Steve Collins Booking Meetings at Resorts: Is it really all that different

RESORT FEES AND OTHER IDIOSYNCRASIES OF MEETINGS AT RESORTS…


October 12, 2007

By Steve Collins

So now we reach the end of the week.  On Monday we talked about the differences of holding a meeting at a resort as opposed to a more business oriented hotel.  On Wednesday we talked about the relative advantages and disadvantages of meetings in resort destinations.  Now it is Friday, and you have decided to “take the plunge” and book your next meeting at a resort.  What kind of strange occurrences can you expect in this process?

First off, let’s tackle the hated resort fee—a much maligned (and much misused) fee that has now somehow managed to infiltrate a far broader range of properties than originally intended, and now is common at both resort and non-resort properties.  Believe it or not, the original intent of the resort fee was actually a very creative solution to a problem resorts were facing—at least as it was first implemented here in the mountain resorts in Colorado.  Due to the extraordinarily high cost of real estate in many mountain resort communities, the cost to build a new hotel property became exorbitant—and far too risky for any single investor.  To combat this, many properties were condominiumized—whether they were actual condominiums (with kitchens, etc.) or traditional hotels.  In many instances, from outward appearances there is no way to know that the hotel is condominiumized—to you and me they look just like standard hotels, but each room has been sold to an individual owner.  This spreads the cost and the risks across a much broader range of investors.

With a condominium property, the owner of each room reaches an agreement with a management company (typically the company that runs all of the hotel operations, from front desk to housekeeping to reservations to common area maintenance, etc.) to rent out his/her room, and the room revenue is split between the management company and the owner.  The management company then pays all of its expenses for the actual running of the property out of their share of the split (typically 40%-50% of the room rate, but I have actually seen it as low as 20% that goes to the management company).  As more and more amenities (that all cost additional money) became expected, this caused a problem for many of the property management companies that run these condominium properties.  Due to their split with the owners, in order to pay for new amenities that might cost, for example, $10 to provide, they would have to raise their room rates by $20 to increase their revenue enough just to break even on that $10 of additional costs (since the owner gets 50% of every dollar of room rate).  Hotels could provide this same service simply by raising their rates by $10.  This put the condominium properties at a significant disadvantage when competing with traditional hotel properties.  Since they had to raise their rates by twice as much as the actual cost to provide the added amenities, their rates soon grew to a level where they were no longer competitive with the hotel properties.

Resort fees were born as a solution to this problem.  Since a fee is separate from room rates, the management companies do not have to split this with the owners of the various rooms.  This meant that, while hotels had to raise their rates by $10 to provide the additional amenities, the condominium property could keep its rates the same, but institute a $10 resort fee.  This way they were able to remain competitive with the hotels both on pricing and amenities.  In other words, there ARE actually some justifiable resort fees.

The problem for us as consumers came about when hotels figured out what was going on in the condominium market, and that the general public had basically accepted the premise.  Many hotels have seen this as an additional revenue stream, and a way to raise their rates without actually appearing to do so.  This bothers me because in a traditional hotel, I have yet to see any justification as to why they should raise their rates via a resort fee (which, quite frequently, is not as clearly disclosed in the booking process) as opposed to simply being up front and actually raising their rates.  After all, “free” local phone calls, “free” internet access, “free” newspaper delivery, etc., are all items that are not actually FREE if you have to pay a resort fee to cover those costs.  And, of course, since most of us travel with cell phones these days, how many “free” local phone calls do you make from your room anyway--$10 per day worth?  I think not…..

One other new fee that I am seeing on an ever increasing basis—at least out here in Colorado—is the “special improvement district” fee.  This is a fee that LOOKS just like a sales tax, and shows up on receipts as a separate line item right there with the sales tax, but it is actually a fee on all retail sales within a certain geographic area to provide additional “services” to that area.  It shows up in retail shops, restaurants, hotel bills, and anywhere else where sales tax is charged.  The dirty little secret of this fee, though, is that it is NOT a tax, and is NOT required by the city, the state, or any other entity with actual taxing authority.  In other words, it is just as negotiable as the room rate, even though many hotels try to present it as a tax and non-negotiable.  In your negotiation process you may not be able to convince them to remove the Special Improvement District assessment, but you CAN negotiate to have them lower their rates enough to cover the additional cost of this fee.

So there you have it—a week’s worth of discussions on holding meetings in resort locations.  On Monday we talked about the differences involved in booking resorts, on Wednesday we talked about the relative advantages and disadvantages of meetings in resort destinations, and today we talked a bit about a couple of the idiosyncratic fees you might encounter when booking a resort.  Hopefully this has been helpful to you!

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF BOOKING A MEETING IN A RESORT DESTINATION?


October 10, 2007

By Steve Collins

On Monday we discussed many of the differences experienced when booking a hotel in a resort destination as opposed to a hotel in a metropolitan area, but which is better?  Well, the answer, quite clearly (as with the site selection process for any group), is that it depends on your group and the goals of your meeting or event.  Today what I want to do is go through some of the advantages and disadvantages of holding a meeting at a resort.

One of the major disadvantages of holding a resort meeting is the perception that it can create (especially today when everyone is so concerned about SOX regulations).  After all, how can you have a productive meeting at a reasonable cost in a resort area, right?  I still remember some of the struggles I had on this front when I was a hotel sales manager for various resort hotels in the Aspen/Snowmass area here in Colorado.  For example, I had one non-profit organization actually spend $4000 MORE on their 50 person meeting to hold it in Denver, simply because they did not want to deal with the perception problems of booking a meeting in Aspen.  I know of another hotel in Breckenridge that was going through re-branding, and went to great efforts to avoid using the word “resort” in their name to try to avoid this issue—particularly for government groups.  I even had planners from some state agencies tell me they could not meet in the resort areas—even though we are obviously still part of the same state…..

Another issue that can arise depending on your chosen location is access.  As I had mentioned on Monday, typically a “getaway” resort is, by definition, not located within a major metro area.  When considering a resort destination, you definitely need to consider the issue of airport transfers.  Will your entire group be arriving at once, so you could just charter motorcoaches to bring them all to the resort at once, or will their flights be scattered throughout the day (or over several days)—necessitating individual transfers for each of them?  For a longer event, transfer times are not necessarily as important (if your group is not averse to them), but for a 1-2 night meeting, this additional time might prove unacceptable for your attendees.  Bus transfers might also require some extra creativity to fill that time (for example, I have seen groups actually conduct sessions on each bus during the transfer, or I have also seen bus companies that have the ability to create their own “break” or other F&B function while on board).

Also on Monday I had mentioned that, in some cases, there can be less flexibility on the part of the hotel in a resort setting, and you also need to be sure that the amenities available in the area are appropriate for your group.  For example, if you have attendees who tend to be absolutely addicted to their Blackberries and their EVDO wireless cards in their laptops, an “incentive” to an area without adequate cell phone coverage may not actually be much of an incentive for them…..

I also mentioned seasonality a bit on Monday, and this can prove to be either an advantage OR a disadvantage for your meeting at a resort.  For example, if you are trying to schedule a week of intense brainstorming sessions, a resort during the off season might be an IDEAL place to take your group.  You can get first class facilities at bargain basement prices, and there will be few distractions to pull your group away from their meetings.  Conversely, a golf incentive meeting in the desert in August is probably not going to be much of an incentive for a group, since walking outside during daylight hours at that time involves temperatures that can melt your shoes to the pavement.

Of course, there are some MAJOR advantages to holding your meetings at a resort as well.  As I mentioned on Monday, since the typical booking pattern at resorts favors weekends, a business meeting during the week can actually be quite reasonable.  Plus, if your attendees tend to be the typical “road warriors” who spend a lot of time in hotels, holding your meeting in a desirable resort destination may help ease some of the discomfort usually associated with business travel.  Many resort destinations have short-term rental condominium facilities that also have meeting space available.  Since condos tend to have a much different feel from your typical hotel room (i.e. kitchens, actual living rooms, etc.), booking a meeting at a condominium complex may actually give your more seasoned travelers a welcome break from the routine of business travel.  It may feel a bit more like “home” than a traditional hotel room would.

One final advantage is the added opportunities for really unique theme events that can be available to you in a resort setting.  Just think of some of the possibilities—how about a special event on a movie set at Universal Studios in Orlando?  What kind of impact would it have on your group to ride on horseback or a hay wagon to the top of a mountain on a beautiful summer evening for a sunset barbeque outdoors?  How about taking a chartered yacht over to a private island for a reception on the beach?  Just a few ideas that are possible in resort settings….

In other words, while there may be a few added complications when booking a meeting at a resort, personally I feel that the benefits can FAR outweigh these challenges.  After all, especially for those who are frequent travelers, why hold the same old meeting in the same generic hotel meeting room when you can be just as productive  in a beautiful resort destination—and frequently at a competitive (if not lower…) cost?

Just a thought……

On Friday I will discuss the much maligned resort fee a bit and go into a few of the other idiosyncrasies you might encounter when dealing with resorts.  I hope you will return for that!

HOW IS BOOKING A RESORT HOTEL DIFFERENT FROM A CITY HOTEL?


October 08, 2007

By Steve Collins

In my years of working in sales offices at resort hotels here in the central Rockies, I was amazed at the number of meeting planners who seemed totally unfamiliar with how resorts work.  Now, after being on the “other side” of the equation for a few years, I understand where the confusion can arise.  Although the ground rules are fairly similar, there are a few differences that need to be taken into account when booking a resort property as opposed to a hotel that is more business-oriented.

This week we will discuss a few of the ins-and-outs of booking meetings at resorts.  Today’s topic will be highlighting some of the differences to expect when booking a resort.  On Wednesday, I will address some of the advantages vs. disadvantages of meetings at resorts, and on Friday I will go through some of the “idiosyncrasies” you might encounter when booking at a resort (including a discussion of the hated resort fee).

A couple of caveats:  first of all, I will be addressing these topics from a US perspective.  While many of the issues discussed are valid worldwide, there may be some issues that may not be as relevant at some international resorts.  Also, I will be generalizing quite a bit because there is no real way to speak for every single resort property throughout the country—obviously there WILL be variations, but most of these issues will still be valid at least to some degree.

Okay—so now on to today’s discussion:

WHAT DIFFERENCES WILL YOU FIND WHEN BOOKING A RESORT?

A hotel is a hotel, right?  So what’s the difference if it is a resort hotel instead of a business hotel?  Actually, here are some of the more significant ones:

• Access—since, by definition, many resorts are considered “getaway” destinations, they tend to be located further from major hub cities with good air service.  This means that your attendees may need to be prepared to change planes, fly on smaller aircraft, and/or sit on a shuttle bus of some sort for a fairly significant period of time. 
• Deposit/Cancellation Policies—hotels in major metropolitan areas generate a very significant amount of walk-in business, which means they can typically have very lax deposit and cancellation requirements—thus, the 4pm (or 6pm) cancellation policy that is very common in cities.  Since there are plenty of other lodging options available nearby in the event of a walk situation, they can overbook the hotel by as much as 25% or more, and count on the attrition rate to even out their room count each evening.  This also allows them to book groups with little to no advance deposit.  Not so with resort properties.  In many resort areas—particularly destination resorts—a room that is unsold 30 days prior to arrival will most likely not be sold.  FIT guests don’t just “show up” without a reservation at a resort that may be 2-3 hours away from the nearest major metro area, so there is no walk-in business to speak of.  This means that most resort hotels are going to be much more stringent with both their deposit policies and their attrition/cancellation policies.  If a group significantly reduces its room block or cancels too close to the arrival date, there is simply no way that the resort will be able to replace that business in most cases.
• Seasonality—most resorts have very distinct seasons where they will be absolutely full or absolutely empty.  If you are trying to book a resort during their peak season, expect to pay top dollar and have little flexibility.  If you are booking during the off-season, they will typically bend over backwards to attract your business, but be aware that there may not be many activities available in the area over those dates.
• Pattern—most business hotels have a Monday through Thursday pattern for the majority of their business, so weekends are typically empty for them.  In a resort setting, typically Friday and Saturday are the busiest days of the week, so be aware that you will pay top dollar for those two nights—and some resorts will not even take your group if you will break up a weekend by booking only a Friday or a Saturday night.  On the other hand, you will generally find them to be much more flexible with you for a booking during the Monday-Thursday time frame.
• Facilities—always remember that most resort areas are geared toward leisure travelers, and as such, may not have some of the amenities available that have become expected among business travelers.  Some things are obvious—for example, not many secluded resort areas are going to have a convention center available that can seat your 10,000 person general session plus 25 breakouts and meals for the entire group.  However, some things are much more subtle—especially for planners from the Eastern Seaboard who are not used to more rural settings.  Be aware that things like high speed internet and consistent cell phone coverage are still NOT a given in many areas—particularly in the more rural parts of the western US.  Just make sure that your attendees can live without these things for a few days if you decide to book a resort in a more remote area.

This is by no means a complete list, but it gives you an idea of some of the items to consider when looking at resort destinations.  Holding a meeting at a resort can be fun and rewarding for the attendees as well as cost-effective and impactful for the sponsoring organization, but you, as the meeting planner, do need to be aware of these differences when you are conducting your searches.

On Wednesday we will go into a bit more detail as to the advantages vs. disadvantages of booking meetings in resort destinations.  Stay tuned……

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