Hospitality industry analysts say group bookings are making a comeback, as companies relax travel bans put in place after the recession in an effort to control costs.
Starwood Hotels & Resorts Worldwide Inc., which plans to move its headquarters to Stamford next year, indicated the improved group business is allowing it to charge more after steep discounting during the recession.
In a conference call with investment analysts, Starwood CEO Frits van Paasschen terms it “a travel-intensive recovery” with group business a major driver.
“At the beginning of last year, (group business) was pacing down 20 percent, but improved dramatically through 2010,” van Paasschen said. “Strong bookings and improving sales will translate into revenues that are quickly rebounding toward 2007 levels. Who would have taken that bet a year ago? And get this ”“ December crushed the all-time record for monthly group production.
“The real story in 2011 will be about rising rates,” van Paasschen said. “Corporate rate negotiations are being finalized and they”™re still on track to increase in high-single digits.”
In a recent report, travel-research company PhoCusWright Inc. estimated that the U.S. corporate groups and meetings market suffered a 29 percent decline in gross bookings in 2009 as a result of the recession and financial crisis. The Sherman-based company expects a moderate resumption of growth under way since late 2009 will finally begin to impact the industry”™s bottom line this year.
Still, PhoCusWright thinks total gross travel bookings in 2012 will still be well below their levels of 2006.
“If 2009 was a difficult year for the travel industry, it was disastrous for the corporate groups and meetings marketplace,” Douglas Quimby, senior director of research at PhoCusWright, said in a statement. “But the story in this market is not just about decline and recovery ”“ which is under way ”“ but really about transformation. Early developments in strategic meetings management and procurement, virtual meetings technology, and the application of social media and mobile services are now clearly established. These trends are reshaping how organizers are managing meetings, delivering content, engaging attendees and ultimately realizing (return on investment).”
Gartner Inc. began noticing a rebound in its own events business in the second quarter, both as measured by exhibitors and attendees, and cited an easing of corporate travel restrictions in part for the improvement. The Stamford-based company runs symposiums addressing high-tech trends and products; in the fourth quarter, more than 18,000 people attended a dozen events, with revenue up about a third at comparable events held a year earlier.
“Our events business significantly outperformed expectations,” said Gene Hall, CEO of Gartner, in a conference call. “Our symposiums ”¦ set a new global record for overall attendance.”
Overall business travel spending is expected to climb 5 percent this year, according to a recent survey by the Global Business Travel Association, which until recently was known as the National Business Travel Association. That is more than double the growth of the industry in 2010, according to the new GBTA, after a 14 percent drop in 2009.
“International outbound travel in particular remains strong and should continue to grow through 2012 as American companies seek opportunity in robust export markets,” Michael McCormick, executive director of GBTA, said in a statement. “Companies are once again recognizing the value of face-to-face meetings with customers, prospects, partners and colleagues.”
