Are group bookings good business?

Over the years I’ve worked in revenue management, I’ve frequently heard the following when it came to group business discussions: “Let’s quote higher and raise our public rates” … “We’ll be oversold if we take this group but there is always wash”… or my personal favourite: “We need the baseline occupancy!” Sound familiar? Statements like these make me question whether group business really is good business. For many hotels, group business accounts for 40, 50 even 60 percent of their sleeping rooms revenue, not to mention the additional revenue brought in from food and beverage, meeting space, outlets, etc. Rightfully so, many hotels have teams dedicated to selling, servicing and managing this profitable segment of their business. The challenge is that for every piece of group business that fills a booking void, stays over a Sunday or spends three times their food and beverage minimum, there is another one that displaces other revenue, washes out significant rooms or, in hindsight, impacts your overall profitability. The key to ensuring your group business is all great business is to establish a strategy and make certain it integrates with the broader revenue strategy for all your segments. Here are some pointers to help you better evaluate your group business strategy with the aim to achieve an ideal business mix. Find your true demand You can’t be selective about the business you want unless you know what potential business is out there. Hotels don’t have a crystal ball indicating exactly when the best enquiry is going to come along, but with the right technology, you can get close. Technology advancements can now provide you with the ability to accurately forecast group revenues, going so far as helping you understand demand for a given date range by visualising your booked, turned-down and lost enquiries. The latest technology also lets you alert the system of sudden changes for specific groups (like a wedding block that’s not picking up with a cut-off date looming) so it can optimise your strategy based on the new information before the change takes effect in your systems. Let’s be clear—when I say ‘forecast’, I don’t mean looking at last year and saying we will do the same or taking the blocks already on the books and calling that a forecast. I mean analytically understanding unconstrained demand preferably by market segmentation, historical performance and the reasons for that performance, the current market conditions and the impacts of special events to get a true picture of group demand. This approach will generate a powerful and accurate forecast you can use for future strategy. Focus on profitability with the right technology Don’t be taken in if your hotel’s system is capable of providing a rate for a given group within a matter of moments. To fully maximise revenue, you must have instant access to a full profitability displacement analysis of the group to ensure it is the best piece of business. For example, a common problem faced by hotels is suggesting alternate dates for a group that is flexible or budget conscious. If your system is capable of serving up alternate dates that stand to be the most profitable for your hotel, your sales staff won’t have to resort to guessing alternative dates for guests. What about analysing a piece of business across different properties for the regional sales rep? Or how about running that analysis right in your sales and catering system to avoid duplicate entry? Or quoting different pricing for each room type? In today’s increasingly competitive marketplace, you need more than a tool that only replaces the breaking-even rate or traditional excel spreadsheets. Accepting this effectively gives your competition the upper hand and, frankly, ‘just enough’ solutions are just not enough. The right piece of group business can exceed all expectations by helping you surpass budget. Your revenue management solution should be doing all that for you and more. Is this group business good business? Before discussing with your sales teams, start with getting strategic insight from your revenue management tool. By Damiano Zennaro, head of advisory services EMEA, IDeaS Revenue Solutions.