Group Rates Follow-Up

Last week in Richmond, the Virginia Association of Hospitality Sales & Marketing Professionals hosted a seminar/panel discussion addressing the group rates crisis. We had a great turnout with a true medley of sales pros, meeting planners, and even a sharp revenue manager to keep things interesting. As you might imagine, there were a variety of opinions, suggestions and best practices that were highlighted, such as:

1) Hoteliers, don't drop your rates. [I know, like that's a rocket science bit of advice!] But seriously, this is the root of the group pricing crisis... for some reason your transient rate is lowered below your group rates on the books. Everyone agreed that by definition group rates are supposed to be below transient/public rates. However, the panelists also agreed that in some scenarios you really need to lower your transient rates. So, in that situation,

2) the hotel sales and revenue management departments need to be in sync, so the rates aren't lowered on dates when group is paying more. For example, your revenue manager may have decided to drop your summer prices for the entire season without discussing it with the sales team. (oops) After a little heart-to-heart in your strategy meeting the team opts to keep certain dates at premium prices because the rock-star sales team already has groups who have booked at the old prices. In the unfortunate circumstance when the team still finds it necessary to drop below those group rates,

3) notify your clients. Simply, group planners don't like to be surprised. It's a much more pleasant conversation if the hotel initiates it, with a game plan/options on the table, versus the client "calling you" on it. At that point the planner has already been chastised or mocked by an attendee and hence their demeanor is a little less empathetic with the sales manager. Among the aforementioned options you might offer, the panel suggested:

3-a) enhancing the group value adds for the client, such as upgrades to premium rooms/suites, golf, spa or beverage credits, etc. Your value-add options will, of course, depend on your property and creativity.

3-b) Lower the group rate to a logical figure relevant to your new transient pricing, or

3-c) stick to your guns on the rate, explaining to the client why. For example, if a conference group rate includes rebates, food and beverage events, conference space or other real cost items, then it is incumbent on the planner to educate their attendees accordingly.

The panel also discussed how to avoid the issue for future groups. First and foremost, hoteliers need to reference bullet #1 above. A couple other options mentioned were:

4) for planners to request a "best rate guarantee" in their group contract. The hoteliers had mixed opinions on this, but if you do agree to it, reference bullet #2. With a complex network of reservations channels, the implementation of rate "guarantees" isn't as simple as it may seem.

5) Both planners and venues should consider dynamic pricing. For example, setting a group rate of 20% off the "rack rate". If negotiating this scenario, a second level of protection for both parties could easily be inserted with "not to exceed $xx or be less than $xx".

Please note that the event was a full hour and a half of non-stop discussion with in depth analysis, logic and explanation from all perspectives. There were many great points and take-aways, not all of which are noted here, so be sure you don't miss the next VAHSMP event. To join the association or become a sponsor, please contact the office at (804) 747-4971.