The meetings and events industry has been revitalized in recent months thanks to the gradual yet significant return of business travel, bolstered by a remaining pent-up desire to hit the road. In fact, according to Amex Global’s 2023 Global Meetings and Events Forecast, 65 percent of survey respondents say meeting spending is increasing internationally, and many travelers are mixing leisure excursions into their business travel. While this “bleisure” renaissance bodes well for an industry that has long sought a return to M&E business, hoteliers must use new strategies and technology to remain competitive and truly benefit from this return to form.
When considering the lessons learned by hospitality over the past three years and applying them to M&E, the potential for growth in this segment is boundless. Hotels, by and large, have not fully capitalized on potential upselling opportunities to guests, particularly outside of the guestroom and standard amenities. Operators who can disconnect from their expectations for M&E before the pandemic better position themselves to compete for M&E bookings as they continue to roll in. Executing this will require investigating the new drivers behind business travel, hoteliers' challenges in this growing market, and how technology can help them optimize revenue when it matters most.
Once operators have a better understanding of their place in the current market and how it is evolving, many of them can improve their M&E efficiency using new technology–as long as they are willing to challenge the established rules for managing this corner of hospitality.
Back to the Drawing Board
Hotels have traditionally been resistant to change–you would be, too, if your industry had persisted for thousands of years. However, hoteliers must shed some of their attachments to the past to maximize their potential meeting revenue today. One way to do so is to rethink how hotels measure their meeting space's utility and value. The industry has long clung to revenue per available room (RevPAR) and average daily rates (ADR) for optimizing room revenue. Still, these metrics don’t carry the same weight when applied to M&E space.
Hotels historically measured M&E performance by looking into spending at various functions, the number of guestroom bookings these events draw to the property, and how much this business grows over time. However, this method is far from perfect. For example, it can be hard to determine if F&B spending at an event correlates directly to the event itself, the time of the year, or random chance.
To ascertain the upward potential of your hotel’s non-guestroom event space, hotels can look into these potential performance indicators:
- Revenue per square foot or meter allows hoteliers to measure revenue generation in a given room or for all of a hotel’s combined function space. It can even help calculate usage by day, on a specific day of the week, throughout a month, or even an entire year.
- Attendee density measures how many attendees are occupying a function room relative to its optimal or maximum capacity and can calculate potential revenue for a specific event or over a period of time.
- Revenue per attendee is an effective tool for identifying the individual value of each attendee at your events and how to improve marketing efforts when targeting them down the road.
- Conversion performance is a measure of how effective a hotel’s sales staff are at converting inquiries into actual business. This statistic compares the value of definite bookings to the potential value of all booking inquiries, including lost business.
These and other key performance indicators will be indispensable for creating new ways to measure M&E success going forward–something hoteliers must keep in mind as guestroom rates gradually stabilize.
Digging Under the Data
Forecasting for the future is one of the most effective tools hotels have for understanding customer demand. Forecasts can draw on historical and evolving data sets to help hotels understand who is traveling for events, where these travelers are coming from, and how long they are staying. The capacity to develop reliable forecasts is crucial to remain competitive in the current hospitality marketplace–as long as hotels share data between departments.
In many cases, hotels cannot share crucial data between siloed departments. For example, a hotel’s sales and catering system typically provide information for business on the books and business done but rarely offers a visual aggregate of total demand for any point in time–past, present, or future. This makes it difficult for hotels to compare data on trends without rethinking their approach to technology integrations.
Hotels today can no longer succeed by relying on the M&E business already on their books. They must use dynamic pricing models that can quickly respond to new forecasts by applying individual strategies to each sector of its available meeting space. Reaching the granularity required to optimize revenue in this environment requires quickly classifying bookings under segments and applying agile pricing to new business opportunities.
Using data in this manner will only become more important over time, particularly throughout what is expected to be volatile due to economic uncertainty across hospitality. Acting on these insights will require new flexibility from operators, particularly as lead times for events are reduced from 6 to 12 months to 1 to 3 months.
To thrive in this environment–and what comes next–hotels must focus on improving the quality and reliability of the data they gather. Success in this area will also support the growth of predictive analytics and can even help create a more sustainable working environment, fostering continued employment amid the persistent labor crisis. However, hotels can only reach this point by dropping the barriers between departments, particularly revenue management and sales and catering.
The labor shortage has added to the cruel irony of hospitality’s long recovery. Amid the most significant return to travel in recent years, hotels simply don’t have the people to cope with their guests’ needs. Fortunately, just as hotels look for automation to assist with operations, automated pricing and actionable data insights can lead to greater conversions on M&E bookings. They can lead to a greater understanding of your hotel’s M&E profitability.
Many operators across the industry remain fixated on improving guestroom revenue, but as M&E business picks up, it’s important to remember that function space can present greater earning potential overall. Additionally, M&E can be a hotel’s greatest and most untapped asset regarding revenue management practices, a factor that will become more important to consider as business travel continues to grow throughout 2023. For this reason, investing in and growing your hotel’s M&E potential allows operators to take one step closer to attaining total profit optimization across their entire property.
ABOUT THE AUTHOR
Helen Taylor started working in hotels at the age of 16 and has proudly served the hospitality industry throughout her entire career. Passionate about bringing people together and creating memorable experiences, she found her calling in the meetings & events side of the business. In all her roles over the years—from reception to revenue management to F&B—she’s brought a strong sense of customer service, professionalism, and dynamism. Helen joined IDeaS in 2016 where she makes it her mission every day to truly understand each of her clients’ unique perspectives and challenges. She believes patience and persistence are key as she works to help hotel teams better understand their data and drive their business forward, one step at a time.