Tim Hentschel, CEO and Co-Founder of HotelPlanner.com, outlines the five group booking trends and why hotels need to heed the wake-up call.
Beyond the heightened demand for more sophisticated technology and customer service, we asked Tim to present ve trends driving the need for speed in 2018 and beyond.
1 THE INDUSTRY’S BIGGEST PLAYERS ARE REDUCING GROUP AND MEETING COMMISSIONS
The biggest news to come out of 2018, so far, came in March when both Marriott International and Hilton, made the sweeping decision to reduce the commissions they pay to group intermediaries from 10% to 7%. The margin drop will lead to less distribution channels, and less advertising and marketing for the growing group travel industry.
2 INTERMEDIARIES CONTRIBUTING TO MEETINGS COSTS WILL MEAN HIGHER EXPENSES
Research from Kalibri Labs shows that for every $1 hotels spend in distribution costs ($1.2 billion in annual group booking commissions), they are spending $4 in hotel group sales departments, a whopping $4bn in annual labour cost. It’s much more cost effective to give these hotel sales managers free tools to respond to more leads instantly, than to make their work days less productive by cutting off distribution channels with lower margins.
3 MORE NON-HOTEL VENDORS ENTERING GROUP MEETINGS BUSINESS
With costs rising, a number of outside vendors like Airbnb and WeWork are gradually gaining market share by offering their space for group meetings and events, which for some customers offer a number of upsides.
Nevertheless, there are still many advantages for holding group meetings and events at hotels, but at a time when alternative vendors are competing for this same market share, it further illustrates the need for hotels to remain on the cutting edge of technology to stay competitive and strengthen their distribution margins.
FOR EVERY $1 HOTELS SPEND IN DISTRIBUTION COSTS, THEY ARE SPENDING $4 IN HOTEL GROUP SALES 4 HAVING A MORE CLEARLY DEFINED ROLE FOR YOUR HOTEL’S SALES OFFICE
4 HAVING A MORE CLEARLY DEFINED ROLE FOR YOUR HOTEL’S SALES OFFICE
Another big challenge hotels are facing has to do with their ability to effectively delegate when it comes to determining where the responsibility for doing the group bookings lies. Ultimately, it becomes a question of whether or not it’s done directly through the sales office or through the revenue manager who is typically yielding rates through a number of different channels. This is why hotels need to automate the process.
5 BETTER OPTIONS FOR BECOMING “SMARTER” THAN EVER BEFORE
Obviously, the term “smart” when it comes to group bookings is fairly open ended and there’s no single one-size- ts all resource that can universally anticipate the constraints of every single customer, which are highly personalised. When you add that to the price tag of higher costs, smaller commissions and increased competition, it’s also just smart business.
Photo: Tim Henschel, CEO and Co-Founder, HotelPlanner.com