Vous êtes sur la page 1sur 9

Top of Form

http://imageserve http://w eb.ebsco Smart

ctl00_ctl00_FindF ctl00_ctl00_FindF ctl00_ctl00_FindF ctl00_ctl00_FindF def768d2-1ee4-4 7

H4sIAAAAAAAE

enabled

Browse Resources toolbar


New Search Menu Item. Sub Menu Available.
Publications Menu Item. Sub Menu Available.
Company Profiles Menu Item. Sub Menu Available.
Thesaurus Menu Item. Sub Menu Available.
More Menu With Sub menus.
Cited References Menu Item. Sub Menu Available.
Images Menu Item. Sub Menu Available.
Indexes Menu Item. Sub Menu Available.
Folder Access and Help
Sign In
Folder
Preferences
Languages Menu With Sub menus.
English
Deutsch Menu Item. Sub Menu Available.
Español Menu Item. Sub Menu Available.
Ελληνικά Menu Item. Sub Menu Available.
Français Menu Item. Sub Menu Available.
Italiano Menu Item. Sub Menu Available.
Magyar Menu Item. Sub Menu Available.
Polski Menu Item. Sub Menu Available.
Português Menu Item. Sub Menu Available.
Русский Menu Item. Sub Menu Available.
Türkçe Menu Item. Sub Menu Available.
‫ عربي‬Menu Item. Sub Menu Available.
简体中文 Menu Item. Sub Menu Available.
繁體中文 Menu Item. Sub Menu Available.
日本語 Menu Item. Sub Menu Available.
한국어 Menu Item. Sub Menu Available.
ภาษาไทย Menu Item. Sub Menu Available.
Hrvatski Menu Item. Sub Menu Available.
Čeština Menu Item. Sub Menu Available.
Bahasa Indonesia Menu Item. Sub Menu Available.
‫ ִעְבִרית‬Menu Item. Sub Menu Available.
Română Menu Item. Sub Menu Available.
Slovenski Menu Item. Sub Menu Available.
Nederlands Menu Item. Sub Menu Available.
New Features!
Help
Exit
Screenreader assistance: To improve accessibility we have several tips for navigating the
Article Detail.
Heading levels are available for easier navigation
Skip to Citation
Skip to Main Content
Skip to Find box or use access key = 2
Negotiation & Attrition Trends
PSG INST OF MANAGEMENT

Searching: Business Source Premier Choose Databases »


EBSCOhost Search
Attrition rate in it sector

in
join operator in
join operator in
Add Row
Search Clear

Main Toolbar
Basic Search
Advanced Search
Visual Search
Search History
Result List Refine Search Result 37 of 1744345
Title:
Negotiation & Attrition Trends. By: Carey, Robert, Successful Meetings, 01484052,
Jan2005, Vol. 54, Issue 1
Database:
Business Source Premier
HTML Full Text
Negotiation & Attrition Trends
Contents
THE FLIP SIDE
WHEN ATTRITION ATTACKS
Essential Highlights
Planners who spend more time on negotiations and contracts than 2 years ago:
Average expenditures per meeting
Negotiability of meeting commodities
Room Block Flexibility
Liste
n
Pause
Loadi Help
ng
Section: State of the Industry
Heading into 2005, planners are surprisingly optimistic about where they stand in the area
of negotiation. First, a comparison of SOI reports from January 2001, January 2003, and
today shows that planners' views of negotiability of guest rooms, meeting space rental,
food and beverage, and AV equipment/services have consistently improved over the past
four years. So on a scale of one to five, with five being extremely negotiable and 1 being
not at all negotiable, in the current climate our respondents found that guest rooms were
at 3.69, meeting space rental at 3.81, food and beverage at 3.08, and AV
equipment/services at 2.93.
Of course, the struggling economy over the past four years bears out our respondents'
conclusion that the market has favored buyers. But as the economy began a wobbly but
unmistakable recovery in many sectors by mid-2004, it seems that planners' present
opinions of how negotiability will change in the coming year might not match that new
reality. Case in point: 29.3 percent of respondents said that guest room rates will become
even more negotiable in 2005, while another 38.1 percent said there will be no change in
negotiability. For meeting space, 30.8 percent said that would be more negotiable, while
45.9 percent said there would be no change. For food and beverage, 23.8 percent said it
would be more negotiable, while 46.1 percent expected no change. And for AV
equipment/services, 20.5 said it would be more negotiable, while 58.3 percent expected
no change.
Furthermore, PricewaterhouseCoopers estimates that hotels' revenue per available room
(RevPAR) was 6.3 percent higher in 2004 than in 2003--the largest one-year jump in 20
years and a testament to newfound supplier strength. But perhaps the most significant
estimate planners should consider is this: Smith Travel Research and other lodging
industry research firms predict guest room rates will go up between three and five percent
in both 2005 and 2006, while some major cities already have been able to raise rates well
beyond that number because their occupancies are getting back to healthy levels not seen
since 2000.
"I think there is a lagging perception among planners about today's negotiating climate,"
says Fred Shea, vice president of sales for Chicago-based Hyatt Hotel Corp. "The hotel
industry's stronger-than-anticipated results from the second half of 2004, and the
predictions for healthy growth coming on the heels of those results, don't match what
planners have been able to negotiate to this point. Many planners have not yet digested
the most recent numbers, but they will start seeing the effects of those numbers as they
book their meetings for the next two years. Basically, favorable rates are going to become
harder to find."
"We've seen meeting group attendance come back much stronger in than the transient
market, which is just now returning to the East and West coasts but still lags in the
middle of the country," adds Mike Beardsley, VP of field sales for Bethesda, MD-based
Marriott International. "And as we look at 2005, we see that the groups who are booking
inside 12 months will be subjected to larger rate increases than those who have already
booked or who will book events with lead times beyond 12 months."
THE FLIP SIDE
As daunting as the hoteliers' assessments sound, there is another way of looking at
negotiability in the face of impending rate hikes--one that our SOI respondents seem to
have picked up on.
In the air travel market, a research finding released in November states that the majority
of fares on existing routes are the lowest they have ever been, after inflation is factored
in. And planners apparently have sensed that this market has hit bottom, because just 20
percent of them think that airfares will be more negotiable in 2005, while 45 percent
estimate no change and 34 percent predict fares to be less negotiable. In short, when
prices drop on their own, negotiability fades away.
This raises the hope, then, that as rates go up for guest rooms as well as other items and
services related to meetings, planners will in fact have ample opportunity to negotiate--
particularly in those areas where hotels typically reap the highest margins of profit. But
there are only two ways for the optimism expressed by SOI respondents regarding
negotiation to become reality. First, planners must undertake efforts to track not only the
direct revenues that hotels and meeting venues reap from their meetings, but also the
ancillary revenues generated by attendees at the hotels and meeting venues, and even
throughout the whole destination. Second, planners must either book their meetings
further into the future or approach suppliers with flexibility on dates and/or location.
On the first point, Larry Luteran, VP of group sales and industry relations for Beverly
Hills-based Hilton Hotels Corp., says that "we always look at the potential total
profitability of an event, so the more data a planner can produce on what her group
traditionally spends in each area, the better a deal she'll be able to strike because there
will be room for each party to maneuver so that they all get what they want. Actually,
we'll take a small financial hit in one area or another, if the overall profitability picture is
right for us."
Marriott's Beardsley adds that "the more that planners can keep elements such as catered
receptions, banquets, and other affiliated functions inside the hotel, the better able they'll
be to bring down guest room rates--which is generally the most profitable item for us--or
get some other concession or upgrade. What's more, any access planners give us to solicit
exhibitors to hold their related hospitality suites and functions at the property will help a
group's leverage." Interestingly, Beardsley recently negotiated for a meeting--as the
planner--and was able to bring his group's guest room rate down by $15 because he did
not need all of the complimentary guest rooms the group earned, and returned them to the
hotel's inventory.
Today, many hotels are quite willing to negotiate with groups that will frequent the
property's spa or golf course. "Spa revenue is critical to us, and it's going to stay that
way," says Hyatt's Shea. "Use of the golf course and spending in the retail outlets on
property are desirable too. But with recent research showing that spa users also spend
more on all discretionary items throughout the property, we now look hard at how many
attendees of each meeting will use the spa."
And to capture ancillary revenue from the business center, to the in-room minibars, and
everything in between, several hotel chains say they are improving internal systems to
allow for a complete revenue picture of each meeting. "Planners get miffed when
hoteliers ask for information from past meetings, even though the hoteliers didn't provide
a way to capture all the data when those meetings took place," Shea says.
As for planners gaining leverage through flexibility on dates and location, Luteran notes
that this might be the only way to land a 2005 meeting in a desirable city at a price
resembling what groups paid in 2004. "In a hot destination, the exceptions to the rule
almost always revolve around filling a hole a property has over a particular set of days,"
he says. "Also, some cities have not rebounded as strongly as others on the transient
business side, so there are some great properties still with sluggish occupancy. Working
with a chain's national office is the best way to cast the net widely, and we are upfront
about our high-value opportunities around the country because that's where a planner can
help us out significantly."
Attrition
In the two years since our last SOI report, several positive developments have lessened
the impact of meeting cancellation and attrition. Market shifts, technological advances,
and old-fashioned ingenuity have made these issues less feared, less time-consuming, and
less onerous to suppliers and planners alike.
Across the board, hoteliers state that the economy of the recent past forced planners to
adapt their attrition strategies such that those planners are reaping the benefits today.
"Attrition is not as much of an issue as in past years," says Marriott's Beardsley. "After
the headaches they had to deal with during their 2002 and 2003 meetings, planners cut
back room-block sizes when planning their 2004 and 2005 meetings. So right now, many
groups are picking up more rooms than they blocked out, and it's reaching a point where
some have to scramble a bit to find more rooms." The result in 2005 will be slightly
larger room blocks and longer lead times to secure them.
Hyatt's Shea echoes Beardsley's sentiments. "Two things have happened in the past year:
Customers and hotels have done a better job at booking conservatively, and groups have
been getting much better actual pickup because of the improved economy."
Actually, it's more than just the economy that is driving high rates of block fulfillment
these days. Two years ago, planners were more or less terrified by their inability to stop
attendees from booking outside the room block by using merchant-model Web sites such
as Expedia and Travelocity. But perhaps the most shocking finding in the 2005 SOI
report is that more planners now feel that the Internet will help them cut their rates of
attrition (30.8 percent) rather than contribute to higher rates of attrition (22.2 percent).
From an online perspective, a change for the better "started with hotels' getting back
control of their inventory from outside sites," Shea says. "The rate guarantees chains have
put into effect on their own Web sites have helped keep attendees from straying. And
many organizations have taken control of where their attendees stay by creating Web-
based registration modules that push people to book their housing during the same online
visit."
Further, hotels themselves are creating Web sites to help planners boost attendance, and
timely in-the-block bookings in particular. For instance, the Hiltons of Washington
collectively offer the site www.dcmarketingtools.com, which "combines our hotels' best
imagery, marketing materials, and e-commerce tactics along with best practices to
maximize meeting attendance," says a Hilton spokesman. "The tool was also designed to
help create excitement and interest in the city of Washington and ensure primary usage of
the official convention hotel."
Luteran feels that in addition to all the proactive steps taken by planners and hoteliers, the
economy will still be a primary solution to attrition. "The way our hotels operate is to
first secure a group base at a hotel, and then have the last remaining out-of-block rooms
for those dates command the highest prices. Of course, when the bottom fell out of the
transient market four years ago, the model was flipped in that the last rooms left were
offered below the group rate. This posed a credibility problem both for planners with
their attendees, and for us with our planner clients. But improved transient demand is the
cure for this, and we see that in 2005, the rooms remaining after the group's cutoff date
will indeed command the highest prices."
WHEN ATTRITION ATTACKS
Of course, most association and corporate planners will deal with an attrition situation at
some point despite their preventative efforts. And that's when the most creative planners
and suppliers will shine, by finding a solution that satisfies both parties.
In fact, there seem to be many creative folks in the meetings business, because only 18.1
percent of SOI respondents who incurred attrition in 2004 paid the full attrition fee
stipulated in the contract. This does not surprise Hilton's Luteran. "We're in business for
the long haul, and we want to work out deals during and after the meeting not just to
mitigate a situation, but also to make sure the customer is satisfied and will return to us in
the future with business."
As for the 28.6 percent of planners who said they paid part of the stipulated attrition fee
in 2004, hoteliers appear generally satisfied with the alternative forms of compensation
they receive in lieu of cash. "We're getting a lot more cooperation from clients who don't
pick up their block to switch an off-site food and beverage event back into the hotel, or
give us another meeting or two in the same calendar year, or a combination of both," says
Shea. But Luteran notes that "the fact that we gain a meeting in the future does not make
us whole, because it doesn't help us with the rooms that were left vacant on the original
dates. But there is a magic formula to mitigate every bad situation, and we try hard to
find it with each client."
When all else fails, the best way for planners to avoid attrition is to release portions of
their room block as early as possible so the hotel can sell those rooms. With transient
demand rising, in fact, most hotels should not have significant trouble reselling rooms
released at 30 days out, which is the median penalty-free cutoff that planners agreed to in
their contracts, according to our SOI respondents.
But despite the fact that nearly 40 percent of respondents had between 15 and 30 days to
release rooms without penalty in 2004--and nearly 26 percent had between just 7 and 14
days--Shea says that "those figures would be very surprising to see in today's contracts.
Then again, if you are going to a city at a time where things are wide open, we'll be very
flexible with final cutoff dates."
Essential Highlights
Negotiation Trends
• Several research firms predict guest room rates will rise by three to five percent both in
2005 and 2006.
• To bring down room rates, planners must present both direct meeting expenditures and
ancillary spending by attendees in all areas. Properties are creating software to assist in
capturing such data.
• Some cities have not rebounded as strongly as others; hotel chains' national offices will
promote opportunities in destinations where planners have leverage.
Planners who spend more time on negotiations and contracts than 2 years ago:
2002 73%
2004 56%
Average expenditures per meeting
Legend for Chart:

B - 2004
C - Corporate
D - Association

A B C D

Accommodations $18,108 $16,177 $15,809


Food & Beverage $24,844 $17,964 $39,174
Meeting Space Rental $2,773 $2,028 $4,166
Exhibit/Expo Space $6,972 $3,615 $12,691
Speaker/Trainer $5,838 $4,330 $9,316
AV Equipment/Services $8,510 $5,647 $14,124
Airfare $17,100 $10,157 $9,314
Ground Transportation $2,808 $2,451 $2,958
On-Site Staff $3,043 $2,245 $4,845
Exhibit Services/Décor $7,581 $4,884 $13,442
Negotiability of meeting commodities
Legend for Chart:

B - 2002
C - 2004

A B C

Sleeping rooms 3.60 3.69


Food & beverage 3.00 3.08
AV equipment & services 2.90 2.93
Meeting space rental 3.80 3.81
Air travel 2.60 2.38
DMC services 3.00 2.89
F&B attrition terms 3.30 3.06
Guest room attrition terms 3.30 3.14

Legend for Chart:

B - 2002
C - 2004
A B C

Cancellation Trends and Penalties

Planners who cancelled a contracted meeting 32.0% 20.5%

Planners who cancelled a contracted meeting 32.0% 20.5%

Of those, planners who paid full cancellation fee 16.8% 18.1%

Of those, planners who paid partial cancellation


fee 27.4% 28.6%

Attrition Trends and Penalties

Planners who had at least one meeting miss


its final room commitment: 37.1% 28.0%

Of those, planners who paid partial or full


attrition fee: 54.1% 47.1%
Room Block Flexibility
Legend for Chart:

B - 2004

A B

Median number of days before event that room


block could be cut without penalty in 2004: 30

Planners who had between 15 and 30 days to cut


the room block: 39.9%

Planners who had between 7 and 14 days to cut the


room block: 25.9%

Planners who feel the Internet will contribute to


more attrition in 2005: 22.2%

Percentage of planners who feel that the Internet


will contribute to decreased attrition in 2005: 30.8%

Top 3 perceived factors for


increased attrition in 2005

Attendees' inability to travel 38.2%


Virtual meetings 27.9%
Regional trade shows 19.2%
~~~~~~~~
By Robert Carey
Copyright of Successful Meetings is the property of Northstar Travel Group LLC and its
content may not be copied or emailed to multiple sites or posted to a listserv without the
copyright holder's express written permission. However, users may print, download, or
email articles for individual use.
Result List Refine Search Result 37 of 1744345
<object classid="

View:
Detailed Record
HTML Full Text
Similar Results
Find Similar Results using SmartText Searching.

Tools
Delivery Options:
Added Add to folder
Print
E-mail
Save
Cite
Export
Create Note
Permalink
Permalink:
Bookmark

Top of Page
EBSCO Support Site
Privacy Policy
Terms of Use
Copyright
© 2010 EBSCO Industries, Inc. All rights reserved.
EBSCO Publishing Green Initiatives

Bottom of Form

Centres d'intérêt liés