March 2006
5 Trends to Watch for Hotel Shows
With rising occupancy and rates, hotel shows continue to face a tighter, more competitive marketplace in 2006
By Nancy Mann Jackson


These days, the hotel industry is a good place to be — if you work for a hotel. Demand for hotel space continues to expand, with occupancy in the top 25 markets increasing 7 percent during the past year, from 62.1 percent in November 2004 to 66.7 percent a year later, according to Smith Travel Research. And sleeping rooms aren’t hotels’ only hot products — meeting and exhibit space is also in high demand. In fact, almost 40 percent of all trade shows are held within hotels, according to the Center for Exhibition Industry Research.

Self-contained trade shows can be profit centers for hotels, but because the industry is constantly expanding and contracting, planners can’t expect the same game — or even the same rules — year after year. And in 2006, there are a number of hotel industry trends shaping up that are undoubtedly affecting hotel trade shows. Here are five to watch for.

1. The Sellers’ Market
It’s no secret that today’s show organizers are having “a harder and harder time finding space, no matter where they are,” says David Scypinski, Senior Vice President, Industry Relations, Starwood Hotels and Resorts (www.starwoodhotels.com).

“It’s not necessarily a good thing that negotiation is completely in hotels’ hands, but that’s the way it is right now; it’s all part of a cycle,” Scypinski says. “Organizers just have to recognize it and adjust accordingly. They have to realize that they’re putting themselves out there, and the hotel is comparing their show to someone else’s. If you’re greedy and ask for too much, you may lose. And if you’re lucky and you find the right place, it’s going to be harder to get what you want. You may not be able to get everything you want, but you may still be able to negotiate.

“You’ll get a much better deal if you’re willing to be flexible. For instance, if you ask, ‘Where do you want me?’ or ‘Where’s the hole?,’ you’ll have a lot more luck than if you say, ‘I want the third week of October 2012.’ People who get great deals are smart enough to ask those questions and be flexible.”

Show organizers agree that flexibility is a key ingredient to finding deals that work for their hotel shows. “Certain hotels and cities are spoken for in the peak months,” says Lou Mancini, Vice President of Operations for event management company JD Events (www.jdevents.com). “In top-tier cities, there are annual events at the same hotels so you’re forced to move quickly. Ideally, a mid-week schedule of Tuesday-Wednesday-Thursday is prime time, with Monday-Tuesday-Wednesday or Wednesday-Thursday-Friday as slightly easier to come by. We don’t currently hold events in second- or third-tiered cities, where I’m sure availability would be more open.”

In the face of rising room rates and shrinking availability, clients “want us to buy down,” says Brian Stevens, President and CEO, ConferenceDirect (www.conferencedirect.com). “They’re saying, ‘If we can’t go to the Crowne Plaza, go to the Holiday Inn.’”

In some cases, ConferenceDirect has gotten creative to develop solutions that will satisfy both the hotels and their groups. “Sometimes you can take a layered approach if there are two types of attendees, such as buyers and sellers,” Stevens says. “I’ve told hotels, ‘I don’t care what you charge exhibitors; I just have to take care of the buyers.’” If the hotel wants a room rate of $250, for instance, Stevens will ask for 500 rooms at $200, which he’ll sell to show attendees, and another 500 at $300, which he’ll sell to exhibitors. That way, “I protect buyers, and the hotel gets their average,” he says. 

2. The Labor Struggle
In eight major North American destination cities, hotel labor contracts will come up for renewal this year. In Boston, Chicago, Honolulu, Los Angeles, New York, San Francisco, Toronto and Washington, DC, union leaders will be negotiating labor terms with hotels — while guests to the cities and hotel workers themselves may get caught in the middle.

“Show planners may be getting phone calls from different unions asking them not to meet in certain hotels,” says Fred Shea, Vice President of Sales for Hyatt Hotels Corp. (www.hyatt.com). “If that happens, planners should call the hotel’s sales manager and get both sides of the story. In actuality, we still have contracts with these unions and, by making such phone calls, they’re stealing business from those workers who need it.”

Scypinski adds: “The labor issue is really important this year. The unions are the biggest propaganda machines I’ve ever seen; they’re doing some really nasty stuff, and we’ll be aggressive in the other direction. Planners need to recognize there’s a threat of union activity, and they may see picket lines or receive letters in the mail. The best thing you can do is to read up on it and understand what’s going on.”

3. The Residential Phenomenon
“The most dangerous trend to hotel shows is the trend toward residential conversion,” Scypinski says. “People say the market is expanding, but where is it expanding? Not in convention room nights. It’s in residential property, condominiums.”

According to Lodging Econometrics, which tracks hotel industry real estate, more than 30 properties across the United States are converting some or all of their rooms to condominiums. While some hotels, like the Fontainebleau in Miami, have added new buildings to house their condo components, numerous properties, including landmarks like New York’s Plaza Hotel, have permanently closed many of their traditional guest rooms to be converted to condos. In fact, New York has lost 7,000 to 10,000 of its 90,000 hotel rooms to the trend, according to Scypinski, and Philadelphia has lost more than 1,100, according to the Philadelphia Inquirer. In some cases, even the hotels that are retaining a traditional guest room component are still losing meeting space in the conversions.

While some condo purchasers view the condos as rental investments and will relinquish them back into room inventory, some are retaining control of the condos for their own use. And the growth of the trend makes it difficult for show organizers to know what to expect at a particular property from year to year. For now, expect the trend to continue “because it’s funding our expansion,” Scypinski says.

4. The Technology Relay
Hotels’ slow adoption of technology is a trend that continues to affect show organizers’ effectiveness in staging on-premises expositions. “Hotels in some cases are not keeping up-to-date on technology for trade shows and conferences,” says David Korse, CEO of IDG World Expo (www.idgworldexpo.com). “Namely, wireless capabilities are lacking in most hotels. This is an added expense for show management that we do not see improving fast enough.

“We’re incurring added expenses to build our own wireless network in hotels in order to produce the event,” Korse says. “With the total cost per attendee at hotel events increasing, once you add all the guarantees such as food and beverage, sleeping rooms, and rental, it can be difficult on pricing the event fairly while maintaining a profit.”

However, hotel representatives say the trend is beginning to turn. “Hotels are vastly improving technology; it’s much better than it was,” Shea says. “Exhibit halls in hotels used to be lacking; it was difficult to use cell phones or the Internet. But now most hotels are going wireless, especially in public places.”

While the jury still seems to be out on the level of technology progress made by hotels, it’s a good idea for show organizers to check with potential properties about their particular technology prowess. Knowing what you can expect from the hotel will help you plan for your attendees’ technology needs.

5. The Meeting Space Race
Not only are hotels’ sleeping rooms filling up quickly, but on-property meeting space is also harder to come by. Just a few years ago, planners could make last-minute decisions about how much meeting space they would need, but today they’re having a difficult time reserving space even in advance of the meeting.

“A trend to note is the difficulty in getting 24-hour holds on meeting rooms in certain instances,” Mancini says. “The hotels want the rooms to be used as much as possible to generate as much revenue as possible. They’re reluctant to commit to 24-hour holds unless certain criteria are met.”

 Rather than competing for meeting space against other groups in the same hotel, Mancini suggests using citywide meetings’ secondary hotels. “Seek out hotels that are host hotels for convention delegates for a citywide,” he says. “You may find you are able to get the meeting rooms you need with your desired housing block because the larger convention is putting heads in beds and using little meeting space in the hotel.”

Not only is committable meeting space difficult to find, but once found, it can also be expensive. “Many hoteliers charge hall rental fees,” says Anne Hamilton, Vice President of Resort Sales and Services for Walt Disney Hotels and Resorts (www.disney.com). “But if those fees are non-negotiable, show organizers can often leverage other meeting expenditures to help offset that fee. For example, hoteliers may be able to eliminate or reduce the rental fee for clients who can increase their spending on food and beverage or other services. It’s all about looking at the total value of the show.”

The fight for meeting space may become less intense in the near future, as more hotels are adding exhibit space, according to Shea. “In-house trade show business is very good business; it’s more lucrative than a meeting without a trade show,” he says. “Hotels are working to attract this business, and more and more are adding their own exhibit halls. Check out what’s available at various properties; there may be more options in a particular city than there were a few years ago.”