Kate SmithManaging Director

WALDRONSMITH Management

TOP ISSUES FOR CONTRACTING HOTEL ALLOTMENTS

Why Do We Do It?

• Value add for our clients

• One stop shop for delegates

• Maximise savings opportunities for delegates

• Revenue stream

Do Your Homework

•Work from real statistics – don’t rely solely on the client

•Research the history

•Consider the demographic of the delegates • the style of hotel• the proximity• the price point

•Residential Booking or Supporting a Convention Centre Event

•Be selective – increase your negotiation power

Contractual Considerations

•Structure of Contract •Corporate versus Association•Understand the difference in terms of deposits, cancellations etc

•Rate •How does it compare to rack rate, corporate rates•Rate parity – rate management

•Room Inventory •Room types•Allocation of rooms for Shoulder Dates

Contractual Considerations

•Release Dates •120/90/60/30/14 days•Penalties•% Attrition of the Allocation

•Cancellation Policies •Attrition of the allotments•Individual cancellation penalties for delegates

•Deposits•One nights deposits•Full stay prepayment•Credit card guarantee

Contractual Considerations

•Complimentary Rooms

•Upgrades

•Value Adds•Welcome drinks•Internet access•Early Bird rates•Room Drops•Marketing opportunities

•Special Event Considerations

•Read the Contract!

The Value of the Relationship

•Collaboration is the key

•Understand the needs of all parties to attain a win/win

•Communicate – regular and timely

•Build and maintain your reputation by your sound management

•Understand the hotel owner/hotel chain relationship

•Keep in contact with the key personnel in the hotel

•Your success is their success

What’s next….

•Now the management begins….

The Hotel and PCO Relationship: Room Block Management without the Crystal Ball

A guide to room block management (Forecasting with Foresight)

Monique English AFMEAAccommodation Department Manager

Tour Hosts Pty Ltd

The ForesightYou don’t need a crystal ball…. You need statistics!

Creating the perfect room block can be broken down to a 3 step process:

Step 1: Consider the facts

• Research/evaluate previous events

• What is your delegate profile?

Step 2: Statistics/Look at your event

•Program

•Additional technical tours

•Where is the event? Consider your destination.

Step 3: Market segment

•Choosing the right hotels for your delegates is paramount to success!

Step 1: Consider the Facts

Previous room statistics from prior conferences

•Number of rooms/room nights booked

•Percentage of delegates who booked through the PCO/Agent

•Breakdown of rooms booked in each star rating

What are your delegates like

•What is their spending power?

•Where are they coming from –list hotel chains that they would know

•Do they require share options?

The Foresight

Step 2: Statistics/look at your event

Program

•Look at your program to deduce the amount of rooms required on your ‘side dates’

• Do you have full or half day’s in your program at the beginning or the end which will influence delegates arrivals/departures

•Do you have technical tours or additional programs which will require extensions of stay over the weekend

Destination

•Is it a destination where delegates would come pre/ post event for leisure

•What events are on in the destination over the time of your event. Will it affect availability for your room block

The Foresight

Step 3: Market Segment

There is no benefit to your delegates, or you if you chose the wrong hotel for your event.

There is no point in placing accommodation in 5 star hotels when your event needs 3 star accommodation….and vice versa!

Look at your requirements

•Is there a requirements for twin options?

•Are there likely to be families? Will you need apartments?

•Do you have a large number VIP guests who need suites/club lounges?

•Are there transport options for easy access to your venue

•Are the hotels you are considering within walking distance

The Foresight

The Creation

Now that you have the insight…..how do you create the perfect room block? Its not guesswork…it’s science!

•Look at your delegate numbers – better to be based on conservative figures

•Look at percentage you expect to book through your room block

•Look at where your delegates are coming from. Do they all need accommodation or will you have a portion of local residents

•Consider how many will be sharers…this will reduce your room requirements?

Room Allotment Management

What works?

•Reviewing your event forecast on a continual basis

•Keep in mind your stakeholders COMMUNICATION IS THE KEY!

How to do it?

•Look at your figures work out what is selling, what is not

• Review early bird figures

• Readjust your room blocks based on the expected figures

•Contact your suppliers as early as possible if your event forecast has changed

•Market knowledge, keep in mind the destination

The Science!

Think of each event as an experiment into what is successful and compare across similar events.

How?

•Maintain records and review

•Compare your room block achievements over years

•Analyse your data and use this as a guidelines for future events

An insight into my analysis has brought some interesting facts to life….

•For association business on average 38% of delegates overall choose to book through the PCO this is consistent over the past 3 years

Interestingly this increases based on the venue category

•Where the Hotel is the meeting venue, 53% of delegates choose to book the PCO

•Over the past 3 years, 69% of the room block would be taken up at the venue

What you may find!

Statistical EvaluationStatistics

•Maintain and analyse statistics across your core business

What statistics should you think about?

•Materialisation

•Booking percentage

•Rooms booked by cut-off dates

• Take up of rooms at certain milestones

•International vs. National delegates

Thank You

– Why it is important that PCO’s get it right

– Advantage for Hotels dealing with events managed via Professional Conference Organisers

Jakki Temple Sofitel Sydney Wentworth

A Hotel receives an opportunity for a Room Block

The Hotel prices the opportunity (traditionally base rate based on agreed materialization and history)

The hotel then increases its public rates

Why it is important that PCO’s get it right

Occupancy for March 1 2 3 4

0%10%20%30%40%50%60%70%80%

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$100

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Average Rate

Public Sell Rate

$100

$120

$140

$160

$180

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Septe

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Average Rate

Public Sell Rate

Theoretical

In a 200 room sample hotel forecasting 70% occupancy over normal times, with pricing varying from $190 to $260 publicly, creating the average rate of $210

A 40 room conference books at $180 the hotel lifts the public rate creating an average rate of $250.

The conference materializes bringing the hotel to 90%

$-

$50.00

$100.00

$150.00

$200.00

$250.00

ARR Rev Par

Hotel Without Conference

Hotel With Conference

Why it is important that PCO’s get it right

$-

$50.00

$100.00

$150.00

$200.00

$250.00

ARR Rev Par

Hotel Without Conference

Hotel With Conference

Hotel where ConferenceWashes at 50%

When a Conference Washes

50% conference wash in last 30 days the hotel has to drop rates at last minute

$-

$50.00

$100.00

$150.00

$200.00

$250.00

ARR Rev Par

Hotel Without Conference

Hotel With Conference

Hotel where ConferenceWashes at 50%

Why it is important that PCO’s get it right

5-10% of Events are managed by PCO’s Only an additional 10% are managed by full time event plannersRemaining events are managed by people whose main job is not event planning

Hotel Events coordinators average of 1.5 years length of serviceMany are junior positions in hotelsOften managing multiple quotes and events at one time (20 per month)These positions are measured on Sales

Advantage for Hotels dealing with PCO’s

Multiple Hotel personnel can be involvedTakes many hours of labourA competent PCO substantially reduce time of Hotel TeamSaving the hotel wages Hotel can focus on further sales

Advantage for Hotels dealing with PCO’s

If an event delegate books the hotel as an FIT

1) The cost of sales increase (multiple channels, GDS fees, cost of individual reservation more expensive than via rooming list)

2) Forecasting and thus yield management is more difficult

Advantage for Hotels dealing with PCO’s

Moral of the story

- If PCO’s get it right and more events are managed by PCO’s

- The industry and the client wins

Neil McInnes Director of Business DevelopmentHilton Sydney

Revenue Management

What is Revenue Management?

•The Science of selling the right product for the right time at the right price through the right channel.

•Aim is to have a WIN / WIN for hotel and for the customer (from 1 room to all the rooms).

•The Revenue Manager will look at:•What day of the week they are staying•What season / time of year they are staying•How long they are staying for•Forecasted volumes of business by segment at that time

•The Revenue Manager will look at the total value of the business, how it fits into the hotels other business and will quote the best rate for that piece of business at that time.

Revenue Jargon

Revenue Per Available Room (RevPar)

•It is based on the number of rooms the hotel has sold and at what rate.•Calculation:

(Rooms Sold x Average Rate)Total Number of Hotel Rooms Available

e.g. Hotel X sells 485 rooms at an average rate of $295.

The RevPar is then:

485 x $295577

RevPar equals: $247.97

Revenue Jargon

Revenue Generation Index (RGI) •It is based on our hotel’s percentage of rooms versus the competitive set, e.g. Hotel X (577), Hotel Y (557) and Hotel Z (416) = 1,550 Rooms

Hotel X has 577 rooms therefore our fair share is 38% (e.g. 577/1550)

•For every $1 that comes into the market (our competitive set including Hotel X ), we should get 38cents (38% of $1).

•If we take more than 38cents then we have taken more than our fair share of the revenue and our RGI will be greater than 100%. A good result.

•However, if we take less than 38c then we have taken less than our fair share of the revenue and our RGI will be less than 100%. A disappointing result.

How can you help a Revenue Manager help you

•Flexibility of dates – if flexible can secure more attractive rates;

•Customer can see cheaper rates than the secured ‘Group Rate’•Check that it is the same conditions – often fenced;

•Group holds more rooms than required and release close to the event•There is no guarantee we can re-sell as booking pattern is often more than 60 days

•The perception is that BIG Groups receive bigger discount in rate – Bigger groups takes over a larger number of room types and does not allow the hotel to sell higher room types at the correct rate (e.g. Relaxation Suite is normally $395 higher than the standard Guest Plus Rate).

Question Time

Thank You!

Thank you!

22nd MEA National ConferenceTuesday 7th April 2009