Sizing the value of group business for your hotel

“Group business” is a catch-all phrase which has been applied by the hotel industry to block-bookings.

But a group of 10 staying at a 30-room boutique hotel in Key West to celebrate someone’s 40th birthday weekend has a different set of demands and requirements from 1,000 delegates attending a three-day convention at a big box property in Las Vegas. The cost to the property of servicing different types of groups is different, as is the potential profitability.

Identifying the constants

While the theory between groups varies, there are some constants in the practice of securing the business in the first place and in delivering on what has been sold.

Identifying groups which are most likely to convert after receiving the response; anticipating the upsell, cross-sell and repeat booking opportunities; calculating the potential impact on rates once the group’s rooms have been allocated – all feed into an increasingly important and business-critical conversation.

The conversation is also wider within the property as different departments work more closely together. Silos are slowly becoming a thing of the past – data sharing between departments has been facilitated and enhanced by technology, with this co-operative mindset applicable across all sizes of hotel. The collaborative approach is often reflected in corporate structures and reporting lines.

Assessing group value

But before department heads can get together to discuss projections and profits, properties need to assess the value of visitors comprising the group. At the risk of oversimplifying – the 1000 delegates at the Las Vegas convention might be using their expense accounts to buy contacts or colleagues drinks at the bar which is good for operating income. However, as the planners probably will have booked a buffet for lunch, It’s important to factor in all of the revenue streams with events and groups, both individual transactions and group purchases, when evaluating their value to the hotel.

Beyond purchases, there’s also intrinsic value in brand mentions and digital praise from smaller groups like the 40-something’s birthday weekend in Key West. The immediate pay off may not hit the ledger, but what is the value of their social media activity talking about how welcoming the hotel staff were and what a perfect spot it was for such a group outing? For hotels, this earned credibility online is priceless in earning new business from future like-minded groups.

Personalization inside groups

Upselling and cross-selling are part of 21st century ecommerce – no-one bats an eyelid when Amazon or Netflix suggests things you might like based on your past purchases or what other people have bought. Just because a guest is part of a group stay, that doesn’t mean hotels can’t offer unique room upgrades, meal options, spa treatments, even activities with third party partners based on an individual profile at a personal cost. Hotels need to embrace this more comprehensively while being aware that one of the reasons Amazon and Netflix upsell so efficiently is that the suggestions are appropriate. With so much data available to hotels there is no excuse for mis-selling or not upselling at all.

Bottom line

Hotels, like every other business, need to turn a profit. Thinking about the value of groups rather than the room rate they can be charged is a fresh way to approach this dilemma and technology is helping to make “value” into something concrete that can be integrated into pricing decisions.

Want more insights on groups? Learn how to unlock the potential of group sales and catering in our new report for hotels.