Hoteliers Are Getting Creative To Monetize Their Meeting Space
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As the disruptions of technology continue to shake the hospitality industry, hotels are clinging to those services that set them apart from competitors like Airbnb. One of the industry's biggest moneymakers is hosting meetings and events.
Having available meeting space that caters to an array of events — from corporate conferences to exclusive parties and weddings — gives the industry a leg up.
Hoteliers are getting creative with their meeting space, investing in space that is functional and appealing, said Colliers International’s Bryan Younge, Hospitality & Leisure and Valuation Advisory Services practice leader.
Hotel meeting space has become less compartmentalized than it was a few decades ago. Instead of being off in its own wing, event space is often next to the hotel lobby. Younge said a big trend is the shift in pre-function space. The meet-and-greet areas, usually adjacent to the ballrooms, have become more flexible. No longer a stale room outside of the ballroom where guests wait before an event starts, this space has become key to gathering before the main event, with hoteliers getting creative with their food and beverage components.
“It has cool stuff now, [including] bistros, library elements, places you can sit down with nice tables and chairs instead of standing,” Younge said. “Natural light is key. Studies have shown the more natural light an attendee gets throughout the day the better the longevity of their attention, and the lower their stress.”
Monetizing Meeting Space
Though boosting traffic by hosting events to increase cash flow is imperative for major brands, Younge said hotel operators must first determine whether their meeting space is being over- or underused. This is where Colliers’ “space utility index” comes in to play.
“It’s used for marketing and planning strategy,” Younge said. “From an analytical standpoint, much like the competitive index for appraising properties … if you’re just trying to figure out the general health of hotels in a market, you can look at the space utility index.”
Simply put, the space utility index is a metric that determines how hotels are using their meeting space. By taking the number of group-oriented guests that visit on an annual basis against the total square footage of meeting space a property offers, hoteliers can determine use of that space. The greater the number of annual group visitors per square foot, the higher the use of the space. But it doesn’t stop there — operators must determine the metric for hotels within the same market to know whether their meeting space is functioning at a high or low level compared to the competition.
Market Against Market
There has been a shift from large hoteliers competing directly against one another to entire markets competing against other markets.
Large operators with tens of millions of dollars’ worth of meeting space are not overly concerned about Airbnb exposure, nor are they solely in direct competition with other hoteliers in their market, Younge said. Instead, hotels are increasingly banding together to compete with entire markets for tourism and guests, like Nashville is doing with Las Vegas, he said.
“Nashville is pushing hard to become Las Vegas’ competition … hotels are fighting for business that was going to Vegas and trying to get them to go to the City of Nashville,” Younge said. “Hotel operators’ biggest struggle is making sure that the cities and markets they’re doing business in are active enough to attract tourism and events in general.”