How hoteliers bring in additional revenue from groups
How hoteliers bring in additional revenue from groups
08 JANUARY 2019 9:36 AM

Properties are looking for new ways to upsell spa treatments and F&B, and are creating other initiatives to bring in additional revenue.

REPORT FROM THE U.S.—Effective revenue management is always paramount for the hospitality industry. But, it becomes that much more challenging when you are trying to revenue manage with large groups who are staying at your property.

After all, group business always includes a pre-set negotiated room rate, much lower than rack rate. There also are negotiated prices for food and beverage. So, what's a revenue manager to do when it comes to trying to bring in more money from group clients?

There's actually plenty you can do, according to sources. And, it starts with knowing what the needs and wants are of your group and upselling based on those preferences.

"It's really important for the hotel to understand the group and what they are looking for," said Steve Goodman, founder and managing partner at MeetingAdvice, a full-service meetings and event management company in Atlanta. "For example, if the group doesn't have time in their schedule to use a spa, then offering a 25% spa discount won't work."

Meeting planners also need to understand how revenue management works at hotels, and that every hotel looks at revenue management somewhat differently, Goodman said. Hotels can explain this process to planners when they work with them. He discussed a group of 3,000 surgeons he is working with who will be attending an event in Nashville in a few weeks. The group is willing to pay for a higher-end selection of wines, and that will bring in additional revenue to the host hotel.

"The hotel is accommodating the needs of this group and knows what they are willing to buy," Goodman said.

For instance, if you are located in a resort destination, you can provide creative packages for spouses and kids that meeting goers would be willing to pay for, noted David Sangree, president of Cleveland-based Hotel & Leisure Advisors, a hospitality industry consulting firm.

Communication with your group is key to successful incremental revenue from groups.

"A lot of revenue management starts with the event manager; this person is in charge of selling groups additional items," said Justin McCabe, regional director of revenue management at Atlanta-based Davidson Hotels & Resorts.

This event manager can find out what extras the group may want and try to sell those. This can include spa services, extended menus, special happy hour offerings, customized lunches in the hotel restaurant, and shuttle service to the city center and the airport, McCabe added.

Hoteliers also should embrace technology as a way to upsell to group business and manage revenue.

"You can engage your group guests on a mobile basis with customized texts tailor made for those travelers that promote some of your special amenities and services," McCabe said.

At Davidson's 349-room Margaritaville Hollywood Beach Resort in Florida, for example, there are numerous opportunities to increase revenue from group guests—from selling multiple restaurants to water sports to spa services, McCabe pointed out. Thirty percent of the hotel's guests are there for group meetings and conferences.

More and more hotels, working in tandem with meeting planners, are looking to create memorable experiences for their group guests—similar to what the individual travelers have wanted and asked for in greatly increasing numbers.

"We try to create a sense of and feel of Minneapolis in our hotel and really want to keep group guests on site as part of effective revenue management,” said Steven Lindburg, GM of the Radisson Blu Minneapolis Downtown hotel, which gets 60% of its overall business from large groups.

For instance, the hotel will create a special lounge, bring in karaoke, hire a small performing troupe, and bring in brewers and distillers to do beer and liquor tastings as a way to make additional money and satisfy the wants of its group travelers who are looking for something special and different to do during their free time.

"This really gives guests a sense of place and adds something special to receptions," Lindburg said. "It allows meeting groups to also form new connections with each other and helps create new friendships among employees or those who are with an association."

Going this extra mile can result in more revenue 15-20% of the time, Lindburg pointed out. This can translate into 25-30% more incremental revenue, added Dale Krogman, director of sales at the property.

Sangree noted you need to actively revenue manage the guests at your hotel that are not part of the big group—namely transient travelers staying at your property.

"If you know your hotel will be pretty full because a large group is onsite, you can do some serious revenue management and raise your rates with your other travelers who want to be at your property," Sangree said. "But, be careful that you don't gouge anyone."

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