There’s an on-going meeting and event trend, regarding short hotel lead times, that doesn’t seem to be losing much speed heading forward: Shorter lead times lead to problems and frustrations for all.
Short Hotel Lead Times
Logic says plan your meetings and events with enough time to secure the best fit and value at a location allowing for ample time to plan, communicate, and deliver world-class events. Right? Well sure, but as we all know, it’s just not that simple or easy. How far in advance is far enough?
In today’s economy with little to no supply added to the supply chain the past 5-6 years truth is that demand is far outpacing supply. So, the further you plan in advance, the better chance you’ll get to secure the right location at the right price. Harder and harder to do these days as lead times dwindle.
Why are lead times shorter?
It could be a number of factors: it may be difficult for an organization to align on dates, event objectives, or budget. I think the underlying issue is a new paradigm: many businesses have seen their annual allotment of sales and marketing funds dwindle to half-year, or even worse—monthly, or quarterly fund distributions—XYZ Co is no longer dolling out their marketing program funds on an annual basis at the start of their new year.
Instead, they’re withholding, planning each quarter at a time, gauging return on investment (ROI), and after thoughtful consideration, they start over again. This new paradigm offers short lead times which cause problems and frustrations for all involved. Maybe only the hotels end up on the winning side currently, and we’ll talk more about that in a moment.
What key indices are driving factors?
RevPAR, or Revenue Per Available Room, is one of many hotel indices (statistical measures of change) tracked by the meetings industry, as you may know. It’s a measurement of a point in time, so it’s usually compared to a similar time frame. If you research, you’ll see a strong global performance in RevPAR year-to-date.
Globally, RevPAR is up and the US leads the way at 7+%. Where RevPAR is up, so are hotel rates!
Why is this important?
Hotel rates continue to rise! 7+% is the national average around mid-year (last reported). And I believe it’s continuing to rise as demand exceeds supply consistently since the bottom-out last in 2008-09. The more spent on hotel, the less budget left for other elements. And let’s face it, our clients want to go to the top destinations, so it’s even higher in those places; Nashville is one leading the charge in the US at a whopping 15+% RevPAR change yr/yr. And Miami and other tier one cities aren’t far behind. And rates are just half the problem, as often times there is a lot of luck involved in just finding the room block available with shorter lead times in play!
What to do?
Let’s use this information to educate our organizations to help to open lead time windows back up again. There are many other benefits to that as you can imagine. But sharing this information is the first step. I was in a meeting recently and shared this point with a client as I was encouraging and nudging them to get started now on their sourcing for their Spring 2017 event. Normally they would wait until 6-8 months prior, a few months after the current year’s event. Sound familiar? There is a better way! We can educate our clients that we’re adding value by leading with the issues, pains, problems, opportunities, and results that are important to the mutual success of our relationships.
In the client meeting on that recent day, we were experiencing real pains because a client (like many others out there) waited too long to source their meeting. Dates and pattern flexibility entered the discussion and they didn’t like it. The property desired wasn’t available, and the one settled on didn’t have their best spaces and venues available, so we had to settle—short lead times lead to frustrations!
Key industry indicators help us improve: When you hear or see RevPAR remember that its per available room, and when it’s rising so are hotel rates! All the while availability is shrinking so don’t miss the boat, act fast(er)! Share the message because this is a trend that’ll likely carry through the next year.
Bonus: TRevPAR (Total Revenue Per Available Room). When the calculation uses Total Hotel Revenue instead of guest room revenue.
Brightspot is here to help you conquer short hotel lead times for your next meeting; head over to our Events page to see how.