“It’s not uncommon that hotels make the decision that it doesn’t make financial sense to keep the fifth star and to instead reposition the hotel,” says Mark Woodworth, president of PKF Hospitality Research. “Within the next six months, we will likely see owners of very high-end hotels starting to reposition to a lower price point.”

Smith Travel Research shows the average daily room rates at luxurious hotels dropping 16 percent to $245.13 with prices for mid-range hotels down 13 percent to $87.12.

Mobile Travel Guide’s specific requirements for five-star hotels include “an exceptionally distinctive environment offering consistently superlative, personalized service.”

By M.J. Blank

If you’ve ever dreamed of upgrading your venue to a three- or four-star hotel, wished for a break on attrition fees, or imagined taking your annual conference to a city that seemed out of reach, this might be the time to make dreams like these come true. The lodging industry is suffering, and hotels are seeking groups that they might not normally bother with to fill empty rooms. For hotels, it’s the perfect storm: Just as the faltering world economy has slashed demand for corporate travel, worried consumers have cut back on leisure travel and a large number of new hotels that had been under construction are opening their doors, adding to a market that is already saturated in many areas.

“The combination of a weak economy and rising levels of supply have caused one of the deepest and longest recessions in the history of the domestic lodging industry,” a study earlier this year from PKF Hospitality Research concludes. PKF expects this year’s revenue per available room—a measure of a hotel’s health—to decline 13.7 percent, making it one of the worst years since 1930. “And we’re not at the bottom yet,” says Mark Woodworth, PKF Hospitality Research president.

With revenues off, many more hotels are likely to have trouble servicing their debt, and to make matters worse, hotels have lost value along with residential real estate. Not surprisingly, lodging closures and bankruptcies are projected to rise.

For meeting planners, this scenario suggests opportunities—and caution. “This is one of the most attractive buyers’ markets that we’ve seen since 2002,” PKF’s Woodworth says. The increase in supply and the decline in demand for hotel rooms should combine to push room rates down, and hotels are likely to dangle incentives to bring the business in. And for business already on the books, hotels interested in maintaining long-term good relationships with groups are more likely to bend a bit on attrition.

One simple reason associations and faith-based groups may seem be more valuable now than ever: They’re still holding meetings. “Associations and religious groups are still signing contracts,” says Gus Vonderheide, vice president of group sales for Hyatt Hotels & Resorts. Their numbers may be down a bit, but they are still traveling. But regardless of the economy, faith-based and other non-corporate groups are valuable because they fill rooms during off-peak times such as weekends and holidays.

Sandra Schutrop, religious sales manager, worldwide accounts for Hilton, says in today’s buyer’s market convention and visitors bureaus from larger cities are wooing faith-based groups, and rates in some cases have dropped to a more affordable level.

Holiday Inns’ parent, IHG, recently reorganized and beefed up its national sales force, creating a division specifically devoted to the religious market. “We have always had a significant presence [in this market],” says Mike Fegley, IHG’s vice president for global sales for the Americas region. “But we never had someone who went to bed at night and woke up thinking about religious meetings. We’re excited about that.”

Let’s make a deal

Lodging chains and management companies with empty meeting space and guestrooms are trying a variety of techniques to get business on the books and to keep current clients happy.

First off, don’t expect to see deep discounts across the board on room rates. Given their cash-strapped situation, slashing rates is understandably not the preferred method of winning the business. These days, it’s more common to see hotels throw in freebies such as bumped-up frequent guest program rewards, coffee breaks, or a manager’s reception to sweeten the deal.

At the corporate level, some hotel companies are looking at the big picture, and they are more inclined to give planners a break when they sign contracts for multiple meetings or locations in the future.

Hyatt recently rolled out a multiple meetings program that rewards larger groups booking multiple events in some of its largest hotels. Rewards including frequent guest program points, complimentary meeting space, rebates on guestroom revenue, complimentary board meetings and more.

Similarly, Hilton has introduced a “Book Now and Save” promotion. For meetings before March 31, 2010, the company is offering a menu of incentives, including complimentary room ratio of 1 per 35 group room nights, 25 percent allowable attrition, double Hilton HHonors base points for attendees, complimentary staff meals for up to four staff members, a 2 percent rebate on guestroom revenue, and 500 Hilton HHonors Event Planner bonus points per paid group room night. Depending on the number of room nights, a planner can select up to three of those incentives.

Marriott International, meanwhile, rolled out a promotion package called Marriott Meetings Matter, valid at more than 1,200 properties worldwide. Available through March 2010, the promotion includes a 25 percent allowable attrition rate, up to 50,000 Marriott Rewards bonus points per event, one complimentary room for every 35 hotel rooms booked, and a 2 percent rebate on the master bill for meetings that have at least 100  cumulative room nights booked in the promotion period.

Gaylord Hotels offers incentives on a case-by-case basis. “Each group has its own criteria that are important. So, rather than saying we’ll give them free coffee breaks—which may not mean anything—we’ll customize our offer,” says Randy Miller, vice president of sales at the Gaylord Opryland in Nashville.

One area of special concern to faith-based groups, other than room rates, is food and beverage, and food costs have risen faster than inflation in the last year or so. Despite that increase, hotels that typically host at least some non-corporate groups understand budget-conscious groups and try to work with them. “If you come in with a budget, we’re not going to throw a menu at you and say ‘this is what we have—take it or leave it,’” Vonderheide says. “We will work with your budget.”

Damage control

During these uncertain times, attrition clauses are a source of anxiety for many meeting planners. Hotels have tightened those clauses since 2001, when attendance at many group events fell off precipitously following the September 11 terrorist attacks. “The long-term trend is that hotels know it’s a cyclical industry and they want to maintain the long-term business, so they’ll waive fees,” says Robert Mandelbaum, director of research information services for PKF Hospitality Research. In the short term, cash-strapped operators may not be so lenient. “Right now, any cash is good cash. This year, hotels might try to enforce the clauses and sacrifice the long-term business.”

Earlier this year, Omni Hotels announced that it would waive attrition fees for smaller events booked by June 30 and held this year. More commonly, hotels are dealing with attrition on a case-by-case basis. “It’s a daily conversation,” says Gaylord’s Miller. “We’ve got pretty solid contracts. Sometimes they pay, other times we’re getting their business at other times of the year.” Another common tactic is to ask groups to spend more on food and beverage to compensate for the lost guestrooms revenue, although faith-based groups are less likely to find the value in this option.

“Hotels have been a lot more flexible in 2009 and going into 2010 relative to attrition,” says IHG’s Fegley. “It is a buyer’s market for meeting planners in many markets, but not all,” he adds.

At Hilton, Schutrop says a lot of hotels are negotiating with 2009 groups and sometimes dropping room block numbers. “They understand that in times when there is hurting across the board, it’s time to make sure you don’t lose your clientele,” she notes.

Creating a win-win with hotels

There are right ways and wrong ways to approach and negotiate with hotels. Here are some tips from the front lines:

• A good request for proposal, including your group’s history (how many attendees, room rates, locations) from past conventions, will steer the hotel toward dates and rates that are more in line with your expectations.

• Take advantage of hotel chains’ help. IHD runs a 24-hour hotline for meeting planners that takes more than 100,000 calls a year, and Marriott provides “Meetings Excellence”online tutorials on its website. Marriott.com also has electronic tools such as space and budget calculators, online rooming and group lists, custom web pages for groups and step-by-step guides for everything from planning to post-meeting follow-up.

• Prioritize. What’s a deal breaker (or maker) for your group?

• These days, if you can schedule multiple meetings or conventions with one company, you are more likely to get a break.

• Finally, Hilton’s Schutrop says, remember that “no question is a dumb question.”

By Regina McGee

Sitting in her office on the sixth floor of the Unitarian Universalist Association’s headquarters office in downtown Boston, Janiece Sneegas, director, General Assembly and Conference Services, recalls her first year with the UUA. It was 2002 and the country was still recovering from 9/11 and a recession that had severely curtailed travel. Hotels were hurting for business and heavily discounting rates.

“We had signed a contract [four years earlier] for a $189 room rate for a meeting here in Boston in 2003, but you could go to hotel.com and get a very good room across the street for $129,” she explains. The upshot? The UUA was looking at attrition penalties topping $1 million, with hotels unwilling for the most part to work with the UUA to renegotiate rates. Ultimately, the association ended up owing between $300,000 and $400,000, most of which was paid off through agreements to book future meetings.

“That meeting made a very significant impression on me,” Sneegas says. “I have worked very hard not to sign contracts so far out that we get caught in an economic crunch.” Now the UUA tries to sign contracts two years out from its General Assembly date instead of four or five, but the economy has a way of catching everyone by surprise, as recent months have shown.

Recession Far Reaching

The sharp economic downturn in the last quarter of 2008 has affected a wide swath of businesses and organizations—including many churches and denominations that have seen their investment portfolios suffer and contributions decline. In March, UUA leadership announced plans to address expected budget shortfalls for 2010, including staff and travel cutbacks, merging departments, a salary and hiring freeze, and moving some print publications to digital versions.

Sneegas says a the General Assembly department (Sneegas and three assistants) is likely to morph into the Office of Conferences, which would handle the negotiations and logistics of most off-site meetings. “We’ve been moving in that direction for some time. There are a lot of variables to consider,” she explains, adding that the association has undertaken a survey to find out more accurately “what the universe of UUA meetings is, because we don’t even know.”

It’s not a great time for any meeting planner to be worrying about attrition penalties, but for Sneegas there is the comfort of having instituted changes since 2002 to help with that concern. For one thing, the group tries to negotiate the most favorable attrition clauses possible, asking for 25 or 30 percent slippage. For another, UUA hotel contracts for upcoming General Assembly meetings include a clause that ties the negotiated group rate to rate trends prior to the meeting.

So far, registration for the UUA’s 2009 General Assembly meeting in June in Salt Lake City is healthy, Sneegas reports. The meeting will involve election of the new UUA president, as well as a review of the organization’s core beliefs (its Seven Principles and Purposes) — both of which will help drive attendance, she believes.

Cost-cutting steps already taken include big savings in printing and paper by eliminating paper usage wherever possible. Marketing has also been trimmed and the childcare program has been reduced by a day. The UUA is also offering a very affordable option of dorm rooms at the University of Utah, where individuals can stay for $225 for five days.

“We’re always very conservative about our room block. And we’re doing every thing we can to keep the meeting affordable and trim costs,” Sneegas says. A big part of that effort is tied into the UUA’s green meeting practices.

Committed to Green

When it comes to green meetings, the UUA has been a leader not just among faith groups but within the wider world of meetings. Last year the UUA won the silver Green Meetings Award for its 2007 General Assembly meeting in Portland, Oregon. The prestigious international award is given by IMEX, the International Hotels Environment Initiative, Oceans Blue Foundation, and the Green Meetings Industry Council to organizations and meetings groups that have demonstrated a commitment to sustainable practices.

“I wasn’t excited about green meetings at first. Like many religious conference planners, I felt that we had our work cut out for us in just
negotiating an affordable meeting.” But the UUA Ministry for Earth (as it is now called) convinced her that “we need to be walking the talk,” that green meetings are part of the UUA’s core beliefs, specifically the group’s Seventh Principle, which talks about the inter-related nature of all of creation. The UUA worked with Meeting Strategies Worldwide to put their faith into action.

Today Sneegas serves on the board of the Green Meetings Council and on the Convention Industry Council’s APEX commission charged with developing sweeping standards for green meetings. She believes there is both a business case and a mission-based case to be made for why faith-based groups need to start making changes that will result in meetings that are more environmentally friendly.

“Smart meeting planners know that thousands of dollars can be saved by instituting green meeting practices to cut waste and consumption,” she says, noting that the UUA has cut is printing budget for the General Assembly by a third. “Many convention venues and hotels are also aggressively pushing recycling and energy-savings initiatives, as well.”

But the recession is going to impact how cities and venues can maintain these practices. “It’s hard to imagine that the economy won’t affect sustainable efforts in some form,” acknowledges Sneegas. “We’re hearing, for instance, that Salt Lake City doesn’t do glass recycling anymore. We’re still in negotiations about that.” (The city will continue glass recycling, Rejuvenate learned at press time.)

For faith-based groups, Sneegas believes the obligation to go green is much deeper than simply good business practice. “Every world religion has within their mission something that has to do with their relationship to the earth, something that says we are stewards of the earth. Go back to your core beliefs. This is the right thing to do.”

A passionate involvement in social-justice issues has  always marked the Unitarian and Universalist churches (which united in 1961 to form the Unitarian Universalist Association). It’s also true that the UUA’s being on the forefront of many liberal social issues can present meeting planning challenges. One example: At last year’s General Assembly meeting in Fort Lauderdale attendees were required to show government-issued identification to be admitted to convention center. (The building is located in the Port of Fort Lauderdale and thus is required to follow Federal security guidelines.)

Some UUA members objected in principle to the requirement to show government-issued ID, saying it would discourage anyone without such ID, such as undocumented workers, from attending the event. Attendance at the General Assembly dropped significantly from the year before, in part as a result of the ID policy.

“UUA members are a passionate, educated, socially conscious group of people,” Sneegas says.  “So saying, we better practice what we believe when it comes to our meetings.”

Pendulum Swings

The upside of the recession for faith-based groups is that their meeting business is being  pursued with a new enthusiasm. “We’re getting cold calls from destinations and hotels all around the country,” says Sneegas.

“There is more interest because they know that religious groups are by and large mandated to meet by their bylaws,” she continues. “And another piece of it is that with religious meetings, people come together to support one another and to lift each other up in difficult times, so religious meetings are going to happen in a weak economy whereas corporate meetings may not.”

She is particularly impressed with the new advisory board for faith-based meeting planners formed by the Greater Phoenix CVB. The advisory board met for the first time in October. Focusing in this way on the religious conference market is a great strategy, Sneegas maintains.

“One of the things I realized at the advisory board is that faith-based meeting groups tend to follow each other around the country—to destinations that have the facilities we need and that are attuned to things most important to us.” She adds that religious conference managers are invaluable resources for each other.

“Planners have long memories. We share stories with each other, and if something happens in a city that is negative or that is wonderful, word gets around.”

Photography by Jenn Gyles