Unlocking the Potential of Group Sales and Catering

A Hotelier’s Guide

Unlocking the potential of group sales and catering: A Hotelier’s GuideA Tnooz Report sponsored by CendynAuthor: Martin Cowen Design: Sensical Design & CommunicationCover image: Jacob Lund/stock.adobe.comPublished in 2018 by Tnooz, owned by Sparrow Media, PO Box 632, Sherman CT 06784

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ContentsIntroduction / 2

State of the market / 3

The value of groups / 4

Demand and occupancy for groups / 4

Personalization inside groups / 5

Vetting group prospects / 6

The hotel forecast for groups & events / 6

Mastering speed and specificity in RFPs / 7

Trends in groups: What’s buzzing / 8

Creating the group sales playbook / 9

Technology and competitive forces for groups / 9

Great expectations: Winning over group stakeholders / 10

Mindfulness: The big picture for groups ahead / 10

Group business for hotels

is strong and looks set to

continue its rise. At the

property and chain level, the

potential to increase revenues,

drive loyalty and enhance

reputation is starting to be

fulfilled, but this report will give

an idea of what else can be

achieved, and how the industry

can maximize the value of this

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IntroductionTo fulfill the potential uplifts, group sales and catering teams need to be aware of the many moving parts. The various internal and exter-nal influences—such as demand and supply, customer preferences, operating costs, com-petitive landscape—have aligned with each other and now have a resonance in unison as well as isolation.

Increasingly, technology is there to help hotels address these influences and data is at the heart of many decision-making processes. But as most hoteliers realize, data-driven decisions still require humans, on property, to deliver what has been promised.

From the meeting planner’s ability to ensure that the buffet can cater to vegans, to the housekeep-ing department being made aware that Room 456 has booked a late check-out—the hotel

experience will ultimately be judged by what happens on-property, in the real world.

The layers of complexity which have emerged over the past decade, if not the past twelve months, are inspiring hoteliers to think dif-ferently about every aspect of their business. Group sales and catering is being transformed by technology and by the role it plays in the everyday personal and professional lives of the planners, attendees, corporate buyers, IT part-ners and the front-desk staff.

In this report, we will look at how group sales and catering has become a significant revenue generator and profit center for hotels, how consumer-facing concepts such as “telling the story” and “personalization” are changing the game and how technology is helping to tame the complexity it was partly responsible for creating.

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2 UNLOCKING THE POTENTIAL OF GROUP SALES AND CATERING: A HOTELIER’S GUIDE

State of the market For group sales and events, it’s a sellers’ market in the favor of hotels.

PwC’s 2018 Q2 Hospitality Directions report leads with the statement that: “Stronger economic indicators in Q2, coupled with accelerating group demand, suggests sustained momentum for the lodging sector through 2019.”

Marriott International group bookings are sufficiently strong for president and CEO Arne M. Sorenson to tell the market in its 2018 Q2 statement: “In North America, solid group business allowed us to drive higher room rates in the quarter.”

In North America, the American Express Global Business Travel 2018 Global Meetings and Events Forecast report predicts the greatest increase in group hotel rates across the survey regions, at 3.5% in the US and 3.0% in Canada for 2018.

The macro environment is also helping hotels— the correlation between global GDP and business travel is well established and a strong economy is usually a positive backdrop for travel. The IMF’s latest World Economic Report, published in July, expects global GDP to grow this year and next by 3.9%.

The strongest indication of the overall health of the market comes from STR. This June was the 100th consecutive month that RevPAR across the US hotel marketplace had increased.

This positive macro environment feeds into the growth profile for group sales and catering.

Looking into the future, airline industry trade body IATA believes that global travel, when measured by the number of air passengers will double from current levels to reach 7.8 billion by 2036.

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The value of groups

Demand and occupancy for groups

“Group business” is a catch-all phrase which has been applied by the hotel industry to block-bookings. But a group of 10 staying at a 30-room boutique hotel in Key West to celebrate someone’s 40th birthday weekend has a differ-ent set of demands and requirements from 1,000 delegates attending a three-day convention at a big box property in Las Vegas. The cost to the property of servicing different types of groups is different, as is the potential profitability.

While the theory between groups varies, there are some constants in the practice of securing the business in the first place and in delivering on what has been sold. Identifying groups which are most likely to convert after receiving the response; anticipating the upsell, cross-sell and repeat booking opportunities; calculating the potential impact on rates once the group’s rooms have been allocated—all feed into an increasingly important and business-critical conversation.

The conversation is also wider within the prop-erty as different departments work more closely together. Silos are slowly becoming a thing of the past—data sharing between departments has been facilitated and enhanced by technology, with this co-operative mindset applicable across

The value variance with groups is of interest to Rodd Herron, Vice President of Sales Develop-ment and Events at Cendyn. He believes that one of the great untapped opportunities in hotels is off peak season that all hotels suffer in terms of demand and occupancy.

“During any off-peak season for groups, regard-less of how that varies by region, it’s tough, but there is some business to be won,” Herron says. “Hotels have a dilemma—drop the rates, win the business purely on price and see the revenue

come in. Or hold rates and miss out on the business. The problem is that if a hotel lowers the rates, it will be very difficult for it to raise them again—the pricing expectation for this particular group has been set.”

The demand patterns within the low occupancy period can be revealing. While groups might be slow, leisure might be strong—is there any value in keeping availability for high-margin transient groups rather than undersell it to one-off group bookings? For many hotels, the answer is yes.

all sizes of hotel. The collaborative approach is often reflected in corporate structures and reporting lines.

But before department heads can get together to discuss projections and profits, properties need to assess the value of visitors comprising the group. At the risk of oversimplifying—the 1,000 delegates at the Las Vegas convention might be using their expense accounts to buy contacts or colleagues drinks at the bar which is good for operating income. However, as the planners probably will have booked a buffet for lunch, it’s important to factor in all the revenue streams with events and groups, both individual transac-tions and group purchases, when evaluating their value to the hotel.

Beyond purchases, there’s also intrinsic value in brand mentions and digital praise from smaller groups like the 40-something’s birthday week-end in Key West. The immediate pay off may not hit the ledger, but what is the value of their social media activity, talking about how welcoming the hotel staff were and what a perfect spot it was for such a group outing? For hotels, this earned credibility online is priceless in earning new business from future like-minded groups.

4 UNLOCKING THE POTENTIAL OF GROUP SALES AND CATERING: A HOTELIER’S GUIDE

Personalization inside groupsHerron was also interested in giving a presonali-zation angle for individual guests inside a group, providing a clear example of what value can be missed if different departments do not talk to each other. “I was recently traveling as part of a group stay at a resort which has a golf course and marina. I was interested in the latter, but all the communications and marketing material to me was based around the golf. If they had referenced my profile that wouldn’t have hap-pened. The hotel missed out by trying to sell me tee times and not offering anything related to my interest.”

Upselling and cross-selling are part of 21st century ecommerce—no-one bats an eyelid when Amazon or Netflix suggests things you might like based on your past purchases or what other people have bought. Just because a guest is part of a group stay, that doesn’t mean hotels

can’t offer unique room upgrades, meal options, spa treatments, even activities with third party partners based on an individual profile at a personal cost. Hotels need to embrace this more comprehensively while being aware that one of the reasons Amazon and Netflix upsell so effi-ciently is that the suggestions are appropriate. With so much data available to hotels there is no excuse for mis-selling, like the boat-not-golf disconnect mentioned previously. Increasing profits for groups with guest personalization models can expand revenue potential.

This is an important factor in the value of groups.

Hotels, like every other business, need to turn a profit. Thinking about the value of groups rather than the room rate they can be charged is a fresh way to approach this dilemma and technology is helping to make “value” into something concrete that can be integrated into pricing decisions.

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Vetting group prospects Identifying “the value of groups” is important, but hotels need to secure the business in the first place for the value to lead to profitability. Sophisticated data analysis comparing which groups represent the biggest opportunity for a property are rendered meaningless until a contract is signed.

Creating a more efficient way to win business is arguably where technology has had the biggest impact on group sales and catering. There are many tools on the market which claim to be able to automate responses to RFPs (requests for proposals) but simply “automating a response” is not enough. The response needs to accommodate the exact requirements of the RFP; it needs to be priced in a way that is competitive but profitable;

it needs to not only answer all questions in full but also pre-empt and answer any follow-up ques-tions which might be bounced back.

Technology can help take automated responses from the generic to the specific, but in a way, technology has also contributed to the problem. Herron referenced the phenomenon of “RFP spam”—where planners often send RFPs to a database of properties with minimum filtering.

Hotels often have no way of identifying a spam RFP from a genuine expression of interest. If identifying the value of visitors is on the agenda, so too is identifying the value of an RFP. The delivery of an automated response to a spam request does nobody any favors.

The hotel forecast for groups & events • Group hotel sales on the rise: “Stronger

economic indicators in Q2, coupled with ac-celerating group demand, suggests sustained momentum for the lodging sector through 2019.” (PwC Hospitality Directions)

• Higher room rates for groups: In North America, solid group business allowed us to drive higher room rates in the quarter.” (Arne M. Sorenson, president and CEO, Marriott International, 2018 Q2 earnings statement)

• Demand for meeting space set to in-crease: Global hoteliers predict an increase of almost 4% in the demand for non-tra-ditional meeting facilities throughout 2018. Group hotel rates will increase 3.5% in the US for 2018. (American Express Global Busi-ness Travel 2018 Global Meetings and Events Forecast)

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6 UNLOCKING THE POTENTIAL OF GROUP SALES AND CATERING: A HOTELIER’S GUIDE

Mastering speed and specificity in RFPs Fortunately, there is tech which can help hotels recognize genuine leads and which can help calibrate their response. The drive towards au-tomated responses may be in direct response to research which has benchmark status—namely that 70% of first responders get the business. The secret for hotels is to square the circle between speed and specificity. Today’s solutions mean that the two ideas are not mutually exclusive.

The layers of data which need to be integrated into a response are not static, and change in response to corporate, consumer and macro-economic trends. Sustainability questions which once focused on a venue’s carbon off-setting policy are today likely to want a statement around single-use plastic. In-room entertainment queries have been replaced by internet connectivity speeds. Availa-bility of taxis to and from the hotel will instead be replaced with questions about Lyft and Uber.

Of the many questions currently featuring in RFPs, a property’s catering offer is growing in importance. An interest in wellness, the current attention given to food tourism, the zeitgeist around “local experiences” are some of the consumer-facing factors in play here.

The opportunity for a hotel to differentiate by incorporating details about its food offering are facilitated by technology, and one area of focus is rich content. This phrase from the early days of ecommerce is now prevalent again. Food photography is an art in itself, and while there is a cost to bringing in a professional food photographer, the return on investment makes it worthwhile.

Rodd Herron strongly believes that rich content can help a hotel tell its story, and this lei-sure-leaning phrase is applicable to group sales. But he insists that it is not just about imagery.

“Any response to an RFP should include profes-sional imagery of the food offering but there is more that can be done, but departments and datasets need to talk to each other. The planners should know about the chef’s training, his awards, his specialty dishes. If the bartender has created a bespoke cocktail, include that. Millennial planners in particular want something different when a hotel gets back to them. Rates and dates work for some people but there is a shift towards decisions based on different parameters.”

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Trends in groups: What’s buzzing

• Sustainability: No single use plastic or straws for catering

• Signature cocktails and chef inspired meals for events

• Ride sharing: Uber, Lyft, bicycles and scooters

• Roof-top dining and gatherings

• Off-site group activities ‘live like a local’ near hotel

• Wellness integration: group yoga, stretching, exercise in schedules

8 UNLOCKING THE POTENTIAL OF GROUP SALES AND CATERING: A HOTELIER’S GUIDE

Creating the group sales playbook

Technology and competitive forces for groups

The influence of consumer sentiment is also bringing presonalization into the group sales playbook. Cendyn CEO Charles Deyo is convinced that presonalization is a way that hotels can differentiate themselves and reduce the risk of becoming a commodity. In an inter-view, he said that 62% of guests are willing to pay more to a business which gives them a personalized service.

It follows that meeting planners might be willing to pay a premium for a property which responds to an RFP in a personalized way. Charles Deyo insists that technology has a vital role to play here in making sure that the response is targeted and appropriate.

It goes without saying that technology has changed the hotel industry. The emergence of metasearch engines is the most obvious mani-festation of technology’s disruptive influence on established patterns. Ironically, OTAs are now hand-in-hand with hotels facing the disruption brought about by Airbnb and the alternative accommodation category.

Airbnb has grown from a flat sharing site to a global accommodation business with other prod-ucts such as experiences and a bespoke unit for business travel. It has used technology to build a platform, to empower its hosts and to attract customers. Tech has allowed a business which owns very few assets to become a giant in its field and front-of-mind for many travelers.

The nature of how the technology industry operates has also allowed Airbnb, like the OTAs in their early days, to invest large sums of venture capital in marketing, staff, tech and product. It has been able to build the top-line without having to be overly concerned with the bottom line.

And as mentioned above, the response needs to be quick. An HSMAI working group which met just under a year ago noted a trend towards a shorter booking window for meetings. This ups the ante for the group sales technology platforms—with even less time for the planners to decide which hotel to use, the speed of response imperative becomes even more intense, as does the need for that response to be accurate and informative.

If hotels can master speed and specificity, with a rich content led approach then the profit profile for group sales will be positive.

Group sales are to an extent shielded from the Airbnb influence because there are very few Airbnb properties which can accommodate 1,000 people for a convention in Las Vegas. Smaller group business is more vulnerable, but there are still many aspects of the group experience that hotels can deliver more effectively than the alternative accommodation sector.

Airbnb however, has shown that it can adapt its model, and hotels with a large group revenue stream should not be complacent.

Providers of group sales and catering technology, such as Cendyn, are inspired by the challenges in the market to develop products and services which give hotels the edge. Robin Deyo co-founded Cendyn some twenty years ago and recognized the potential that the technology of the time had to transform the group sales space. In an interview with tnooz she said that “We’ve been in tune with the group sales market for some time,” explaining Cendyn’s first set of products were eProposal, eMenus and eBro-chure—products to help hotels sell to groups.

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Great expectations: Winning over group stakeholdersTechnology has changed, but so too has con-sumer expectations around technology. In group sales there are several stakeholders, each of whom has their own sphere of reference when it comes to technology. Meeting planners, espe-cially Millennials, have been brought up on a diet of instant access and direct bookings; members of the group expect a personalized experience before during and after the trip; the employer organizing the meeting expects a depth of data, in real-time, to quantify the return on their spend.

The list of requirements from the interested parties is exhaustive.

To meet this challenge, hotel IT systems have become more sophisticated, not just in the under-the-hood technology plumbing, but also in pricing models. One of the many recent changes in the hotel group sales IT landscape is the availability of tools which allow small and medium-sized properties access to a similar scale of tech innova-tion as their better resourced larger peers.

Mindfulness: The big picture for groups ahead Having said all this, Cendyn is absolutely aware that one of the most important aspects of technology is the mindset of the teams using the technology. The importance was highlighted in a tnooz interview with Charles Deyo. He referenced a meeting with a potential new client in which the head of human resources attended. The HR person explained that there was a significant change management component to introducing new software, not just in terms of training staff on what buttons to press, in what order, but in changing the employee perception to buy in to the bigger picture of what the new system can do and why.

For hotels to really maximize group sales, the key will be ensuring their staff are involved in deci-sions involving technology choices, strategy and process. Systems which are intuitive are easier to train staff on and can create a more confident and

engaging on-property workforce. Front-line staff, who deal with groups or are part of the catering team, have valuable hands-on experience. Their input should help frame the future direction of group sales and catering. Similarly, every member of staff has an opinion on how effective—or not—processes are, and these insights need to be aggregated and analyzed in a structured way, not left to the end of their annual review.

The theory and practice of group sales is con-stantly changing. There are many innovations from within the industry and outside for hoteliers to consider. However, technology is not the answer in itself. It should be seen as a way to improve a hotel’s relationship with planners, guests, investors and, most importantly, staff. The personal touch is often identified by tech-nology but delivered by humans, and both need each other.

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About the authorMartin Cowen oversees sponsored content for Tnooz, where he’s also a UK-based contributing editor with a focus on B2B distribution and technology and Asia Pacific trends.

About TnoozTnooz covers the global digital travel economy, especially how new technologies and start-ups impact distribution and marketing. Sign up for our daily newsletter at Tnooz.com.

About CendynCendyn is a cloud-based software and services provider that develops integrated technology platforms for driving sales and marketing performance in the travel and hospitality industry. The Cendyn Hospi-tality Cloud offers the most complete set of innovative software and services in the industry, covering hotel marketing, guest engagement, group sales, and event management. With offices in Boca Raton, Atlanta, Boston, San Diego, Toronto, Whistler, London, Munich and Singapore, Cendyn proudly serves more than 30,000 clients in 143 countries with enterprise spend levels in excess of $1 billion. For more information on the Cendyn Sales Cloud, visit http://bit.ly/2NzaeE8.

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