Meeting planners are caught between a rock and a hard place.
Resorts are offering hefty incentives to attract association and business meetings in the down economy, but many companies can’t take them without a public inquisition about spending practices.
“As you would guess, some groups have been hesitant to book resorts because of the perception of being extravagant,” said Kay Cochran, director of sales and marketing at the Hyatt Regency Huntington Beach & Spa.
According to Meetings and Conventions, and industry publication, almost 40% of planners responding to a recent survey put luxury or upscale hotels at the top of their lists to avoid, with golf resorts and beach resorts both ranking in the top 5 off-limit meeting locations.
“People don’t want to be associated with being at resorts even if they can afford it,” said Joe McInerney, president and chief executive of the American Hotel & Lodging Association. “They don’t want to be on the 11 o’clock news for attending a meeting in a destination. The irony is these destinations are some of the best for hotel room rates and airfare to get there.”
That puts Orange County resorts, which had attracted high-ticket meetings with coastal views and golf and spa packages, into a full spin to try to bring in business by proving luxury can be cost effective.
The Hyatt Regency is offering incentives for new business,incentives can include discounts, free rooms or extra food and beverages,and the Ritz-Carlton, Laguna Niguel is offering a systemwide package of bonuses for companies that book more than 10 rooms.
“There are a lot of incentives on room rates because everyone is focused on budgets,” said Tim Brown, partner at Meeting Sites Resources, an Irvine-based company that helps facilitate global meetings. “The other things that are big are value-added incentives to sweeten the pot that run the gamut from discounted or complimentary rooms to hosted cocktail receptions.”
Not every resort is cutting the price of rooms, which are the largest source of profits for hotels. The Resort at Pelican Hill, which opened last year, customizes meeting packages with golf and spa options but holds firm on room rates, according to Managing Director Giuseppe Lama.
“When you look at the market and see other properties are doing heavy discounting, it begs the questions, ‘Where are you going to find money to pay your staff?’ ‘How does that relate to how you take care of your group the next month?'” Lama said. “We made a choice not to do discounting, slashing and cutting because that is detrimental to the destination and the property itself.”
Resorts were pressured into defending their rates after insurer American International Group Inc. received public scrutiny for holding a $450,000 retreat at plush St. Regis Monarch Beach Resort and Spa just days after receiving an $85 billion bailout from the government last year.
“We took the majority of our hits earlier this year (because of) the AIG effect,” said Michael Mustafa, director of sales and marketing at St. Regis.
The resort saw a 15 percentage point drop in occupancy after the brouhaha and some market watchers have said rooms have been as much as 70% empty this summer.
“It was really devastating for big destination resorts,” McInerney said. “Companies did pull out and paid cancellation fees to move someplace else.”
According to the Meetings and Conven-tions survey, 21% of the companies that responded had dropped events that had already been scheduled because of the growing public backlash.
Financial services industries had been 20% of the St. Regis’ meetings business before the fallout of AIG’s retreat, according to Mustafa. Now the resort is reaching out to other industries, including technology and medical, which still are planning public meetings.
“There are some areas that are a little more robust including medical and pharmaceutical,” Brown said. “The financial markets, aircraft and aerospace,those areas have been pounded.”
Brown said the medical industry still is holding meetings to keep up with training compliance issues and some manufacturers still are getting together.
Manufacturer Honeywell International Inc. bought out the St. Regis earlier this year, according to Mustafa.
Finance and high-profile companies still are meeting but aren’t publicizing them as much.
“There are meetings going on, some certainly are more stealth in nature,” Brown said.
Keeping that privacy is key to Pelican Hill’s business, according to its directors.
“We try to be mindful of what kinds of businesses are coming here,public or private,and how the public perceives them,” said Pelican Hill’s Director of Group Sales Nance Trevithick. “For those who do come here, we ensure their privacy. We don’t place reader boards anywhere on the property and we promise not to disclose who is here.”
Pelican Hill, as with most OC resorts, also relies on its location to draw in guests. Many of the resorts in OC boast ocean views and golf courses to attract meetings. The resorts locally also benefit from nearness to airports, Disneyland and major metropolitan cities.
“Resorts that are close to major metropolitan areas are going to do well,” McInerney said. “OC is a great destination with the beaches and nice resorts.”
Being close to major cities allows resorts to go after local businesses as more Southern California companies are allocating less for travel budgets.
“People are not traveling so far and are holding their meetings closer to home,” Hyatt Regency’s Cochran said. “As programs are being held more regionally, our OC resorts become more desirable.”
The St. Regis is targeting local companies with scattered offices to hold daytime meetings in its conference rooms. It is giving financial breaks to local groups that hold meetings at the resort.
“The evolution of meeting spaces is changing. We have to go with the times,” Mustafa said.
The St. Regis upgraded its teleconferencing abilities to allow businesses to interact with offices around the globe.
Brown said that teleconferences and Web-based conferences are very popular right now because it saves on the expense of traveling.
“Nothing will replace face-to-face meetings. It will come back,” he said.
