDSs, hotels have the ability to boost their mid-week occupancy and revenue in a way no other distribution channel can. And, with group business travel slightly outperforming transient travel activity, the forward-thinking hotels are those that can enhance their marketing to capitalize on the booming MICE industry so they are best poised to generate more revenue.

Let Travelers Know You Mean (Group) Business

Contrary to the many travelers who now book their accommodation spontaneously or while they are on the move, meeting planners book their group meetings and room bookings at least many months in advance. In order to secure the space early, they also tend to rebook spaces as soon as their group meeting is over, and who can say no to repeat (and predictable) business? As a hotel, it is therefore vital to treat meeting planners as a key target market and to create marketing and sales strategies that attract and convert these high-spending bookers.

Through the GDS, hotels can market their business-related amenities, including but not limited to free Wifi, proximity and transfers to the nearest airport, business centers, catering services and, of course, meeting and conference rooms. Are you a hotel located in a business destination? Are there regular, direct flights in and out of your destination? Make it your business to let meeting planners know.

Meeting planners today search for more than a hotel property in a convenient location; they want a destination that offers flexibility and a memorable delegate experience. Long gone are the days where hotels only had to target business travelers. Today, they need to accommodate the 'bleisure' traveler who combines their business trips with leisure, and group meeting delegates that have traveled long distances are the most likely candidates for this category. Those delegates often add a weekend on to their trip for leisure activities, so hotels that can provide both group meetings and reasons to extend their stay for leisure purposes ultimately provide meeting planners with a more attractive option.

Additionally, with the rise of health and wellness, hotels should be looking to innovate in the team-bonding space. It is no longer about interactive indoor workshops that begin with formal business card exchanges; today's business travelers enjoy outdoor group activities such as fitness or dance classes, or a game of tennis. Is there a golf course or scenic tour activity available nearby? Ensure these form part of your hotel's marketing and sales strategy.

And, do not forget food & beverage, which has become increasingly-influential in a meeting planner's decision-making. With growing global trends in organic, gluten-free or locally-sourced ingredients, food & beverage plays a big part in the enjoyment of any type of group meeting. Does your hotel offer curated food experiences? If so, make sure meeting planners know.

Remember, content is king and GDSs are the perfect avenue for showcasing the best (features and images) your hotel has to offer to the corporate travel market. Today, 37 percent of business travelers book hotels out-of-policy simply because they cannot find a hotel close enough to their destination.

For corporations, the GDS serves as a form of security and revenue management. It is critical to corporations that they know where their traveling employees are at all times and that expense management will be as seamless and transparent as possible.

However, attracting group business does come with the need for a certain expertise and innovation in revenue management. Do you know your best-performing seasons and what you can offer during those, such as exhibitions, weddings, trade shows, seminars and workshops? As a hotel, you want to diversify what "meetings" means and then forecast your revenue from that. Naturally, when business travelers attend these "meetings", they will book their accommodation via their preferred agents and take advantage of the preferred rates on offer. Plus, the savvy corporate travel manager always negotiates last-room availability. It's important to always consider these dynamic factors in your forecasting.

So, How to Maximize Revenue Per Available Square Meter?

Inevitably, not all hotels have the physical capacity to host group meetings. For those that do, however, and are looking for their return in square meter, it is obviously critical to ensure that meeting space is sold at the optimal price to increase their overall revenue and profitability.

The Fortune 500 companies are renowned for supporting their preferred hotels by also supplying them group business. So, if you are a hotel that is not part of a preferred corporate travel program, look at joining one soon. It is worth noting that the two types of programs - corporate transient and group programs - often work hand-in-hand. The savvy corporate buyer that knows this ultimately has more negotiating power for the following year.

Behind every business traveler is a corporation, and behind every group meeting are many corporations you can gain exposure to and gain future business. It begins with the GDS and hotels in the top one-third of a travel agent's availability display get selected almost 60 percent of the time.

Jason Lewis-Purcell, Vice President, GDS SiteMinder served as a director of sales and marketing at some of the world’s leading properties. He started his career at 11, helping his family to clean and upkeep their bed and breakfast. It is Mr. Lewis-Purcell’s long career in hospitality that has forged his success at travel technology disrupters. Under Mr. Lewis-Purcell’s leadership, SiteMinder secured some of Europe’s most prominent and respected hotels, including GCH Hotel Group; Macdonald Hotels & Resorts and Malmaison in the UK; Derag Livinghotels in Germany; and Silken Hotels, Rusticae and Sercotel in Spain where the company continues to dominate in the hotel technology arena. Mr. Lewis-Purcell can be contacted at 44-020-3151-0730 or jason.lewis-purcell@siteminder.com Please visit https://www.siteminder.com for more information. Extended Bio...

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