REPORT FROM EUROPE—Group business has started new shoots of growth, but sources have differing prognostications as to whether its global recovery also will bear fruit in Europe.
Some industry professionals see hope as well as a fundamental change in how that business enters hotels.
Michelle Wharton, director of sales and marketing at the 200-room London Marriott Hotel County Hall, which recently renovated its more than 9,000 square feet of meeting space, said that for many sales staff seeking new group business the post-recession has resulted in a new wave of cooperation.
Wharton’s comments refer to the swift rise of national and regional hotel company revenue managers who might not be as gung-ho about group and meetings-incentives-conventions-and-exhibitions revenue streams as are sales directors and catering managers.
“Group sales have to look at overall spend into the hotel and justify each piece of business,” Wharton said, who added she has seen an uptick in business meetings and events, with the real forward trajectory starting with business booked for last July onward.
“Twenty percent of 2015 has already been booked, and much of this has been London booking in London,” Wharton said, adding her hotel was the first United Kingdom Marriott to roll out the hotel company’s new meetings management app Red Coat.
Chasing MICE
Carol Dodds, VP of revenue management at Interstate Hotels & Resorts, said that despite some uncertainty in the U.K. market, which might see further wobbles due to 2015’s general election, her U.K. assets would focus much more in 2015 on domestic MICE business.
“The U.K. is our strongest growing market, and we already are seeing upturn,” Dodds said, adding that Interstate in 2015 will open the 171-room Hilton at the Ageas Bowl Southampton and the 87-room DoubleTree by Hilton Liverpool, both with extensive conference facilities.
Dodds said the hotel-MICE client relationship has changed of late. She said booking lead time is the shortest she has ever known, and contracts have been under scrutiny since the wave of cancellations following the 2010 eruption of Iceland’s Eyjafjallajökull volcano.
“Contract terms are especially relevant with the huge conventions, not so much with business with very short lead times, where we are now far more flexible with the way customer behavior has changed,” Dodds said.
Critical to how hotels view MICE business today is in-house training, sources said.
“What is needed when evaluating business is revenue management education and a whole-team approach. The sales director needs to be aware of what the thresholds are for accepting a piece of business,” Dodds added.
Dodds said unlike accommodation, there is not the range of software that allows group bookings decisions to be made automatically.
“Software partners are catching up, but I do not think there will ever be an ultimate piece of software to make the complex decisions required for MICE business linking accommodation-related sales and optimizing venue-space utilization. Again, there is a need for an educated team with a whole-team approach,” Dodds said.
Uptick not uniform
In PricewaterhouseCoopers’ March 2014 report “Room to grow: European cities hotel forecast for 2014 and 2015,” the business consultancy predicted that for 2014 business travel (including groups) is expected to be a major travel driver in Germany, United Kingdom and France, with about 26% of those surveyed expecting to travel more in 2014.
In Germany, Europe’s largest economy, much of this group business derives from the government, according to the report.
PwC’s outlook mirrored the American Express Meetings & Events “2015 Global meetings and events forecast,” released on 14 October, which stated that in 2015 meetings are expected to play a critical role in a return to business and help drive long-term hotel industry health.
Back in Europe, Catherine McGavock director of operations Europe at the Global Business Travel Association, remained taciturn.
She said that according to her association’s 2015 “Global travel price outlook,” “corporations are still under significant pressure to manage costs, (and) in Europe, Middle East and Africa, we expect to see a 5% decrease in cost per attendee, per day, as suppliers are working hard to attract business.”
That dip will mean in Europe a reduction or stagnancy in attendee numbers, although that trend, according to McGavock, is not expected to translate to the Americas.
Third parties
Trudi Parr, director of sales of CTI Hotels, part of CTI Corporate Travel International, said smaller non-residential meetings, taking out the hotel component altogether, are on the increase, although she remains hopeful that the entire niche is increasing spend.
“We are currently operating at a 30% increase in enquiries year-to-date when comparing to the same period in 2013,” Parr said.
Some clients are not repeating spend on previously held events, but are thinking of different ways of communication that is more justifiable on the books. The annual event, however, is an exception, Parr explained.
“The decisions that have been taken over the last year or so to push much more back on the property could be a good one for a property if they are savvy and understand their yield, the bigger picture and their margins,” Parr said.
Parr said hoteliers still desire group business, but there is a danger that if feedback is not taken on board by the venue, clients will look for loopholes or alternative properties that understand the ebbs and flows of their booking model.