While there are signs the return of business transient could take a little longer, group business is coming back with force in 2022, and experts say that is giving hotels exceptional pricing power for the remainder of the year.
Speaking during the spring conference for the Hospitality Asset Managers Association, Janine Alsalam, vice president of sales for Hospitality Cloud at Cvent, said the group rebound is gaining steam.
"We're obviously on the upswing, and we're hearing a lot of optimism about the recovery of group," she said during the "Transient vs. Group — What are the Trends in Each Segment?" session. "Obviously, it's not as fast as leisure, but it's definitely coming back and our conversion rates are pretty comparable to 2019."
Kelly McGuire, principal at ZS Consulting and moderator of the panel, noted hotel revenue managers need to take charge in a moment like this.
"We've got the pricing power, people, and don't forget it," she said. "Take it, and own it."
Ted Bogan, director of market management and regional chains for Expedia Group, agreed, noting 37% of travelers in recent surveys have indicated they're prepared for higher prices. At the same time, he doesn't believe hotels should just ramp up prices without giving guests something to show for it.
"The pricing power is there," he said. "But I think you need to show the value for it. ... People are willing to pay more, but they're expecting more. So, we need to be able to deliver."
Return of Group
While all signs indicate group is coming back strong this year, Alsalam said that doesn't mean travel behavior will look exactly like it did in 2019 and before. In particular, there continues to be persistent interest in hybrid meetings.
"There's been a mix of in-person and hybrid, and there are a lot of different flavors of what that can look like," she said.
She compared the structure of many hybrid events to sporting events, where many guests will watch at home or in the stadium but connect online. She said event organizers and meeting planners are thinking the same way as sports franchises in that regard.
"Your goal is to get the people watching from home to want to attend that game, but you're still monetizing the people at home in some way," she said. "So that event organizer, and potentially the venue as well, is getting that sort of dual exposure to draw in all those people who are watching at home to show them the type of experience they can come and have on property."
She said hybrid events have opened up more group and meetings opportunities for smaller hotels, with some big companies hosting regional events at hotels or even organizing watch parties around big corporate announcements or initiatives. Going back to the sports analogies, Alsalam compared them to Super Bowl parties.
"We did it for our company-wide meeting and sales kickoff at the beginning of the year," she said. "We did it virtually."
Alsalam said right now it's those smaller meetings driving the return of group, while big, citywide events lag. She doesn't expect that to always be the case, though.
"I do think the big conferences will come back," she said. "Everybody loves a big convention."
Making the Most of Demand
While strong leisure travel and the return of group business bodes well for hoteliers from a supply-demand perspective, Bogan noted there are some key booking trends that hoteliers need to remember, not the least of which is shifting booking windows.
He said a lot of discussion has come up around more people booking in a shorter window, and there's also been an increase in people booking well in advance.
"Regionally here in the Southeast [U.S.], our booking window, the 91-day-plus window, has really skyrocketed and the zero to 1 [-day] window has. Everything else has dropped."
While that extremely short booking window has seen significant demand, Bogan said hoteliers and revenue managers need to take a closer look at that segment of travelers, and carefully consider whether they're taking the right approach with them.
"What we're also seeing with the shift in that booking window is a $100 rate delta drop," he said. "So what's driving the short booking window? Is it because we're dropping our rates short term and picking up that demand that maybe we wouldn't have, or is the demand there no matter what?"
McGuire begged the audience to avoid that exact pricing practice.
"Are we just doing the classic revenue management panic-at-the-last-minute rate drop?" she asked.