Hotels Raise Rates and Meeting Planners Scramble

Hotel pricing is going through a very volatile period, and the future is very unclear. This is not welcome news for meeting planners. A new American Express Global Business Travel report suggests hotel rates worldwide will increase again in 2023 thanks to pent-up demand for in-person meetings.

What can a planner do? There are a few things to keep in mind.

First, it’s important to understand how hotels calculate housing rates. “Hotels use dynamic pricing to maximize their revenue. When demand is high, they raise prices. They lower their prices when demand is low,” said John Gallery, managing director of Great Potential, a marketing and management consultancy.

For example, the next Eurovision Song Contest will be held in Liverpool, England. When news broke, hotel rates skyrocketed. Many took to social channels to vent their frustration.  

“Going for the maximum regardless of the PR implications for both the brand and the destination seems to bite the hands that feed them,” said Jacqui Kavanagh, CEO of Edge Venues. “Why would a meeting planner return to either a destination or brand that embarrasses them?” However, they will return to brands that communicate and collaborate with them and come up with mutually suitable solutions.

As Gallery points out, there would be a certain irony in planners being impacted by the high demand created by their event. When you factor in external issues stimulating broader demand, such as using hotels to house Ukrainian refugees, or the announcement of King Charles III’s coronation in May 2023, things become even more dramatic. 

The key thing is that pricing is constantly shifting. 

The last thing that a planner wants are unhappy delegates. Delegates want to come to events, but not at any price. And worse still, they don’t want delegates to be hard-pushed to find accommodation. 

“Planners often negotiate a conference rate with that hotel(s). However, there are several considerations here. There is liability associated with holding room blocks on the hotel’s end so that liability can be offset through attrition requirements,” said Caitlyn Blizzard, vice president of communications for Destinations International.

Demand has led to many event organizers being unable to secure blocks as large as they historically have been used to. This, in turn, can impact the attendee looking to secure a good conference rate. And add to this the challenge of providing delegate choice.  

 “Attendees will not attend unless there is a choice of accommodation available with varying price options. Planners need to work with professionals to support this as without an allocation, you have a risk to your event,” said Kavanagh. 

Providing choice for delegates while not increasing rates or financial exposure for the planner is challenging. 

For corporate planners, the financial risk is less of an issue. They will contract housing for the estimated number of staff that will attend.  However, the financial risk is far more significant for association and other planners. They could contract housing to ensure all delegates have a room, but that is likely to create all sorts of issues, not least financial solvency for the organization accepting the liability. 

There is a need for planners to review their housing strategy. If delegates cannot find accommodation, the event is at risk. Encouraging early bird schemes is a tool in the planners’ armory but is it enough when delegates leave their decisions until just before the event’s start date? 

Pricing is going through a very volatile period, and the future is very unclear. 

“Traditional revenue management processes may not be fit as we head into a potential recession at the same time of higher costs in terms of supplier and energy, so it’s a real balancing act,” said Kavanagh. 

Living and working in a globally interconnected and fast-paced modern world, there is always a need to review and revise strategies. It could be a good time to re-imagine delegate housing because who knows where the next sudden demand that will impact your event will arise.