March 2005
Exclusive Series: Managing Hotel Shows

By Maxine Golding


Site Selection
Two years ago, a Starwood hotel property was lucky if two planners knocked on its door to inquire about the same dates. Today, 10 or 15 crowd in line.

The hotel market seems to be turning overnight, surprising sellers of exhibition and meeting space with its power. Just as in the late 1990s, today’s buyers of hotel shows face higher occupancy, rising prices and fewer concessions, particularly in cities in great demand. Even when they’re flexible with dates, patterns and destinations, show producers find the windows of opportunity to negotiate much of what they need rapidly shrinking.

“If you’re going to limit your group to two or three locations and a specific date, you will have a hard time getting a booking — or a deal,” says David Scypinski, Senior Vice President, Industry Relations, Starwood Hotels & Resorts.

Here’s how site selection is changing in this less than hospitable environment.

Part III: Site selection for hotel shows takes on greater urgency with rising occupancy and rates

New Balance Athletic Shoe tried to replace a winter meeting for 300 with a Webcast a few years ago. Yes, it was less expensive, but the company lost all-important camaraderie, information exchange and hands-on product display. Nothing, it learned, is like “face-to-face.”

As road shows and regional meetings fill sleeping rooms and exhibition spaces, many hotels are shifting into “seller’s market” gear. Anything and everything they can sell is up for consideration. Not only are room rates on the rise, so are food and beverage prices and service fees. Even with new hotel supply coming on board, the only items shrinking are concessions. As one hotelier puts it, “The market is working in perfect form.”

“Corporations are not downsizing or rightsizing, but in growth mode. So they’re holding more meetings,” says Brian D. Stevens, President and CEO, ConferenceDirect (www.conferencedirect.com). This is putting pressure on hotel space availability. Anxious companies are beginning to plan ahead. 

This increasingly heated competition among buyers of hotel space is pitting more corporate business head-to-head with association and independent shows. Decisions are being made earlier to secure the right dates and right city, forcing 60-days-and-under booking windows to lengthen.

Planners are mustering their resources for the challenge.

Prioritize, prioritize, prioritize
More than ever, the draw of a destination and the costs incurred remain top criteria. “Everyone is worried about the bottom line,” says Bill Wallace, Director of Marketing, Marriott Wardman Park, Washington, DC (www.wardmanpark.com). “You make money by growing your shows, but if other costs increase dramatically, all is for naught.”

Planners are much more intent on prioritizing what will make their shows successful. Sue Davis, Director of Special Projects, prefers hotel-only shows because she can leverage room nights to gain economies of scale for SPIE — The International Society for Optical Engineering (www.spie.org). She also locates SPIE’s shows within a 250-mile radius of technology infrastructure. “Many hotels feature wonderful physical plants, but not the base of people to walk our exhibits,” she says.

To ensure that it finds the right place at the right cost, Microsoft initiated master contracts with many hotels it utilizes. As a result, “our rates are more stable than they have ever been,” says Jeff Singsaas, General Manager of Events, Microsoft Corp. (www.microsoft.com).

But will it be easy to meet at the hotel? Microsoft’s decision, after it first narrows down to specific geographies, may be based on something as simple as prior experience with a particular hotel, facilities and people. Similarly, MIS Training Institute (www.misti.com) looks to work with hotels that partnered with it on the 3,000-attendee Infosec World during times of past economic challenges, says Jean Hermanowski, Event Manager.

For a Microsoft event to truly succeed, attendees must be able to see, hear and share information. Its site selection team not only sizes up the ballrooms and projection capabilities and backs these up with its own production expertise, but also assesses the quality and commitment of support staff. “We can work out rates and a lot of other stuff, but support can be the critical unknown,” Singsaas says.

That’s why relationships count. “I tend to be very loyal to one chain,” says Linda David, Senior Meeting Planner, New Balance Athletic Shoe Inc. (www.newbalance.com). “The more business I do, the better the discounts and the more I save for my company. If I’m stuck, I get treated differently.”

Without available dates, however, all criteria are moot. “Hotels used to welcome my business,” David adds. “Now if you don’t sign the contract within 60 days, you lose space and won’t get the things you want. I’ve never had that before.”

More associations, too, have to answer for their show’s financial success. This can be difficult to achieve when bylaws, rotation requirements and board members drive site selection. That’s why the most important priority, Davis emphasizes, is to know the value of your business.

She uses post-show reports from every hotel, bureau, convention center and city where SPIE meets. Within 30 days of an event at the San Diego Marriott, for example, she receives a comprehensive, 80-page report in “incredible detail.” She has to continually push other hotels to provide this. “They don’t want you to know what their value is, especially if you repeat the business,” Davis says. However, this knowledge bought SPIE considerable advantages in a 10-year agreement negotiated with the Gaylord Palms before it was built in Orlando, FL.

Sourcing through third parties
Corporations, associations and independent show producers felt the downsizing sting after the recession and 9/11 hit in 2001. “That reduction of staff and costs is now clashing with the need to book efficiently and quickly,” says David Scypinski, Senior Vice President, Industry Relations, Starwood Hotels & Resorts (www.starwood.com). 

Site selection is a large component of the planning process that has been outsourced to intermediaries, in some cases in tandem with negotiation, contracting, planning and execution. These partners, in turn, have become highly valued resources about cities and facilities. “It’s a lot easier to shop if you give an RFP to one person who can supply you with a polished grid of responses,” says Stevens. “People going directly to hotels are probably not shopping as widely and may be paying a higher average rate.”

Even with hotel backgrounds that are a decided asset in site selection, third parties don’t get a free ride. End-users are putting them through their paces to demonstrate their worth, particularly through negotiated concessions.

Intermediaries also “force us to communicate effectively,” adds Lawrence Luteran, Vice President, Industry Relations, Hilton Hotels Corp. (www.hilton.com). With more people involved in site sourcing, messages need to be communicated properly and all questions answered appropriately.

Good-bye commodity pricing, hello bundling
Corporate procurement departments that succeeded in squeezing hotel prices in recent years, as well as show producers and associations that benefited from a buyer’s market, may be in for a shock as hotels cherry-pick customers in 2005.

Show organizers can gain more negotiating traction with multi-venue, multi-year requests for proposals that bundle a series of meetings and commoditize the process. “There’s common sense in talking about a different deal with longer-term business,” notes Scypinski. For show organizers, there’s also a direct correlation between getting their arms around the data that outlines their total spend year-to-year and bundling for optimum buying power, cites Luteran.

But bundling may add costs for a hotel chain. Starwood, for example, has to ramp up specialized staff just to handle sourcing of 1,500 to 2,000 meetings annually for Microsoft, a number that may be inconsistent from year to year.

Predictability really gives hotels the chance to sharpen their pencils, and here’s where associations can benefit. Because it runs six meetings in the same place every year, SPIE saves a great deal of money, staff labor and site selection time by contracting with a single property. Its multi-year contracts with hotels cap rates for food and beverage and sleeping rooms. Plus, hotels present less stringent booking policies than convention centers, says Davis.

Planners like New Balance’s David don’t have the numbers to “bundle.” It’s harder for them to control costs, especially when they’re spending more on material items such as meeting space, draping and lighting. One way is to demand that fees be disclosed upfront, negotiated and clearly outlined in the contract.

Concessions and value adds
Before hotels were hungry for business, concessions were tied directly to pick-up of the block. That’s coming back, reports Gary Schirmacher, CMP, Vice President/Western Region, Conferon Inc. (www.conferon.com). “Meeting planners may lose some concessions to bring their block numbers down or eliminate attrition.”

Concessions that involve a cash outlay by the property — contracted limousine runs, for example — will be harder to come by, while those that don’t eat into profitability remain easier for hotels to offer.

“More creative concessions are needed to enhance the show experience,” says Anne Hamilton-Chehab, Vice President of Resort Sales and Services, Walt Disney World Resorts  (http://disneymeetings.com).  She points to Disney’s new exhibitor concierge program (first roll-out is at Coronado Springs). It directly assists a show’s exhibitors with everything from arranging technical services to planning and executing events, including giving away promotions, coordinating dining reservations and obtaining theme park tickets.

“Exhibitor concierge adds some overhead for us, but gives clients better service,” she maintains. “If happy exhibitors sign up for next year, we’ve just taken a load off of that show producer.”

Davis at SPIE keeps concessions from eroding by writing multi-year agreements. “The reason hotels are not giving me less is the fact that my meetings and exhibitions are growing, so I’m giving them more F&B, room night revenues and a larger room block,” she explains. Yet Davis concedes that it’s reasonable for hotels to renegotiate concessions when a multi-year client is unable to meet the obligations in its contract.

What to Anticipate 
 The pendulum swinging back for planners who booked fewer rooms to mitigate attrition. A strategic decision to lock rooms in at a later time means that planners cannot find all the rooms they need, and if they can, these come at higher prices, says Lawrence A. Luteran, Vice President, Industry Relations, Hilton Hotels Corp.
 Comp room ratios creeping back up. The ratio of complimentary rooms to booked rooms, which had dropped in some cases to one for 40, is zooming past the standard one for 50 mark to as high as one for 75.
 Ancillary charges and taxes rising. More attendees encounter resort or business plan fees, whether or not they use such options as the health club or high-speed Internet. “Hotels can enlist this better in a seller’s market than a buyer’s market,” says Gary Schirmacher, CMP, Vice President/Western Region, Conferon, Inc. Planners need to see these with the initial contract, where they may also learn if service charges are taxed.
 Greater enforcement of cutoff dates, as hotels build on their occupancy levels and rates.
 More challenging connectivity requirements for exhibitors. Hotels, with exhibit and meeting facilities deep in their interior or in subterranean areas and former garages, face significant issues not just with online access but wireless services (phone and Internet).

How to Proceed
 Understand market conditions, opportunity windows, and trends in the areas where you’re looking to book business. Get the perspective of peers who have planned events in those locations.
 Be efficient and do your homework on two, three or four venues before sending an RFP.
 More than ever before, be able to document the full value of your show.
 Give hotels options. The dates they offer may not be perfect for you, but the price may be right if they’re giving the space away.
 Confirm that the hotel is on a space-positive basis for your dates.
 Give a complete RFP and insist that hotels provide a comprehensive response. Limit the number of hotels you contact. Who has time to compare 30 proposals?
 Find out how convention and visitor bureaus and hotels in the areas of interest can help market your show. What tools can you tap to drive attendance?
 Make the process collaborative, and you’ll end up with a true partnership. Hotel professionals expect to strategize with their clients at a much higher level than ever before.
 Push back when hotels try to pass on added fees. Very seldom do you get everything you want the first time around.
 Bundle as many site visits as you can handle at a single time, since budgets for site travel may be more limited than other customer-directed travel. Attend an event while you’re there.
 Make a timely decision. Pull the trigger quickly, say hoteliers, or you’ll lose the venue.
 Insist on a document that outlines the deal.
 Determine when you are reasonably able to sign an agreement. Have both parties bought off on the timeline?

New Points for the Hotel Checklist
 Security. While planners don’t want security to be in the attendee’s face, they cannot understate its importance. “We have a responsibility to put together a secure environment, as much as it can be so in this world,” says Jeff Singsaas, General Manager of Events, Microsoft Corp. Linda David never worried about this before, but the Senior Meeting Planner at New Balance Athletic Shoe Inc. now hires round-the-clock security.
 Nothing is off the table. A recent meeting of two end-users and two third-party representatives with Marriott Wardman Park’s director of security and salesperson covered everything from fire issues to defibrillators and cameras.
 Internet access and resulting charges. “It’s the No. 1 issue we never had to deal with five years ago,” says Joan L. Eisenstodt, Chief Strategist, Eisenstodt Associates LLC. “At least 50 percent of exhibitors want online access, whether hard-wired or wireless. Providing it can cost thousands of dollars if you’ve forgotten to ask about it.”
 In-hotel networks rife with viruses. This is a growing problem, particularly for hotel shows that require a high degree of connectivity. Microsoft has chosen to collaborate with facility experts on secure computing and implement temporary event networks. In a case cited by Eisenstodt, a virus blew through a hotel’s wireless network, infecting every show attendee accessing it. “That’s why I love high-tech concierges,” she says. “I want someone who can deal with technology in meeting rooms, guest rooms and public spaces.”
 Move-in and shoulder requirements. More hotels question whether groups really need three-day move-in. And what’s happening on shoulder nights on both ends? Hotels may reallocate your meeting space to maximize their ability to sell rooms at those times.
 Bedding and amenities. More competition is bringing real upgrades to guest room quality, from “eight pillows on a down comforter to flat-screen TVs,” says Bill Wallace, Director of Marketing, Marriott Wardman Park. “Customers more often ask about the hotel’s last renovation – and the next one.”
 Audits and partial performance clauses. The audit is a deal breaker for the International Society for Optical Engineering; facilities that won’t agree to one won’t get the association’s business.