Industry Trends Explored at Elite Meetings EMA
The May 2015 Elite Meeting Alliance meeting started out with a hard-hitting presentation on Industry Trends by Michael Dominguez, Senior Vice-President, Hotel Sales, MGM Resorts International. Here are some of the highlights from his educational session:
Today’s environment is different. With the slowdown of the economy during the recession, new hotel construction was put on hold. As a result, there is a shortage of hotel rooms, which makes it a seller’s market. This makes it more difficult to book meetings less than 90 days out.
In 2008, twelve hotels with at least 50,000 square feet of meeting space were built. There were nine built in 2009, five built in 2010, two in 2011, zero in 2012, three in 2014, and there will be one in 2015.
Most hotels being built today are limited service hotels with no meeting space, because they are more lucrative. Hotels make most of their revenue on sleeping rooms, and there a growing transient market, which pays full rate. In 2005, the transient market was 57% of the market, and group business was 43%. In 2013, those numbers changed to 64% transient and 36% group.
There is record demand in North America. Room revenue was $107 Billion in 2008; $122 Billion in 2013; and, $133 Billion in 2014. (Las Vegas does not report to Smith Research because the market is so different that it would skew the national results.)
He said we are past the recession, past the recovery, and into expansion, but with a new structure. It is not business as usual.
We are in the Age of Consolidation. Hotels companies are either buying or developing small, lifestyle hotels. Examples are Wyndham with Dolce and Intercontinental Hotels with Kimpton. Expedia even bought Travelocity.
Part of the challenge is that the US dollar is very strong, which makes it very expensive to come here from other countries. The current low oil prices are off-setting the increase for now, but when they rise again, we will see the impact.
A quote that he used, from Professor Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum goes, “In the new world, it is not the big fish which eats the small fish, it’s the fast fish that eats the slow fish.”
Photos: Andrew Shafer Visuals