Friday, March 13, 2009

Third Annual MSR Partner Forum

On march 12th, I attended the Meeting Sites Resource Partner Forum in Anaheim. Tim and Jennifer Brown and their son Rob Wilson have built a great site selection company, and they hosted a first-class event. Because Certain is focused on the meeting planners' perspective, it was interesting for me to see the events industry from hoteliers' viewpoint. I also enjoyed seeing the new features for hotels in Meeting Evolution, their new web-based application for Site Selection and Event RFP management.

Exchanging cancelled meeting space - A great idea, right?

The event had two round-table brain-storming discussions. The first was on the benefits and issues involved in trying to broker cancelled meeting space to companies that could use it. In theory, taking cancelled meeting space and re-selling it to another group seems like an effective way to offer discount meetings to a new group while saving cancellation penalties for the original group. After listening to these discussions, however, I believe that in practice the concept of re-using cancelled meeting space can only work profitably when exchanged within a single organization.

Only very large organizations would need enough meeting space to potentially be able to switch groups into cancelled space without changing the contract with the hotel. And these companies tend to cancel a large number of their meetings at once, as is happening now during the current recession, making it less likely that the cancelled space can be re-used on a broad scale.
I've read a lot of sales pitches about the benefits of re-selling or exchanging cancelled meeting space. It's worth a shot to try doing so internally within large organizations, but I don't think I'd want to be in the business of brokering cancelled space among different organizations. If someone has a proven way of doing this profitably, I'd love to hear about it.

The Law of Unintended Consequences

The second round table discussion covered changes in hoteliers' business practices in this recession. During the 2003-8 expansion, many hotels' ownership structure changed dramatically. Hedge funds discovered that they could buy hotel chains, sell the land, lease the buildings to franchise owners, hire hotel management companies, and move hotels under different brands. This created a profitable re-organization of assets for a while, but now that occupancy rates are falling and cancellations are rising, the sales managers at my table discovered they have multiple owners, with conflicting goals.
During the 2001-2 downturn, one sales manager received a call every day from her boss, imploring her to drive more business into their hotels. But now she gets calls from three "bosses" each day. The first comes from hotel owners who want business driven to their property, not caring about the other properties in the same brand who may be a better fit for the business. The second call comes from the hotel management company, who wants her to maximize sales and profit across the entire chain. The third comes from various brands, who want leads to come into their brand over others. With the media mania about companies hosting "extravagant" events at resorts, high-end brands are competing for business that previously would have gone to mid-range brands, who in turn want the business of economy brands.

Somebody made billions re-organizing the hotel industry, but I think a chain who owns and manages it's hotels and brand could have an advantage in this market over the complexity of multiple competing "owners".

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