Suppliers to Planners: Book Small Meetings Earlier to Ensure Space

Hoteliers and other corporate meeting service providers have begun to warn their customers that they must book smaller events earlier to ensure availability — or face guaranteed revenue minimums or settle for a lower-tier destination or property.

Some chains have unveiled tools to streamline bookings for ad hoc events in order to capture the growing market.

Many corporations have yet to hear the message or adjust internal meeting policies, however, as lead times continue to be short for smaller meetings of 100 attendees or fewer, according to suppliers. Companies are choosing to pay higher prices instead of changing dates or locations, though suppliers said lead times may increase as cost-saving opportunities arise with longer booking windows.

"We're trying to get on our host's calendar and radar much sooner," said Linda Levy, senior manager of meeting and event planning for the corporate marketing division of Medco Health Solutions Inc. in Franklin Lakes, N.J. Levy said she has seen some hotels applying revenue minimums on corporate groups and that she has increasingly had to convince hoteliers of the value of her business.

"When we're negotiating contracts, we're negotiating it based on our minimum spend," she said. "It has to be done that way in case of the rare chance there is a cancellation. Our spend tends to be a lot more than our contractual minimum, so we go to the hotel and explain what the true value is to them."

Marriott International's corporate meetings services division has placed 60 percent of its customers at non-Marriott properties due to tightened availability, said Tom Maguire, director of Eventcom International by Marriott. More hotels are requiring food-and-beverage minimums and meeting room rental fees, he said. Availability no longer is the only requirement, as buyers must meet revenue requirements to book hotel space.

"Some of the budgets that they were thinking about even six months ago may not be realistic anymore," he said.

Though room rates are on the rise, Hilton Hotels' senior vice president of sales strategy and development, Bob Dirks, said there has been no pushback from corporate meeting buyers and demand has continued to increase. Most corporations have not begun to bundle smaller meetings in contract negotiations, he said.

"Smaller meetings are so unpredictable," said Dirks. "They generally don't happen the same time, same place or same year — whereas that's not the case for associations and conventions."

Lead times over the past year have begun to lengthen, said Jeff Weggeman, vice president of sales and marketing at Aramark Harrison Lodging, from an average of one to three months to the current window of four to six months.

"We're getting business that's actually jumping beyond the next quarter," he said.

AHL customers have begun to realize a two-fold effect of limited availability at centers in top-tier cities and of growing internal demand for meetings, he said.

"A lot of companies are doing better," Weggeman said. "The economy is doing better and their markets are doing better, and companies are hiring more and need to develop. They're realizing they have a critical mass, so they better move earlier."

When Eventcom is approached with last-minute requests, Maguire said customers likely have to make concessions on location or price. Some who use Eventcom only once a year have been surprised by increasing costs for last-minute meetings, he said, and are becoming aware of how much they can save by planning further out.

"They didn't have to be aware of it a year ago," Maguire said. "If they had attempted to do this even two months out it would have been a buyer's market, and now they're two weeks out and it's a seller's market."

Most events for which the company receives requests have lead times of about three months — half the average of six years ago.

To speed up the sourcing process, Maguire said Eventcom has an initial meeting with a client to find out exactly what is required for the event. Finding out after a vendor contract is signed that a competing company also has booked an event at the hotel, or that breakout rooms are needed, can derail the planning process. "We spend a lot of time in the qualifying stages so that we save them time on the other end," he said.

The entrance of procurement departments over the past two years into corporate meetings management also has affected lead times, Maguire said. The approval process for company contracts can take longer, he said, and obtaining permission to use Eventcom in the first place can be complicated for clients. However, once Eventcom is designated as a preferred provider by corporate procurement departments, Maguire said the entire process becomes much more efficient.

"Once you crawl through that process, and it takes a while, it's very beneficial," he said. "You're electronically copied on to every RFP, you don't exchange financials anymore, and you have the ability to go into their system and see what purchasing orders there are, how much is allotted and whether it's approved."

At Hilton, small meetings business is on the rise and the company has developed automated booking functionality specifically aimed at last-minute events.

"The smaller meetings business is back and it's furious," Dirks said. "Sixty-seven percent of our events are less than 100 rooms. The key is to try and automate that as much as possible both for the hotel operations as well as the consumers."

Small meetings continue to be booked with short lead times, Dirks said, while lead times for larger events have begun to lengthen. "It's a very healthy market and it's growing," he said. "We're seeing it across all of our brands, not just the Hilton brand. We're seeing increases at the airport hotels especially."