Buyers beware, seller’s market is here to stay…
Is your association seeing the impacts of the seller’s market when it comes to finding a hotel partner to host your next event? Don’t expect this trend to fade in 2016. Hotel demand in many destinations around North America has surpassed supply. Although the 2016 Global Travel Price Outlook indicates that hotel construction is booming in the United States with nearly 100,000 new rooms added in 2015, the report also suggests that hotel demand continues to grow at up to quadruple the rate of supply.
If supply and demand concerns aren’t enough to get you fired up, how about this? According to the 2016 Meetings and Events Forecast from Carlson Wagonlit Travel (CWT) Meetings & Events, room rates will grow by 4.3%.
How can you tackle the issues of supply and demand plus increasing nightly room rates head on? Plan ahead. Contract lead time continues to shrink and often hotels in high-demand markets will no longer hold space when responding to RFPs. Increased lead time can increase you negotiating power.
Channel your inner Francis Bacon who once said knowledge is power. Be fluent in the value your meeting brings to the venue and be prepared to readily talk stats such as pick-up history, food and beverage spend, required square footage of meeting space and so on.
Keep your eye on the numbers. Food and beverage costs will continue to be a significant driver of per-attendee costs. The 2016 Global Travel Price Outlook also predicts a 4.5% increase per attendee, per day! The pressures of keeping up with the latest trends and rising ingredient prices are major contributing factors. In fact, the National Restaurant Association says that wholesale food prices have surged nearly 25% during the past five years!
All of this said, the most important piece of advice is to negotiate with care, as attrition and cancellation clauses are becoming more and more strict. Good luck!