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Group Business to Make a Comeback

David Brudney & Associates- Hospitality Marketing Consultants
David M. Brudney, ISHC, a nationally recognized spokesman for hotels and a veteran with four decades of experience, is the principal of David Brudney & Assoc. of Carlsbad, CA

David M. Brudney, ISHC, March 2010

I checked the group room night "vital signs" on two of the large, high-end resorts here in Southern California to verify whether 2009 was as bad as predicted. Both resorts offer similar products-great meeting and banquet space, golf, spa and service-and historically have been 65 percent group houses.

No surprise here-total group room nights dropped by as much as 50 percent last year and the business mix has now flip-flopped to 65 percent leisure and 35 percent group. Unlike just a few years back, both resorts confirmed that leisure is now a 100 percent drive market.

I suspect that had I expanded my research I would have found very similar results at most high-end, group-oriented resorts throughout the U.S.

My sense is that group business-in particular, the highly coveted corporate kind-will make a comeback in 2010, but increase in demand will be moderate at best. It may very well take two to three years more before we see a return to those wonderful big numbers.

Apparently, several industry leaders are more optimistic than me. There was a great deal of positivity heard during the annual PCMA conference held recently in Dallas. A panel of senior executives representing medical trade associations, meeting and event professionals, corporations and hotel management companies, delivered upbeat projections for 2010 for best-ever attendance at this year's annual meeting and increases in the number of larger corporate meetings by this summer. One senior executive even acknowledged that his company paid a price for cutting back on meetings and travel in '09 and a new commitment to correct that in '10.

Another senior executive predicted that while the meetings demand will return, those meetings will not be as opulent as we knew them. Do you hear the words, "more responsible" here or "eliminate excessive"?

You have to wonder, don't you, how much pent-up demand there has to be after 18 months or more of cancelled meetings, incentive trips and those all important rewards for so many worthy qualifiers? Surely, corporate America must realize by now how valuable those gatherings are for face-to-face, human interaction, communication, continuing education, morale building, and recognition.

From all I have experienced, read and heard, there appears to be a consensus that with 2010 we may have, in fact, bottomed out and we are on the road to recovery, but a full recovery may not be realized until 2012 or beyond-and it's highly unlikely we will be returning to those record profit times of '06 and '07. I believe we are headed toward a "new normal".

A retail rebound? According to a 5 March article in the Los Angeles Times, the retail industry's slow, but steady recovery picked up pace in February. U.S. retailers posted the best sales results since November 2007-one month before the start of the recession. Merchants reported a 4 percent year-over-year increase, according to Thomson Reuters' survey of 28 major chains-the sixth consecutive month of increases.

The Times also reported that movie attendance-a part of the business that had been flat or declining-was up 5 percent over 2008 with ticket sales reaching US$10 billion for the first time ever.

Is it just me, or does everyone experience crowded restaurants and bars at dinner time no matter where you are? I keep asking myself, "What recession?" Every restaurant that I have been to during Q4 '09 and so far Q1 '10 has been packed at dinner time. I've noticed, however, smaller portions, entrée sharing and multiple appetizers replacing the standard main course.

And I could not get over the Saturday evening crowds recently at exciting new "places" like L.A. Live in the heart of Los Angeles' new downtown center. It was a very cool evening with some threat of rain yet I thought I was back in Times Square on New Year's Eve. The new L.A. Live-complete with multiple food and beverage outlets, the Nokia Theater, Staples Center, cinemas, and an ESPN studio-is something like Universal Studios' City Walk on steroids. L.A. Live offers some very, very good restaurant selections.

What about this new "couch surfing" network of travelers? As if the hotel industry wasn't hurting enough in occupancy-losing potential guests to cruise lines, time share, camping, RVs, and staying with friends and family-now we have a new non-profit, international organization that connects travelers who stay as guests with locals in more than 230 countries and territories around the world. Couch Surfing's site claims 1 million-plus members-75 percent aged 18-29-and 1.7 million successful stays since 2004. One of the site's testimonials tells of a couple from Florida just returning from a six-month tour of Europe and paid for only eight nights. I wonder if these 18-29 year olds will ever become regular hotel guests a decade from now after experiencing couch surfing all over the world. More importantly, I guess, is what will our industry do to earn these couch surfers' business?

About David Brudney & Associates

David M. Brudney has become a charter member of Laguna Strategic Advisors and was a founding member of the International Society of Hospitality Consultants. Brudney is a veteran sales-and-marketing professional concluding his fifth decade of service to the hospitality industry. Brudney advises lodging owners, lenders, asset managers and operators about hotel sales and marketing best practices and standards of care, and conducts reviews of sales-and-marketing operations throughout the world. Brudney is a professional speaker, teacher, mentor and sales trainer. Previously, Brudney held sales and marketing positions with Hyatt, Westin and Marriott.

Contact:  David M. Brudney, Principal
David Brudney & Associates
Carlsbad, CA 92009
Phone:  760-994-9266
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Web Site:   www.DavidBrudney.com

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