Hotels Branch Out

Numbers are starting to turn around for hotel companies just as the meetings industry picks up. Here’s what some of the top hotels are doing to attract, impress and keep meeting planners in reach.

By Libby Hoppe

We’re lucky to live in a world with so many options. At the coffee shop, we can choose between a latte, macchiato or cappuccino, blended with heavy cream or low-fat soymilk. We go to the electronics store where LCD and plasma televisions stare back at us from the wall in a number of different sizes and at different price points. We can choose from millions of apps to customize our handheld smartphones. When we travel, we choose ocean-view or atrium-view rooms, queen or king beds, and soft or hard pillows.

The options for types of hotels seem endless, too. Boutique or big-city hotel? Resort property or small retreat? For meeting planners, size, meeting space and amenities weed out some of the options, but navigating the pool of full-service hotel properties can still seem like a daunting task. Despite the wealth of options among hotels, a few multi-brand companies continue to book the majority of the country’s meetings and conferences year in and year out. Five companies — InterContinental, Hilton, Hyatt, Marriott and Starwood — keep giving planners reasons to book their next big meetings with them.

That’s no accident. These companies spend millions of dollars advertising and marketing to association planners and corporate groups. They hire consultants to tell them how to best configure a property to optimize space for meetings. They seek out the best designers and architects and invest money in renovations and repairs, keeping guest rooms updated and meeting space equipped with the latest technologies. They garner feedback from planners and guests in virtual online prototypes. They make the food tastier, the beds softer and the incentives juicier in an effort to get a slice of the $122 billion meetings and events industry.

Like other segments of the nation’s business economy, the hospitality industry took a big hit during the past few years. Annual conferences were canceled. Large meetings at resort properties were scaled down. The words “practical” and “sustainable” took the place of “luxurious” and “high-end.” Some resorts dropped the “r” word from their names. The AIG effect took a big toll on hotel ledger books. Occupancy rates hovered around 55 percent in 2009, according to Smith Travel Research. That number is expected to grow a few percentage points this year. “Demand is improving,” says Mark Lomanno, president of STR, but room rates are not. “That means there is an extremely fragile recovery. With occupancy being the driver, that’s the most tenuous of recoveries to have.”

For large hotel companies, meetings and events will be instrumental to their recoveries. In tough economic times, recognizable names matter, which helps to explain why major multi-brand hotel companies are trucking along, slowly seeing upticks in occupancy and demand. But it takes more than a good name to get business in a competitive market. It takes a strategic plan, good leadership and smart incentives to keep planners coming back year after year. We looked at five of the nation’s major hotel companies to find out what’s new in meetings, what they’re doing to improve the process for planners, and where these companies are headed as they emerge from a difficult 2009 into a more promising 2010 and 2011.

INTERCONTINENTAL HOTELS GROUP

Quick: Name the hotel company with the largest number of guest rooms in the world. It probably wasn’t your first or second guess, and it may not have landed in your top five, but the answer is InterContinental Hotels Group (IHG), which has more than 650,000 hotel rooms worldwide. Surprised? That’s probably because the IHG company as it exists today didn’t form until 2003, even though two of its brands are some of the most recognized hotel names in the world. IHG’s InterContinental Hotels and Resorts brand was founded in the 1940s; Holiday Inn, now its largest brand, was created by American hotelier Kemmons Wilson in the 1950s.

Today, the company is mostly a hotel franchise and management company, controlling seven hotel brands. Its strongest full-service meetings hotel brand is Crowne Plaza, with more than 350 properties globally. The same year that IHG formed, executives launched “The Place to Meet” program, which positioned Crowne Plaza hotels in the competitive meetings market. That program requires that Crowne Plaza hotels do three things: respond to an RFP within two hours and provide a full proposal by the next business day; assign a meetings director to each individual event; and give planners an itemized expenditure list at the end of each day to more easily track budgets. The brand ranked No. 1 in this year’s U.S. Hotel Chain survey among upscale/select-service properties, largely in response to several years of expansions and renovations.

IHG’s InterContinental Hotels and Resorts brand is also doing what it can to attract group business. “We’re committed to providing meeting planners and attendees with even more value during this tough economic time,” says Gina LaBarre, vice president, brand delivery, the Americas, at IHG. As a result, she said, the brand is extending its current meetings promotions through the end of the year at its 55 InterContinental brand hotels in North and South America. That includes the “Up to a Million Bonus Points” promotion offered to Priority Club Meetings Rewards members who book a meeting by Sept. 30 and hold it before Dec. 30. Depending on the size and scale of the meeting, the planner receives up to a million bonus points, which can be used for meeting credits, airline miles, charity donations and more. The other promotion, “10% Off Your Master Bill,” gives planners a 10 percent discount for qualified meetings booked in the same time frame.

IHG’s first-quarter numbers were up globally in 2010, despite less-than-stellar results in America. The company saw strong returns in Asia, though, especially among the Holiday Inn brand, which continues to expand during its $1 billion rebranding campaign. Andy Cosslett, IHG chief executive, appeared cautiously optimistic at the recent New York University International Hospitality Industry Investment Conference. “We know how fast things can turn,” he said. In response to first-quarter numbers, he said, “Business travel is returning, although at this stage mainly to the luxury end of the market, which was most affected by the recession. We expect the more resilient mid-scale sector to benefit from this trend as the year progresses and market norms are reset.”

HILTON WORLDWIDE

If Hilton Worldwide executives were looking for a little optimism, they got it recently when they saw the numbers for group business in 2010. By the end of April, group business was up 7 percent, climbing steadily out of a rut that had year-over-year group business numbers down 15 percent in November and December 2009. That jump in group business is enough to give the 90-year-old hotel company optimism as it looks ahead in 2010.

“It’s not the kind of group we’re necessarily used to,” said Hilton Worldwide CEO Christopher Nassetta at the NYU hospitality conference in June. “And it’s not necessarily altogether the groups we want longer-term: very short-window, small- and medium-sized groups. But that’s where we’re seeing the most momentum.”

The good news comes on the heels of a big move the company made late last year when it changed its name from Hilton Hotels Corp. to Hilton Worldwide after packing up its offices and moving its global headquarters from Beverly Hills, Calif., to McLean, Va., near Washington, D.C. And while that corporate transformation is admittedly to appeal to a growing international market, nobody is disappointed to see group business picking up in the United States and abroad.

Hilton offers three types of properties fit for meetings: convention properties, located in major cities like Houston, San Francisco and Baltimore; resorts, located in ski towns and beach cities in the United States and Mexico; and airport properties near major travel hubs like Washington, D.C., and Los Angeles. Most of these hotels are part of the flagship Hilton brand, but a few fall under the Doubletree, Conrad and luxury Waldorf Astoria umbrellas.

One of the advantages of planning events with a large hotel company is the consistency of its services. Hilton always offers group value rates of up to 30 percent off when booking off-season events. The company’s website has online planning tools and personalized group web pages, which allow planners to manage the guest list and see when attendees book their rooms. Hilton Worldwide incorporated LightStay, a sustainability measurement system, in 1,300 properties worldwide. LightStay helped the company cut its energy use by 5 percent, waste by 10 percent and water by 2.4 percent in 2009 compared to the previous year. The system also uses a meeting impact calculator, which measures the environmental impact of meetings and conferences. It can help planners determine if a meeting at the Hilton Atlanta, for example, would have a greater environmental impact than a meeting at the Hilton Nashville Downtown.

Hilton is one of America’s oldest hotel companies, and news of growth in group business is encouraging to its executives and its investors. But Nassetta recognizes that it’s still a very fragile period in hotel recovery, especially as it relates to groups.

“A couple of bad comments can destroy that piece of business pretty rapidly,” he said.

HYATT HOTELS CORPORATION

Every year, Executive Travel Magazine releases its Leading Edge Award winners as voted by its readers. This year, readers chose Hyatt as the best hotel for meetings, edging out Hilton and Marriott, which settled second and third, respectively. It’s a nice designation but not exactly a shock to a company that has consistently targeted group and business travel.

“Meetings are a big part of what we do,” says Gus Vonderheide, vice president of group sales for the Hyatt Hotels Corporation, which manages, franchises, owns and develops properties in seven Hyatt hotel brands. He says that meetings are “extremely important” to the company as it emerges from the recession. “We continue to believe that we can make a lot more happen in face-to-face interactions.” Hyatt is starting to see a renewed interest in meetings, says Vonderheide, which is good news for a company that admits that the majority of its business comes from groups. “There’s a light at the end of the tunnel,” he says.

The light started to shine a little brighter in May as Hyatt released its first-quarter numbers for 2010. Occupancy rose year over year by 5.8 percent to 64.4 percent. “We have begun to see greater group booking activity,” says CEO Mark Hoplamazian. But, he notes, the company is still seeing short lead times on bookings and smaller-sized groups. Still, the numbers are encouraging for the company that went public less than nine months ago.

Vonderheide says that meetings will play a big role for Hyatt’s bounce back, and the company has instituted a number of new incentives for planners. Hyatt Regency, Grand Hyatt, and Park Hyatt hotels and resorts have added Passkey’s GroupMAX online reservation systems as a standard tool. With GroupMAX, a hotel can create a customized booking website for any event in about five minutes, setting up a site where planners can put event information for guests to access. It also lets the planner know about event updates and inventory conditions. The event-specific booking page allows guests to browse through various guest room options and pick the room type of their choice, still at the group rate.

Hyatt also recently introduced “Meeting Promise,” a program that promises to refund any part of a meeting that’s not up to a planner’s expectations and wasn’t resolved during the event. The company is also sweetening incentives for Gold Passport rewards members and planners who are willing to “go green” during meetings. “We stay loyal to our customers and they stay loyal to us,” says Vonderheide.

Hyatt continues to expand and now has 459 properties worldwide. “As long as we’re putting our best foot forward and showing our customers that we’re committed to them, we’re moving in the right direction,” Vonderheide says. The company’s newest hotel brand, Andaz, adds to the meetings inventory with recent hotel openings in San Diego and New York City, but Hyatt books groups at all property levels. “The groups segment is a very important segment for all of our brands,” says Vonderheide. “We do a good amount of our meetings even at our select-service hotels, Hyatt Place, and from Hyatt Regency to resorts to our Park Hyatt properties. We target our message a little differently for each brand. But we’re out there, talking to customers. We’re trying to give them what they need.”

MARRIOTT INTERNATIONAL

“The numbers are pretty stunning.” Those were the words of Marriott International President and CEO Arne Sorenson last month at the NYU hospitality conference. He was referring to first-quarter occupancy numbers for the global hotel company, which operates or manages 3,400 hotels worldwide among 18 different brands. Group travel numbers were up 1 percent compared to the same quarter last year, but it was association group business that led the occupancy resurgence. “Association meeting attendance took off,” said Sorenson. Room nights for association meetings and events rose 15 percent in that quarter and, as, Sorenson put it, a stunning 50 percent in the final third of the quarter.

Based on those numbers, Marriott is optimistic about the year ahead. The company expects revenue per available room to increase by 3 points to 6 percent by the year’s end. What that means is that room rates may finally pick up as occupancy increases. “We truly rely on our brand, our culture and our delivery of services,” says Luis Lamar, vice president of sales, convention and resort hotels, the Americas. In terms of space, Marriott is the largest company in group travel and offers the most meeting and convention space in the United States. “We always maintain a focus on the meetings market,” Lamar adds.

Last year, Marriott underwent a corporate restructuring in an effort to improve regional knowledge and markets. Leadership became decentralized, dividing the company into four continental regions — U.K./Europe, Asia Pacific, Middle East/Africa and the Americas. Each has its own president and operates independent of the others. What that’s done, says Lamar, is allowed each division to focus more on its regional product, responding to market conditions and adding more structure in each segment.

Under the restructuring, Marriott also assumed more control of the luxury Ritz-Carlton brand, which topped the U.S. Hotel Chain Survey for deluxe properties. JW Marriott properties ranked highest in that survey for group travel arrangements and facilities for resort meetings in the upper upscale segment, followed closely by Marriott’s Renaissance brand.

Sorenson is confident about second-quarter numbers, which will be released in mid-July. Preliminary numbers for May show revenue per available room up 9 percent compared to last year in North American company-operated properties. “I’m wildly optimistic,” Sorenson said during a panel at the hospitality conference. He remembers the conference following 9/11 when CEOs thought it would never get worse than it was then. They were wrong. Numbers in 2009 were worse. But, he added, “Occupancy and demand are coming back and that bodes well for the next couple of years.” Rates are slowly coming back, especially at full-service Marriott hotels that cater to large groups and events.

The company recently launched the Innovention Network, a collection of about 60 convention properties committed to making meetings easier. The network has adopted a new streamlined billing system and meetings website. The website allows planners to search for properties by amenities rather than location. For example, a planner may not know if he wants to take his group to Seattle or to San Antonio; instead, he can search for properties by the amount of meeting space he needs, peak rooms required or largest ballroom necessary. The planner can further narrow the search by selecting golf or spa amenities. “Our customers have told us they really want anything that will save them time. They want easy-to-understand billing and someone to support them through the process; they don’t want to repeat themselves year after year,” says Lamar.

In an effort to maintain that repeat business, all hotels in the Innovention Network have access to past records so event management representatives at new properties aren’t starting from scratch — and neither are planners. More than 50,000 rooms are part of the network, totaling more than 4.5 million square feet of meeting space worldwide.

STARWOOD HOTELS AND RESORTS WORLDWIDE

What’s the price tag attached to overhauling one of the world’s powerhouse hotel brands? For Starwood Hotels and Resorts Worldwide, it’s $6 billion. That’s how much the global hotel company invested in revitalizing the Sheraton Hotels and Resorts brand. Sheraton makes up close to 50 percent of Starwood’s total rooms, so the improvement campaign is important to the growth of the company as it emerges from a sluggish 2009.

In May, Starwood announced it would get rid of eight properties that do not meet the new Sheraton brand standards. Those hotels are in addition to the 36 properties the company already removed from its register. The revitalization effort, which started before the economic downturn, is yielding some positive results for Starwood. Customer satisfaction is up, as is satisfaction among meeting planners. “The brand’s all-time high guest satisfaction scores is a direct result of the extraordinary work we’ve invested in rebuilding Starwood’s most global and storied brand,” says Hoyt Harper, global brand leader for Sheraton Hotels.

Sheraton Dallas opened last September following a $90 million renovation, and Sheraton Denver Downtown followed suit two months later after owners invested $70 million in its renovation. New brand standards include Wi-Fi-enabled lobbies and lounges, flat-panel televisions and modern design. Some of these Sheraton properties are part of the Starwood Convention Collection, which includes 32 of Starwood’s biggest and best convention center or meeting properties in North America.

While Starwood invests in renovations and improvements at some of its largest properties, it’s also investing in a greener culture. The company has created a Sustainable Meeting Practices initiative for all North American properties. All sales proposals, room lists and reservation cross-check documents have gone paperless. Hotels are using LED signage and white boards. Recycling bins are in all meeting spaces. Leftover food and drinks from events are donated to local groups. Attendees can take part in volunteer opportunities with Starwood’s help. The practices will extend to global meeting properties next year.

“Developing sustainable meeting practices was a year-long process to determine how to meaningfully incorporate sustainability into our meeting practices while maintaining a superior guest experience and keeping costs low for hotels, meeting planners and clients,” says David Dvorak, Starwood’s vice president of catering and convention services.

Starwood owns and manages properties in its nine hotel brands, which include Le Méridien, Westin, St. Regis and W Hotels, in addition to its Sheraton and Four Points by Sheraton properties. It also has expanded its reach into the boutique hotel industry with new brands such as Element and Aloft. Like other hotel companies, Starwood saw encouraging numbers early in 2010, with revenue per available room increasing 2.8 percent compared to last year at North American properties. Occupancy increased almost 6 percent. With its revitalization efforts in its Sheraton brand and a focused commitment to green practices, Starwood is betting that the meetings industry continues to grow this year and moves in a greener direction.

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