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Adding
"Book/Par" to the Measures
The
31 May 2006 edition of the Zeitgeist e-Zine
For the
American Hotel Industry, the good times are back and business is better
than it’s ever been. Earlier this month, Smith
Travel Research revealed that the industry generated $22.6
billion in profits in 2005. That’s higher than the glory days
of 2000. And I don’t need to tell you that Average Daily Rates
are hitting levels never before seen in many destinations and that developers
are busily building new properties throughout the land.
With this increase in business comes increases in Room Tax collections
which, for many DMOs, is good news...especially if government invests
a standard percentage of those collections in their CVB.
So, if business is so good and the money so flowing, why are some hoteliers
pointing an accusatory finger at CVBs?
In a number of destinations, CVB productivity is starting to slow. Room
Night Bookings are stalled at last year’s levels or are, in some
cases, slightly off the torrid pace set during the year prior (when
the CVB was the hotel industry’s best buddy).
Are the Bureaus slacking off? Hardly. The ones I’ve talked to
are working harder (and smarter) than ever...but there is a slight problem
in paradise.
They don’t have room nights to sell.
Business is suddenly so good that hotels are beginning to pass on the
leads that are being generated by their DMOs. As they believe that they’ll
fill without the “sure-thing” that a convention block might
bring, they aren’t providing room blocks to their Bureaus.
For many of them, they are absolutely right in doing so. After all,
they have to make money when and where they can. And, the convention
block is no longer a sure thing, thanks to the hotel industry’s
on-line fire sale during the first half of this decade. As they tried
to unload inventory on the web during the lean times, hotels inadvertently
taught the consumer that we could do better than the “posted”
rates. And, unfortunately, that includes the negotiated rates at participating
convention hotels. Nevermind that the block rate often IS the best.
The consumer no longer believes it...and goes searching for something
better.
Which, in turn, causes the hotels to be mistrustful of the convention
attendee who no longer defaults to the blocked rooms in a destination...and
the circle spirals ever downward. But, without a sufficient number of
reserved rooms in a Bureau’s bid, the meeting planner is likely
to take a pass on the destination (’cause there’s nothing
worse than cranky attendees that can’t find a room).
So...here’s the question. If the hotel community isn’t willing
to play ball and offer room blocks to the CVB for its pitches to convention,
event and sports planners, should the CVB be chastised when it can’t
sell what it doesn’t have?
Of course not. But, because DMOs are often judged against last year’s
numbers, we have a Houston-esque problem here.
Which is why I believe the DMO industry needs to develop a new measure.
Just like Hotels developed Rev/Par (Revenue per Available Room) as a
more accurate indication of their success than Occupancy and Average
Daily Rate, we need an indicator that is more accurate than simple leads,
bookings and room nights. And, taking a queue from our partners, I think
I’ve come up with an answer:
Bookings per Available Rooms (Book/Par). Effective
DMOs will always be able to generate Leads and potential Room Nights
for the destination, regardless of what hotel availability is like.
But, if there are fewer rooms offered to the DMO in 2006, Book/Par should
show that the Bureau was successful in helping to close the business
that was made available to it, even if the room night totals were shy
of 2005.
Bill Snyder, one of the Destination Marketing industry’s true
statesmen, often railed that CVBs had allowed themselves to be judged
on a hotel matrix. Maybe it’s time we took Bill's suggestion and
designed our own matrix...
To Be Continued (I’m sure)....and I’m eager to hear your
thoughts!
Bill
Wanna comment on this or other topics. E-mail Bill
at bg@Zgeist.com.
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