M&IW’s Event Sourcing experts have seen it all. From the pre-pandemic standards to the COVID craziness to the new trends emerging in the post-pandemic world, they’ve stayed on top of all the latest developments and are always committed to successful and fiscally responsible sourcing and contracting. As we approach the end of Q2 in 2023, they’re sharing their latest knowledge with you to ensure everyone is prepared for the current realities of event sourcing.
In Part 1, we explored the new trends and norms in contracting as well as general hotel trends. Now, we’re taking a closer look at RFPs—both what to include and what to expect from responses—and the causes of rising hotel and venue costs.
In Case You Missed It – What to Know About Event Sourcing: Part 1
Road Map to Effective RFPs
RFPs, or Requests for Proposals, are not new when it comes to event sourcing. What is new, however, is hotels’ approach to them. In general, responses are taking longer to receive and are coming back with less detailed information than pre-pandemic. Keep these top trends in mind when preparing your RFPs and during the hotel decision process.
Timing of Hotel Responses
Our hotel partners have shared they need more than 48 hours to respond to RFPs. This is due to the continued high volume of requests. To combat this, some hotel chains are now deploying team members to respond to RFP requests after standard business hours, meaning later in the evenings or even weekends. Still, for the best results, give hotels ample time to review and respond to your RFP. The more advance notice you can provide, the better.
Key Factors for Hotel Decisions
Because of the high volume, our sourcing team is being asked to streamline the questions we ask of hotels in the initial RFP stage. Be mindful of the key decision factors that will impact your hotel decision, such as distance from airport, 24-hour holds, and meeting space flow as well as additional mandatory fees or surcharges that may impact your event’s budget. Sharing key decision factors in the initial RFP stage may assist in securing faster hotel responses that directly address the items that matter most.
Meeting Room Assignments
Some hotels are trending towards not providing specific meeting room names, instead either offering a TBD or confirming the amount of square footage. This can make hotel decisions difficult as the meeting space is a critical factor in selecting or short-listing hotels for your event. Our sourcing team will continue to request this information, but it may not always be received.
We are seeing more and more alternate small meetings software such as Groups360 or other platforms that are distinctly geared to small meetings of 30 attendees or less. Hotels are encouraging third-party agencies such as M&IW to utilize these platforms, but there are definite limitations, including less customization, very little (if any) negotiations on space and rates, and the inability to receive commissionable rates without specific board approvals.
Our sourcing team highly recommends continuing to use our standard sourcing process to ensure that proposals still meet the requirements of your event as these small meetings are often executive-style programs with a high service level requirement.
Reasons for Guest Room Sticker Shock
Whether you’re traveling for business or pleasure, domestically or internationally, if you are noticing higher guest room rates, it’s because this is a real and current trend. Unfortunately, due to the high compression and high demand, there’s usually not a lot of room for negotiation on rates and fees. But that doesn’t mean we won’t try! Here’s a closer look at the causes of these increases.
Higher Average Daily Rates
We are discovering across major hotel brands that their average daily rates (ADRs) are increasing across all brands but more significantly with luxury brand hotels. Luxury properties’ ADRs can be as much as 60–80% higher than pre-pandemic. This increase is due to transient travel as well as business travel.
When hotels determine the pricing for RFPs for business meetings, revenue management and ownership teams are focusing on ADR over occupancy. In their perspective, it is a better business model to ensure higher revenue even with lower occupancy percentages. This is a different trend than was seen pre-pandemic and can affect both event budgets and the attendee experience.
Labor and Service Fees
This is a trend to keep an eye on. We are seeing more and more additional labor or service fees for one or more of the following occurrences during the planning of your event:
- Outdoor Events: There could be a service fee for events held outdoors for set-up and dismantlement of tables, buffet stations, etc. This can be a percentage (such as 8%) or a per person fee (as high as $7/pp per event). Depending on the size of your event, this could significantly impact your budget.
- On-Site Changes: If there is a menu or meeting room set-up change, there could be a flat fee for changes made within 24–48 hours (and sometimes longer) of the actual event start time. If you need to make changes while on-site, be sure to check to see if any such change will incur an additional fee. All fees should be disclosed by your hotel contact prior to any work commencing.
- Standard Labor Fees: There are also some daily labor fees with standard fees per day of $150 for general room set-ups. In some cases, these are non-negotiable, but it doesn’t hurt to ask about them.
Like ADRs and labor fees, resort fees are trending higher than pre-pandemic. Standard resort fees can be as much as $50–60 per night. Another trend is to use a percentage (such as 10–14%) of the proposed guest room rate to be designated as a resort fee. For example, if your room rate is $339/night with a 10% daily resort fee, then your actual daily guest room cost will be $372.90 plus tax.
Even with higher pricing, resort fee inclusions haven’t changed much. They may include guest room internet, one or two bottles of water, and a list of amenities, some of which you may or may not use depending on your type of event. The biggest value is usually the internet or potential parking.
We always try to reduce or waive these resort fees depending on program type, but many hotels are holding firm. We may be able to reduce resort fees to a more reasonable $20–25, but this still can add up on your larger programs.
More than Inflation for Food and Beverage Increases
It’s no secret that food and beverage prices have increased due to inflation and supply chain shortages. In addition, service charges have also increased—we have experienced service fees as high as 31%. Be sure to keep an eye on the service fee percentages while making your hotel decision!
In most US contracts, there is a contracted F&B minimum. It’s important that your sourcing partner negotiate this minimum to be as low as possible because all attrition and cancellation liabilities are calculated using this amount. This will help mitigate your risk if the contracted minimums are not met or if the program needs to cancel in its entirety. However, actual food and beverage spend is trending about 35% higher than the contracted minimum.
Meeting Room Rental Fees
An important post-pandemic trend we are now experiencing is the rise of meeting room rental fees, especially in the US market. Historically, it was standard to pay these fees for international programs, but it is now becoming the norm in US contracts as well.
Room rental may apply for breakout rooms only or for those set-up days where there isn’t opportunity for the hotel to earn additional revenue. However, in some cases, we are seeing room rental applied for meeting rooms or spaces designated for meals, especially for luxury properties.
Be mindful of your set-up requirements as additional days at the front end of your meeting will impact the amount of rental charged. Do you really need a full two days to pre-set the room? Or can this be done in one day? Allowing the hotel an opportunity to sell the space to another group during these pre-days (especially on weekend days) will help us leverage reduced room rental costs.
And keep in mind, there may also be service fees and tax applied to these amounts as well.
Our sourcing team is very aware of rising costs and fees in our current environment. Rest assured, we have a renewed focus on carefully reviewing all hotel contracts and diligently working with our hotel sales partners to ensure we are minimizing as much risk as possible and negotiating a contract that is reasonably fair for all parties.
In addition, we’ll continue to be consultative and fully transparent when submitting our final, negotiated contracts to you for your review and approval. Be aware of these trends so there aren’t unwelcomed surprises as you prepare and execute your program.
Contact us to get started. Already an M&IW customer? Contact your Customer Success Manager to learn more.
Vicki Walsh, HMCC
Sr. Director, Event Sourcing
Meetings & Incentives Worldwide, Inc.
Lynn McCrory Brown, CMP, HMCC
Team Leader, Event Sourcing
Meetings & Incentives Worldwide, Inc.