Exclusive Feature: To say that the meetings-and-events (M&E) industry was significantly disrupted by the pandemic would be an understatement.
Without being able to attract international attendees or have groups gather in large numbers meant that the M&E sector was mostly dormant or not operating at capacity in Australia until recently.
Thankfully, things are looking more promising for the regional M&E market, with event bookings running at capacity and activity in some markets expected to surpass pre-pandemic highs in 2023.
It isn’t hard to understand why regional hoteliers are attracted to M&E activity. For hotels moving beyond rooms-only revenue management and aiming for a total property approach, M&E revenue can account for a significant portion of their financial performance—contributing up to 40 to 60 percent of total revenue.
The M&E space is, however, not immune to the impacts of rising costs. According to the American Express 2023 Global Meetings and Events Forecast, hotel rates will likely increase by 2.5% in the APAC region over the next year. Experts attribute these costs to higher food, labour, and other fixed costs.
And companies are ready to spend more on M&E in the face of those rising costs. American Express found that 65% of companies report that their meeting costs will go up, while an additional 10% report seeing their meeting costs increase by more than 11%.
Given the anticipated higher operating costs for M&E activity and more company spending in this area, hospitality organisations need to pay extra attention to pricing their M&E space to maintain profit growth.
Enhance M&E sales strategies
To boost revenue from group and M&E business, hoteliers must consider the total revenue potential for every group business opportunity. This means considering what each group will spend on all services and revenue streams outside their rooms.
Looking beyond room revenue to consider what a group spends on food/beverage, AV support and transportation provides a more accurate idea of how much overall revenue the group could bring in. And once a hotel knows that overall spend, it can say “yes” or “no” to each new group business opportunity and determine the ideal rate to offer.
Hoteliers also need to enhance their sales strategies to maximise revenue through approaches like ‘free-sell.’ The free-sell sales strategy follows a simple premise: if a meeting request for a date in the future comes in and the hotel has no guest rooms attached to its request for proposal, a catering or sales manager can’t book the business without approval unless the time frame falls in a designated free-sell period—often a short-term booking window in which the hotel will take any business to fill open meeting rooms in the short term.
But what happens when that highly coveted room business doesn’t end up knocking at your door? What happens if you turned down a $15k meetings-only event because they didn’t have any guest rooms and enquired too far out, but you didn’t fill that space with more profitable business later? Think about the revenue hotels leave on the table when they rely only on this kind of rationale.
Instead of deploying a blanket cut off period for 'free-sell,’ hoteliers need to understand the demand profiles and lead times for different events. For example, a large event which occupies a hotel’s ballroom typically comes six to twelve months in advance, and the request for smaller meeting rooms typically arrives in seven to 90 days. Understanding the demand profiles and lead times for events allows hotels to be flexible in their 'free-sell' guidelines by seasonality, month, and day of the week.
To further improve revenue from meeting and event spaces, hoteliers must also focus on conversions. Hoteliers may track conversions by creating date or arrival data either by a number of enquiries or revenue.
The prerequisite of using conversions to improve revenue and profits is that you need to make sure that your sales team track ALL enquiries, including all statuses (Enquiry, Tentative, Definite, Lost and Cancelled). If you don't have data integrity, the conversation is just a number, which makes it challenging to define targets on the group or individual conversion goals.
Under a scenario where market demand (measured by the number of enquiries) is similar to the same period the previous year, any hotel which improves its conversions by even a small percentage will experience significant revenue uplift.
For a hotel to improve its sales conversion rate, it needs to bring sales, marketing and revenue management closer together with the food and beverage, banqueting and finance departments. It will take the entire team—not just one department or group—to capture the right meetings and events business for the hotel considering.
Plus, it means breaking some conventional thinking about lead time and denials while shifting the focus toward forecasting based on demand patterns for event spaces. And that doesn’t always mean accepting the first lead.
Overcome profitability challenges through better revenue practices
A primary barrier to achieving high levels of profitability in the M&E space often comes from an inability to accurately and efficiently measure performance and make better-informed decisions. This results in many hoteliers falling back on making event-booking and pricing decisions based on gut feelings and guesstimates or, even worse—on a first-come, first-served basis.
Smart revenue management starts with replacing instinct with facts and supplanting guesswork with well-informed predictions. In an M&E environment, hoteliers must ensure their teams track demand and capture all inquiries, day by day, including turned-down and lost business. They must set minimum occupancy thresholds and hold out for higher delegate numbers on high-demand days. Then measure performance. Were goals reached? Were forecasts accurate? Did any high-value opportunities get missed? These measurements will help drive the success of a hotel’s future M&E business.
Forecast and optimise your meeting and event spaces
Optimising the value of meeting and event spaces requires more than simply getting as many spaces and days booked as possible. To really maximise M&E revenue, hoteliers need to be more selective.
At a fundamental level, this could start with dividing rooms into smaller sections to simultaneously get more attendees on location. It also means coordinating meeting schedules to bring in customers projected to spend high amounts of money on ancillary goods and services.
But it can be challenging to understand what opportunities could come along, how much each group would be willing to spend, and how much to charge for each event space—especially compared to the competition—unless you have an efficient method for revealing future demand.
All hoteliers know that forecasting is critical to determining pricing strategies. However, unlike hotel rooms, many hospitality organisations struggle to correctly forecast M&E space utilisation. Imagine that your hotel receives 20 percent more leads on weekdays compared to the weekends. Would you charge the same price for both times of the week?
Today’s advanced meetings and events strategy solutions help hoteliers analyse demand patterns and determine pricing strategies based on predicted high, medium, low or distressed periods of demand throughout the year. The benefit of this approach is that other department heads, like catering sales managers, will gain more confidence in client negotiations as they grow aware of demand patterns and their ‘walk-away’ price.
Take an integrated approach to M&E activity
The revenue opportunities presented by M&E activity are significant for hoteliers across Australia. However, to grow profits from this sector, hoteliers need to put in place an integrated approach to sales, catering and revenue management along with advanced automated technologies and systems to support their teams in attracting the right business and maximising total revenue.
Tracy Dong is a Principal Industry Consultant at IDeaS. For more information on how your hotel can grow its M&E profits, please visit: www.ideas.com
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