Meeting groups are critical to the health of many destinations. Pictured: Northwestern Mutual Annual Conference at the Fiserv Forum, 2022. Courtesy of VISIT Milwaukee

After months of heightened elevated growth, new travel forecasts show that it is expected to remain strong. This is great news for the travel industry, most especially for hotels as they are benefiting from the demand across different segments. At the same time, this surge is making it difficult for meeting and events planners to book rooms that leadership and attendees desire.

“We’re seeing a trend of people traveling more, and in return, have seen instances of hotels reducing their group ceilings to accommodate a higher leisure travel occupancy,” said Lynne Amori, global account director, Amex GBT Meetings & Events, which provides software and services to manage travel, expenses, and more, for meetings and events, in New York, NY. “If a group requests guest rooms only, the hotel may achieve higher revenue from leisure bookings with onsite F&B outlets and other ancillary spend.”

As a result, many of her clients have changed their venue or destination due to capacity. These decisions have also been accompanied by requests to identify locations that are equally as favorable as the initially preferred hotel or city.  In some cases, to avoid this need, Amori suggested groups try to be flexible with dates and day patterns to secure availability in the preferred hotel and city.

That strategy of shifting dates and patterns can work if the destination is truly the ideal for a particular meeting; however, Amori noted, the type of meeting is also a factor. For example, she said, “Annual events, board of directors events, pharmaceutical drug launches, etc., typically don’t offer much flexibility in date patterns due to executive calendars and/or government mandates.”

Hotel partners work tirelessly in collaborating with them, she said, to offer alternative dates, recommending other properties or creatively offering to split room blocks across multiple properties (within their brand) in close proximity.

Besides working closely with the hotel, planners may also want to reach out to the local CVBs. They can often offer recommendations and perhaps spotlight solutions that the planner never thought about. They also can let planners know about citywide events and other activities happening that might substantially impact venue capacities.

Offsite Options | Rising Costs

Finding a room or meeting space is not the only factor that planners face. If they want to have a meeting or get together in a local restaurant, they may have a problem as more people book up space. In addition, some restaurants are becoming more high in demand than others. Amori explained, “As more and more hotel restaurants are looking to bring in executive chefs, they’re quickly becoming destinations on their own. This can create challenges in securing a group reservation or buyout.”

In terms of price increases, the U.S. has not been the only country to be affected. There’s been an increase in pricing across the globe.  “With an increase in volume for meeting requests and a desire for leisure travel, there doesn’t seem to be a slowdown in demand, which may, in fact, be the driving force behind the higher rates,” she said.

Brianna Mark, CMP, senior manager events at Mozilla Corp., a company that coordinates and integrates the development of Internet-related applications in San Francisco, CA, said her groups are switching things up these days and changing where the company books rooms or even where the meeting is held.

“We’ve decided to use different hotels (or hotel brands within a city), switch to different neighborhoods, cancel entirely or push to another city. Sometimes we’ll even abandon a block of rooms and book through a third party (in our case, Navan) if the destination is final and we can find meeting space elsewhere, such as at an office or co-working space or other creative location,” Mark said.

Mark has not yet changed meeting dates, as they are usually booked a year or more before the event through a third-party. For a smaller meeting, she sometimes switches to not booking a block of rooms, but rather space out attendees in multiple hotels.

Unfortunately, she’s not seeing hotels being much help, except for some brands. Many seem to use a “take it or leave it” approach. So, she tries to go to a city with a really good DMO or CVB as they often come up with good solutions. They see the value of an event coming to their city,  she said. “For the smaller events, they basically just say ‘no’ and I move on,” she added.

For Mark, coming up with solutions has been more about leveraging her relationships than negotiating. “In a recent city, I could have booked all my rooms in two hotels but I chose three so we had a bit more breathing room at each. They all ended up being sold out over my event, so I know they had an influx of leisure travelers. Luckily, I snuck in before they could.”

There’s no question that increased demand is driving prices up, but it’s probably not the only culprit. How much prices rise may change according to the destination. Mark has seen the rates going higher, anywhere from 20-70% in locations like San Francisco, NYC and Toronto. Unfortunately, she is also seeing fewer concessions or incentives to book. But there is a solution. Second-tier cities.

Second-Tier Cities

Second-tier cities offer attractive alternatives for planners seeking to host smaller, face-to-face or hybrid meetings. Now, to be clear, for those planners who are new to meeting and events planning, the “tiers” that destination cities fall into — First, Second and Third  — are not to be confused with first, second and third place or good, better, best. Tiers are simply based on city size.

In light of that, Mark’s group is considering second-tier cities for the next large event in 2025, but nothing is booked yet. “We just had a conversation last week about which second-tier cities could even accommodate us, which isn’t a conversation we’ve had to have before,” she said.

Elizabeth McKenna, CMP, CED, senior shows & events manager, with Revlon, a cosmetics beauty and skincare company in Jacksonville, FL, has faced challenges booking room nights due to the surge in leisure travel. Her group has changed locations as one strategy. They’ve also changed dates. “We recently rescheduled all our Q4 events to Q1 next year due to the room shortage and overcrowding issues.”

Like Amori, McKenna said she’s also noticed leisure demand impacting more than room blocks. “Leisure travelers are impacting dining reservations and the availability of venues for group and team dinners, both within and outside hotels,” she said.

Unlike some other planners, she has noticed that hotels and CVBs have not been that helpful. “Given the high demand, hotel companies have not been very accommodating, and planners are finding it challenging to negotiate for additional rooms or favorable terms. And while CVBs have been helpful in suggesting alternative hotels, there haven’t been extensive suggestions beyond that in terms of addressing room shortages,” said Mckenna.

Destinations such as Orlando and Las Vegas, which are significant draws for both leisure and business attendees, can be more challenging than others for some groups. “We’ve faced room availability challenges in Las Vegas, necessitating the use of multiple hotels,” McKenna said. “Orlando, on the other hand, generally has more room availability but requires advanced bookings due to high demand during short-term events.”

Like other planers, the high demands and subsequent rising rates have led McKenna to explore other cities and even virtual alternatives. “We’ve opted to book more events in second-tier cities or surrounding areas of major markets due to pricing and room availability constraints in our preferred locations.”

Emilie Perkins, CMP, CMM, CAE, PMP, CED, senior director of client & conference services with Raybourn Group International, a full service Association Management Company in Indianapolis, IN, is in a similar place. She said they are seeing compression next year and into the following in most first- and second-tier cities.

Some of her groups prefer a warm-weather destination for their annual meetings in February, for example, but room shortages and prices out of sync with budgets have necessitated changes. “Given these constraints,” she said. “we’re trying to be more flexible in our day patterns and consider alternate months.”

That said, Las Vegas remains a good fit for Perkins’ groups. As many locations have limited space availability, having a place that has more properties available with bigger meeting spaces and more rooms certainly helps.

“The problem that we fall into is that the room-to-space ratio is not attractive for many properties,” explained Perkins. “Vegas is the exception. We have a group booked next year and are in the process of a contract the following year as well.”

When planners have challenges with room availability as they try to accurately predict room-block counts, they often turn to companies like Helms Briscoe to help them to research and contact venues for their events.

“Kudos to our industry planners who have toiled over getting the room block just right in order to avoid this problem,” said Nell Nicholas, director of global accounts for HelmsBriscoe in Cornwall, CT. The company streamlines the meeting planning process by managing the time-consuming task of researching, contacting and evaluating venues for meetings and events.

“I’m seeing planners spend countless hours getting the room block at an exact number by working with several of their departments to get to the right number for internal meetings. Conference planners have a tough job in this arena, relying on market research and current trends,” said Nicholas.

In her own site-selection work, Nicholas faces the same situation as her colleagues. “What used to be an ‘easy hold’ from a hotel while waiting for clients to make a decision has become less of an option. With demand so high, some hotels are not offering a hold without a contract.”

The best advice Nicholas is getting from CVB partners is to act quickly without hesitation to get the hotel the client wants. “This isn’t an easy task when having to marry this concept with budgets,” she explained. “There’s a procurement process and clients can’t always move as quickly as hotels require to secure the space. It’s a tough environment to be sure.”

Like others, she’s had to look at different hotels and/or different cities in this environment. And even then, she added, availability is still tough. “One client had to pivot to Las Vegas in order to get better availability and we still didn’t have the choice we thought we would,” she said.

Adding to the challenge, shoulder seasons might no longer offer the reduction in prices they used to. Nicholas gives the example of Miami in June, which she notes used to be shoulder season. Now, she’s seeing higher rates at this time than were previously typical, which doesn’t just impact rooms, but also budgets.

Equally concerning, Nicholas is seeing a change in what hotels offer in terms of meeting space.  “I’m seeing hotels offering smaller-than-normal square footage to planners for their meetings.  This is a big watch-out for us; we need to pay close attention to the square footage to be sure the size of the room is comfortable and can accommodate A/V for the program,” she said.

Leisure travel is also still impacting meetings that had to be rebooked because of the pandemic, especially in those destinations extremely popular with leisure travelers and business groups. “As an example,” Nicholas stated, “a client needed to implement a rebooking for next year for a program in Orlando. The only dates for the entire year that the hotel could even consider for the rebooking were in August. The remainder of the calendar year was fully booked. In order to use the rebooking credit, the client booked those dates, which was not an optimal time of year in such a warm climate and toggling with summer vacations.”

CVBs Perspective

In spite of the current challenges, planners aren’t blaming hotels for taking advantage of a high-demand market; after all, the pendulum will eventually swing back the other way. What they do wish, however, is that partners would help more in finding solutions. We asked two CVBs, one mid-size and one large, for their take on the situation.

First, leisure travel demand is definitely a reality. Both Milwaukee and Orlando have seen a significant increase in leisure travel. Visit Milwaukee saw a 15% increase last year and a year-over-year demand causing compression throughout its market. In Orlando, domestic leisure travel last year exceeded pre-pandemic levels.

But things may be moving in a positive direction for meetings as demand is evening out, according to Casandra Matej, president & CEO of Visit Orlando. “That demand was not sustainable, and we see leisure demand normalizing, she said. “Orlando’s leisure demand has been pacing behind last year since March. Earlier in the year, group was displacing leisure travel in some convention properties.”

With demand coming back down to normal, prices may be going down as well. The last few years, Matej said, they saw prices increasing due to leisure demand, but they are seeing this stabilize this year.

Short-Term & Seasonal Bookings

Short-term booking windows are the biggest problem planners are seeing in places like Orlando. While it is up to corporations to try to change that dynamic and book further out, Matej believes DMOs really are a strong partner for planners looking for solutions.

“To help planners navigate these shorter booking windows and find a hotel that fits their needs, we highly recommend they include Visit Orlando on their RFPs. Visit Orlando’s Destination Experience team can work closely with them to understand their group’s needs. And, since Orlando is home to more than 480 hotels with nearly 130,000 rooms, and more than 200 unique venues and attractions, we’re able to provide a variety of choices and alternative options that will fit those needs.”

In Milwaukee, short-term bookings are also the big problem. Yet, corporate bookings and high leisure demand aren’t necessarily mutually exclusive.

“Leisure demand is impacting hotel availability exclusively for groups who are looking to book last minute,” said Leslie Johnson, VP of sales and event experience, Visit Milwaukee. “These last-minute groups are running into the challenge of finding availability, and they’re also seeing an increase in the rates offered. For groups that typically book their venues much further out, the last-minute leisure demand on venues hasn’t affected their ability to secure those venues — as long as they are sourcing them in advance. Also, the variety of inventory in Milwaukee allows for meeting spaces and venues to plan leisure events around corporate bookings.”

The Season Shift

As Nicholas pointed out, destination high and low seasons are shifting and will probably continue to do so. And moving forward, that is something planners are going to have to work around in many destinations.

In Milwaukee, for example, the city has done more and more to draw winter business. “Seasonal destinations like our newly added Enchanted Christmas, our professional sports teams and Milwaukee Theater District are attractions that bring in visitors from across the country during the winter months,” Johnson said. “Also, our businesses are getting more creative in developing experiences to draw leisure visitors during these times. They’re creating hybrid indoor/outdoor spaces and finding ways to make outdoor experiences more comfortable.”

Whatever challenges planners have, Visit Milwaukee is confident it can be a good partner and find solutions. “A CVB can assist planners in finding an alternative location based on their needs. If the meeting/program is one that can’t be accommodated in an individual property due to limited availability, the CVB can assist in finding a similar hotel in close proximity that can accommodate the remaining portion of a room block.”

The bottom line is that meeting groups are critical to the health of many destinations, and partnerships are the solution for challenges faced by all facets of the meetings industry — planners, hotels and CVBs. Second- and third-tier cities may be uniquely suited to offer solutions to planners in this particular market, and planners have an opportunity to try something new to bring excitement to their meetings. They just need to be creative, open to change and outside-the-box thinkers.

As Perkins notes, switching things up can be a real positive. “We’ve made the conscious decision to look closer at smaller cities that were not considered previously. Second- and third-tier cities have so much to offer and were often neglected in the past because of preconceived notions. It’s been refreshing to widen our searches to include some of these hidden gems.” C&IT