Corporate class at budget prices
For the hospitality industry, 2009 was like every fourth or fifth person died.
Last year was like the last scene of the 1932 MGM movie “Grand Hotel,” when John Barrymore’s corpse is being carried out and Lewis Stone says, “Grand Hotel … always the same. People come, people go. Nothing ever happens,” as a crowd rushes around the lobby.
Last year’s Colorado convention, meeting, conference and corporate retreat business was down 15 percent to 20 percent or more overall, although, just as with real estate, it was not nearly so bad in Denver and the rest of the state as it was in Miami, Las Vegas and Phoenix.
“The state of the meeting industry here in Colorado is coming back,” says Freddie Tem
pleton of Castle Rock-based Rocky Mountain Event Consultants. “It was a scary year and a half, but people still want to get together and network even when they’re losing their jobs.”
Bruce Alexander, Vectra Bank CEO and chairman of Visit Denver, the former Denver Metro Convention and Visitors Bureau, looks at the numbers.
“If you look at last year’s lodgers tax numbers, which are symbolic of what the hotels experience, they were off 15 percent to 20 percent,” he says.
“People were really struggling keeping rooms full, people were laying off staff, even at the convention center. Here, at the convention and visitors bureau, we had to shrink our budget fairly dramatically because of revenues falling off,” he adds.
For some perspective on the deeper meaning of all this, we started at the Broadmoor hotel in Colorado Springs.
The Broadmoor’s ownership takes the long-term view, which might be why the Broadmoor has invested all along in its 185,000-plus total square feet of meeting space. This winter, that meant readying a major renovation of its West Tower meeting space for an April debut, and shutting down its still-new Broadmoor Cottages, which the hotel markets for corporate retreats, for tweaks and upgrades.
Yet, “The meetings business has been way off – not any great surprise,” says Allison Scott, director of communications for the Broadmoor. Normally, the hotel’s sales mix measures 70 percent business to 30 social; now Scott estimates the ratio probably is closer to 60-40.
This might help explain the Broadmoor Guarantee. After the stay of a new booking comprising 50 peak-room nights and a two night minimum stay, “We send out a survey, and if your group agrees that we did not meet and exceed their expectations we pay them back.” That is, the hotel guarantees it will waive the bill. This applies to meetings booked through 2011.
The good news is, “We are starting to see a little bit of an uptick,” Scott says.
Most observers expect the industry to begin this year to pick itself off the floor. Mary Ann Mahoney, executive director of the Boulder Convention & Visitors Bureau, predicts 1 percent to
2 percent growth in 2010.
“Now, in the business world that is not up a whole lot, because for healthy growth you really need 4 percent or 5 percent growth,” Mahoney says. “But if we see 1 percent to 2 percent, that would be good.”
Templeton of Rocky Mountain Event Consultants concurs: “It seems to be on the upswing, for sure.”
Growth is coming not because inventory is selling off – because inventory in the lodging business has to sell off every day. Sales have stopped falling in part because businesses have held off on meetings for a couple of years, for a number of reasons.
“There may be pent-up demand to meet again, because people have been holding off since 2008, and in 2010 that face-to-face meeting still seems to be very important,” Mahoney says.
Another reason the downward spiral might be reversing is that, at the same moment the hospitality industries got hit by the decade’s second nasty recession, they were sucker-punched by
This recession hurt the hospitality business even worse than the horrific travel-centered slump after the attacks of Sept. 11, 2001, contends Steve Kinsley, president of the Rocky Mountain Chapter of Meeting Planners International and president of Littleton-based Kinsley & Associates.
Corporate travel and normal meeting planning were disrupted by what Kinsley calls “the AIG effect.” This took place after news reports revealed that in September 2008, a week after AIG had received an $85 billion federal emergency loan, the company had spent $440,000 for a corporate retreat at the Dana Point, Calif.-based St. Regis Monarch Beach hotel. Outrage ensued even though, Kinsley says, the allegations were a crock.
“People don’t realize that at that AIG meeting everybody was talking about, there were three or four AIG employees there – and the rest of the attendees were people who had won the trip because of the volume of sales that they produced,” Kinsley says. “It was not a boondoggle for AIG employees, it was a reward trip. And now all of a sudden it was no longer good optics to have an incentive trip.”
At any rate, business is coming back a bit.
“It’s beginning to come back, and it’s beginning to come back in niches, some of the niches more quickly than others,” especially health care and technology, Visit Denver’s Alexander says.
Looking at hotels, conference centers and the like the other way around, this is one hellacious buyer’s market.
Corporations, associations, nonprofits and other entities that like to meet in large bunches are looking at what amounts to one of those moments in the economic cycle when things are way out of whack: Rooms and venues are more available; room rates are low; amenities are plentiful, and costly extras now sometimes come free; booking deadlines and “attrition,” the percentage of attendees the corporation or association is permitted to drop, are more flexible than ever; and all this is negotiable.
“In the last year there have been phenomenal deals to be had. You can take your team to a different level now,” Kinsley says. “When the economy turns around can you afford to go to that level again? Maybe, maybe not, but if you couch that with your team in the sense that, ‘This is an opportunity for us to experience something we have not been able to experience in the past, and it may not happen again. Just so everyone knows, we’re going to go for it.’ “
Many businesses are going for it. According to Kelly McCourt, marketing vice president for Denver-based Sage Hospitality, research indicates lower-tier hostelries are suffering the most as planners trade up to higher-rated hotels.
The trick for corporations now negotiating is to get what you can in a civilized fashion.
“I tend to hear from both planners and vendors that negotiation is fine, but it has to be reasonable negotiation,” says Janie McCullough, executive director of Lakewood-based Destination Colorado, a membership organization of 100 meeting and event planners here.
“If you go in and try to totally lowball in your negotiation process, No. 1, you probably won’t book the meeting and, No. 2, you are not building the kind of relationships you need for future years,” she says.
Also, remember that meeting talks can include all kinds of negotiating points.
Hotels and meeting venues “might package in a complimentary reception, or they might package in complimentary breakfasts, they might not charge any meeting room rental – little things they can do which don’t affect their bottom line as badly,” advises Donna Horii, director of sales for the Breckenridge Resort Chamber.
“To me, it’s being honest and showing people the type of event you are trying to achieve and here’s what my budget is,” McCourt says, “and letting the hotel partner work with you to come up with the best value and the best package.”