The strength of U.S. hotel demand this year has renewed hoteliers’ optimism for a swift recovery. U.S. hotel occupancy rebounded strongly in 2021, with July contributing most of the growth with steady gains in the other months. Average daily rate followed a similar pattern. While this is good news for the recovery of the industry, it can also pose challenges for event planners when trying to book an event, especially with shorter lead times.
At ITA Group, we’ve noticed client events now have shorter turnaround times (e.g., six months until operation vs. 1–2 years). Also, organizations are now involving HR and legal more often for approvals to resume in-person travel. To help navigate the added complexity when contracting your next event, below are five factors to keep in mind.
1. Limited Space
A variety of recent media stories on the increase in savings for middle/upper class Americans indicate consumers will begin spending savings on vacations and other experiences when it becomes safe to travel again. This is good news for hotels but also means more demand and more competition for event planners to place their events. Travelers are probably going to stick to the domestic U.S. because of the complexities of traveling outside the country—further limiting the space that is available for groups.
2. High Compression
Hotels have been faced with moving groups from 2020 and 2021 to as far out as 2024 for rebooking, creating compression on those years and leaving groups vying for little space. In addition, venues will be working to reschedule city-wide conventions and congresses—many of which have been uprooted from their “normal” time of year. Layering these events into an already full calendar will be tricky.
3. Higher Rates
Demand for leisure travel in some destinations is driving premium rates and limiting availability for groups. Travelers are ready to get out and explore—and 2022 could be even more popular for trips than before the pandemic, according to a new report the World Travel & Tourism Council (WTTC) shared with Travel + Leisure.
4. Pressure on Short-Term Contracting
After a year of taking the stance of “we’re all in this together,” and working to create mutually beneficial terms, we’ve also seen less flexibility from hotels.
Rebooking isn’t the focus it once was even a year ago. Now the attention has turned to future years and we’re seeing hotel flexibility for short-term business (i.e., the next year or two), but for future years (i.e., three years or more) there has been less flexibility. We’re even seeing the same hotels approve terms for 2022, but not for 2023 and beyond.
Additionally, hotels are implementing their own health and safety policies and programs in response to the pandemic. Quite often, clauses about those requirements are incorporated into contracting agreements with a requirement that the group inform its attendees that they’ll be expected to comply. This may not be an issue for most clients, but is something to be aware of.
Related: Learn how ITA Group helped our client operate an incentive travel program that successfully delivered on expectations while ensuring peace of mind during a global health crisis.
5. Timing & Delays
In many cases, buyers are only allowed 48-hour holds on space before a hotel requires a contract request. While there is mounting pressure for the buyer market to commit, hotels can be slow to respond. They may drag their feet responding to contract addendums. Additionally, hotels are increasingly required to send contracts to their own corporate legal for review with little to no budging on redlines. While layoffs and furloughs have reduced since the start of the pandemic, many properties are still experiencing an increased backlog of contract reviews due to receiving a record number of leads and needing to respond to them all. It’s like a game of hurry up and wait. (Worst. Game. Ever.)
Of course, this may be the exception versus the rule, but you can begin to see how it’s complicated for planners in today’s market to navigate.
That’s how having the right partner in your corner—a partner with strong relationships across the hospitality industry—can provide the expertise and support you need. ITA Group has experienced buyers with their fingers on the pulse of all that is happening in the industry. As well, we have in-house legal counsel with expertise specific to hospitality agreements. Rather than leveraging a hotel’s templated contracts, we’re able to present preferred terms and conditions that offer more mutually beneficial terms for clients.
Related: Watch this webinar featuring ITA Group experts who share what we have learned from operating events during COVID-19.
Aside from the legalese, there are a few things you can keep in mind as you set out your plans for the year(s) to come.
Keep Participant Safety Concerns in Mind With Destination Selection
Research shows a sizeable pent-up demand for incentive travel after the freedom to travel was taken away. While travelers are ready to pack up their suitcases, companies are a bit more cautious of allowing them to board the jet and cross the border.
Clients are considering the security of traveling domestically and putting higher importance on that rather than the unknown and ever-changing realities of traveling internationally.
Offer a Fresh Perspective of Local Destinations
When it comes to getaways, domestic travel growth has "significantly" outpaced global tourism as a whole and is expected to rise even more in 2022.
This year, the United States travel sector is anticipating a 35.6% bump compared to 2020. And next year, the U.S. travel sector is expected to grow by another 28.4%, according to the report, which was produced with Oxford Economics.
The need for planners to prove the value of their event has become more important than ever. Sixty-six percent (66%) of organizers anticipate budget cuts for their virtual, in-person and/or hybrid events in 2022. Data shows that obtaining leadership approval for an event (and consequently the overall budget for events) is contingent on being able to prove event ROI. With restricted budgets comes a growing need to properly allocate and intelligently spend each dollar. Planners can maximize their spend by focusing on domestic locations and presenting them in a fresh way.
“Palm Beach is a great domestic destination that doesn’t always get the recognition it deserves,” said Liz Mikkelsen, CMP, Supervisor, Event Purchasing & Industry Relations at ITA Group. “Worth Avenue is so reminiscent of a town in Europe, with its high-end shopping and great restaurants. The Four Seasons Palm Beach completed a total renovation a few years ago and it looks amazing!”
Enhance the Experience With Exclusivity
Making your event exclusive can not only benefit you by making it more likely to sell out due to FOMO, it can also lead to a higher grade (and higher paying) attendee and create stronger personal connections with a more intimate and engaged audience. Planners may want to consider allocating an event entertainment budget for a buzzworthy artist that will encourage the audience to share their experience via word-of-mouth marketing.
“I’m pretty excited about one particular recognition program set for 2022,” said Kristine Forret, Buyer, Event Purchasing & Industry Relations at ITA Group. “Typically, this group travels to Europe every year, but unfortunately had to cancel 2020 to Switzerland and 2021 to Spain. They are now going to Kiawah Island, South Carolina, in March 2022. We were able to enhance the program with a variety of additional networking opportunities and are working to coordinate a private concert with top-named entertainment. Perhaps more than any other form of marketing, events build a sense of can’t-miss opportunities that keep your people intrigued.”
Handle Contracting Amicably
The events industry has been primed to expect the unexpected. Flexible policies will be essential for any live events taking place over the next year and will likely remain important for the foreseeable future. Strong partnerships between ITA Group and our preferred partners allows us to negotiate together with the most flexibility possible on both sides of the table. For example, Las Vegas is always a popular destination for larger events but we’re finding 2022 and 2023 to be extremely compressed. In fact, one of our key preferred partners has only a few weeks remaining open in 2023. While our preferred partners have been good about letting groups shift from 2021 as far out as 2024 for rebooking, it’s causing compression on those years. Being able to stay on top and ahead of these trends is critically important to ensuring event and meeting success.
Additionally, members of ITA Group’s management team sit on the advisory boards of major hospitality brands and industry associations, enabling us to leverage relationships on behalf of our clients as well as provide unique insight into industry contracting trends and legal analysis.
Want to know more about the future of event contracts, and how we create a strong contract that protects our clients’ interests to every extent possible? Then you’ll want to take a look at these four key provisions to incorporate into your future event and meeting contracts.