Hoteliers Should Embrace Technology to Maximize Group Sales Revenue and Improve Their Function Space Businesses

A next-generation sales and catering solution can be a real game-changer for hotels, resorts and conference centers with function space inventory that is consistently underutilized or not otherwise living up to its full potential in terms of revenue contribution.

By Jeff Zabin, Managing Editor

The Center for Exhibition Industry Research reported a 3.8 percent increase in the exhibition industry’s performance in 2016. According to the “2016 Meetings and Events Forecast” from Carlson Wagonlit Travel and the “2016 Global Meetings and Events Forecast” from American Express, room rates are growing by 4.3 percent annually.

Today, demand for function space for business events is growing at up to quadruple the rate of supply, with the daily cost per attendee increasing by a whopping 4.5 percent.

With the addressable market for event hosting estimated to be $5 billion worldwide across the hospitality sector, the opportunity to drive revenue growth and profitability through group sales and catering has never been greater. For mid-size and large hotels with function space assets, between 25 and 50 percent of revenues can come from the group and events business.

According to research conducted by Starfleet Research in partnership with Oracle Hospitality, no hotel operators at mid-size and large hotels have seen their events revenue decline over the past five years while almost half (45 percent) have seen “significant” or “dramatic” growth. More than one-third (40 percent) report that their events revenue has increased by more than 25 percent.

With this upsurge in demand, the lead times for attendee registration and venue contracts have shrunk considerably. In fact, some hotels in high-demand markets are no longer willing to hold event space without a nonrefundable deposit when responding to availability requests.

According to various sources, the average lead time is currently 18 weeks in North America and only slightly less in parts of Europe. Increasingly, event planners are having to work far in advance of the event date to secure desirable properties.

Many hotel and resort properties now have the clear upper hand in group sales negotiations. Hotels and resorts with function space may well have an opportunity to boost their overall property revenue, given the escalating demand for function space and the fact that many of them have already maximized the value of their guest rooms through sophisticated revenue management capabilities.

Success in optimizing sales and catering management performance generally starts with a next-generation technology solution that can empower hotel personnel. Such a solution can be a real game-changer for those hotels, resorts and conference centers with function space inventory that is consistently underutilized or not otherwise living up to its full potential in terms of revenue contribution.

By employing rules-based algorithms to calculate maximum capacity timeframes for function space inventory, for example, the technology can optimize for profitability in situations where multiple event organizers are vying for the same space at the same time.

From an economic perspective, it might not make sense to book 25 people in a salon room for a Saturday night dinner when the event is more than 90 days out. A larger, more profitable booking opportunity may be likely to emerge in the interim. The solution, therefore, might recommend declining that initial booking opportunity.

Sales managers need to be able to quickly and easily make these types of decisions based on an analysis of available inventory and timeframe. They need to be able to quickly price inventory and, if appropriate, block it.

A next-generation solution can maintain a tabulation of all function spaces within properties, manage combinations of function spaces, allow for overbooking, interact seamlessly with event sales, and record and manage the booking of group guest rooms.

Given both the challenges and opportunities, there is no excuse for hoteliers that fail to harness the power of next-generation technologies to maximize group sales revenue and run their function space businesses as effectively as possible.

Hotel Technology News Partner Event

Featured EBOOK