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A groundbreaking new report by the Urban Land Institute in Washington, D.C. explores sustainability in the hospitality industry and examines ways in which hotels are incorporating eco-friendly best practices into both operations and construction. The study includes insights from leading hotel owners, developers and investors.

Every hotel owner wants to know how he can increase the traffic to the website, and at the same time, boost direct bookings. The key to accomplish both the objectives is to design a site that is accessible even to disabled people. It will not only improve the usability for all types of visitors, but it will also improve your market penetration. Designing ADA website is also very imperative to prevent legitimate complications. In addition to this, an ADA feature will aid in improving the website performance in search engines.

The underappreciated city of Minneapolis served as host for the 2019 edition of HITEC (produced by HFTP) which wrapped up its most recent four-day run on June 20, 2019. In the days and weeks leading up to the event, meeting solicitations and party invites filled my inbox at a growth rate any VC or entrepreneur would envy. As a first-timer to this international hospitality technology behemoth, it became apparent that HITEC actually begins a few weeks prior to when that first request or invitation lands in your over-stuffed inbox.

Time is limited. Once it’s gone, you can’t gain it back. Similarly, once a room goes unsold for a night, it will go unsold forever. There’s no way to recover that loss, because there’s no way to go back in time.
Many hotels fight this limitation by trying to sell as many rooms as possible. If all the rooms are completely booked, time no longer becomes a factor. But most don’t have the luxury of being at-capacity every single night. That’s why last-minute booking apps are growing in popularity in the industry, where hotels can make the most of each day. These apps specifically target guests who don’t plan far in advance, seeking accommodations from one week to one minute later.
There are several different ways your hotel can benefit from using last-minute booking apps in your business strategy.

IoT is Coming, Jon Snow…
Posted: 05/21/2019

Hospitality is prime for the coming advent of the various devices that make up the Internet of Things. Estimates show the industry now represents 17.5 million rooms worldwide and savvy guests are demanding more personalization and an overall improved guest experience along their connected travel journey and belief is that IoT can bring this to reality. 

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Adapting to the Changing Landscape of Group Demand Measurement; Part 3 of 3


In part 1 of this three-part series, I discussed the health of the overall US hotel market specifically focusing on the group segment and the less than stellar ADR growth. In part 2, I discussed the need for and related challenges of estimating group demand in today’s current environment and the impact on pricing. If you haven’t already, you can read part 1 and part 2 now. In this third (and last) post, I will talk about how your measurement of group demand may be causing you to price group business incorrectly.

With the increasing prevalence of third-party meeting planners and online RFP sources, hotels are getting more leads than ever. In Image 1 above from Cvent, you will see that RFP volume has increased by 33 percent each year since 2010. Granted, this information is from the middle of 2012, but in their June 30, 2014 quarterly report, Cvent reports that their revenues have increased by 28 percent this year. I think it’s safe to say that lead volume isn’t diminishing.  ConferenceDirect and others have reported similar growth! 
Imagine for a moment that you are operating a hotel that only gets leads from Cvent. You have no other lead sources available to you. Assuming that all leads are input into the sales system, you could add up all the definites, tentatives, prospects and lost business to get to estimate group demand. Alternatively, you could just take the leads received and call that group demand. Using this information, we can calculate the conversion ratio [Conversion Ratio = (Definite Group) / (Group Demand)] for the property as illustrated in the hotel example above (Image 2). This hypothetical hotel starts in 2010 with 4,000 group bookings and group demand of 7,500. Group demand increases each year at 33 percent which is the same growth reported by Cvent. The group rooms sold increase each year is calculated based on U.S. overall demand change as reported by PWC and works out to a three year average of 3.2 percent. Using those assumptions, we come up with the table (Image 2) above.

In the table above, conversion started at 53.33 percent in 2010. Conversion drops all the way down to 24.91 percent by the time we get to 2013. Group bookings started at 4,000 in 2010 and increased to 4,396 by 2013 due to the hotel capturing group business at the same pace as overall demand increased. Put another way, had this hotel started 2010 with an occupancy index of 100, this hotel would have maintained that same index through 2013. Clearly the reported conversion decreased, but that doesn’t mean the hotel did a worse job. In fact, at the Hotel Data Conference this year, Chris Crenshaw referenced the STR Global Voice of the Meeting Planner survey that is conducted every two years. Based on the results of that survey, in 2011, hotels received 1.5 RFPs per lead. In 2013, that number has increased to 1.7 RFP’s per lead. In other words, for every 100 RFP’s your hotel receives, only 59 of them are true leads.

Obviously a hotel has many more lead sources than just Cvent. And to be very clear here, I am only using Cvent as an example as they are publicly traded and have information not readily available elsewhere. Each lead source at a hotel has a different conversion ratio. Most likely leads that come directly to the property (i.e., as a result of a sales manager talking to a prospect customer) have a higher conversion ratio compared to business that comes from any other lead source. What is changing is the proportion of leads which comes directly from the direct sales effort as compared to those which come from other channels. Generally speaking, on a percentage basis, leads generated from online meeting planning software far outpace growth from any other source.

Thus, if you don’t factor these changes in distribution and lead quantity into your group demand calculation, you will then overestimate the amount of group demand there is in your hotel. This will likely have a direct downstream impact on your pricing, assuming that you price based on demand! If we take the hotel example above, and if one of the components used to price group was conversion, the natural thing to do would be to decrease price until conversion was increased back to historical levels. Obviously, this isn’t the right answer, but I suspect this is happening more often than we think.

In the case of our hypothetical hotel above, it is very obvious that conversion is dropping due to lead volume growth. In that case, there are actually more unqualified RFP’s coming to the hotel which is not reflective of a true increase in demand. It may be that the meeting planner is now asking for 10 different alternate hotels instead of three or four like they did in the past.  Your hotel may/may not be a real consideration, but the meeting planner is curious for whatever reason.

Going back to the ADR performance of group in 2014, I would like to remind you that we are at a 1.5 percent YOY lift. And, while group demand has been struggling, overall demand has not with many markets at peak occupancy levels. Frankly, I think that we as an industry can do much better than a 1.5 percent lift. Actually, you have to do better than this if you have any hope of achieving budget next year. 

Be careful about how you measure demand and conversion. At a bare minimum, you should look at the YOY change in group occupancy in your competitive set/market as a better gauge of group demand change. More than that, though, I think it’s high time to remove the emotion out of group pricing. Start using data and factor in willingness to pay, expected booking probability, and maximize expected revenue on each book. Many of you have invested in a transient revenue management system that does this. Why is your group business less important?

About The Author
Erik Browning
Vice President of Business Consulting
The Rainmaker Group

Erik Browning is the vice president of business consulting with THE RAINMAKER GROUP. With 15 years of revenue management experience across a wide range of hotels in multiple destinations, including 10 years with Hilton Worldwide, Erik understands the hotelier perspective to help meet business objectives.


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