Is This Group Business Good Business?

By , Principal Industry Consultant


Blog Soundbites:

      • Group business accounts for 40-60% of hotel sleeping rooms business
      • Every hotel should have instant access to a full profitability displacement analysis
      • You need more than a tool that only replaces Minimum Acceptable Rates

Back in my revenue management days I frequently heard the following when it came to group business discussions:

“We need the baseline occupancy.”

“Let’s quote higher and raise our public rates.”

Or my personal favorite, “We’ll be oversold if we take this group but there is always wash.”

Sound familiar? Statements like these make me question whether group business really is good business. Don’t worry, I am not here to question all group business for hotels. For many hotels it accounts for 40, 50 even 60% of their sleeping rooms business, not to mention the additional revenue brought in from food & beverage, meeting space, outlets, etc. Rightfully so, many hotels have teams dedicated to selling, servicing and managing this profitable segment of business.

The challenge is that for every piece of group business that fills a valley, stays over a Sunday or spends 3x their F&B minimum, there is another one that displaces other revenue, washes out significant rooms or in hindsight costs you profitability due to concessions. The key to ensuring your group business is all great business is to establish a strategy for it and make certain it integrates with your broader revenue strategy for all segments.

Here are some pointers to help you obtain the ideal group business without sacrificing your ideal business mix:

First & Foremost, Forecast!

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 inquiry is going to come along, but with the right technology you can get pretty darn close.

The best technology provides the ability to truly forecast group revenues, going so far as helping you understand demand for a given date range by visualizing your booked, turned down and lost inquiries.

Leading technology also lets you alert the system of sudden changes for specific groups (like a wedding block that’s not picking up with a cutoff date looming) so it can optimize 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 historical performance, the reasons for that performance, the current market conditions and the impacts of special events to get a true picture of group demand. That’s what I call a powerful forecast you can use for future strategy.

This isn’t new tech, so don’t settle for 1st gen capabilities

IDeaS has been pricing group business for over a decade, pioneering this particular revenue opportunity for hotels. Improvements and innovative enhancements were incorporated, stemming from feedback provided by thousands of clients using the tool day in and day out.

It’s not enough to just provide a rate for a given group in a matter of moments; hotels should have instant access to a full profitability displacement analysis of the group to ensure it is the best piece of business.

What about alternate dates for a group that is flexible or budget conscious? No problem for the leading technology in the market. In fact, now the tool can automatically serve up alternate dates that stand to be the most profitable for the hotel, saving the sales person from guessing at date ranges to select as alternatives.

What about analyzing a piece of business across different properties for the regional sales rep? Or how about running that analysis right in your sales & catering system to avoid duplicate entry? Or quoting different pricing for each room type? Check, check and check—all possible with IDeaS group pricing.

You need more than a tool that only replaces Minimum Acceptable Rates (MARs) or excel spreadsheets, because that happened years ago. That would be giving your competition the upper hand and frankly, “just enough” solutions are just not enough.

The right piece of group business can exceed all expectations, help you surpass budget and make you look like a rock star on your STR report. Your revenue management solution should be doing all that for you and more. Is this group business good business? Stop asking this of your sales teams and start asking this of your revenue strategy tool.

Blake Madril
Principal Industry Consultant

Blake is responsible for helping clients of IDeaS implement revenue technology and optimize profitability. Before joining IDeaS, Blake worked for individual hotel properties and a corporate management team. His roles ranged from operations manager to convention services director to corporate director of revenue management.

Related Resources

Hungry for more?

At IDeaS, we’ve always got an ear to the ground and our fingers on the keyboard, ever-ready to share our latest learnings, data, trends, and happenings with you, dear reader.

See all blogs