Hotels’ convention business getting back up to speed

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There’s good news on the hospitality front: Group and convention business has been gaining traction this year, far exceeding expectations, and is expected to get even better next year.

Last year at this time, the outlook was dismal. Instead, demand has increased sooner than most people predicted.

The fourth quarter is looking strong or steady for most of the large local hotels, with occupancy rates approaching normal levels, thanks to the bump in group business.

The hospitality industry suffered a double whammy when the financial crisis hit the nation, followed by the AIG scandal in 2008, which included allegations of corporate executives’ gross misspending at hotels. National companies reacted by canceling conventions and severely curtailing meetings and travel.

The hospitality industry has yet to completely recover, but there are signs that corporate purse strings are relaxing, and business travel is increasing, as the national economy slowly strengthens.

Group, convention and exhibition business has already improved, though hoteliers say they’re dealing with a few new twists.

Short-term bookings give hoteliers less time to prepare, but short-term has become the new normal, putting more pressure on hotels to accommodate business groups with far less lead time. That trend is expected to continue through next year, because companies are booking as close to their event dates as possible rather than committing dollars too far into the future.

The Doubletree Hotel at the World Arena has seen a good share of short-term bookings.

“It’s amazing the type of business we can get two weeks out,” said John Ault, general manager of the Doubletree, which has 24,000 square feet of meeting space.

Group demand this year came late, as businesses delayed meetings to take advantage of lower off-season rates in October and November.

The Doubletree picks up a good bit of ongoing business from Peterson Air Force Base and Fort Carson. The hotel also is a driving destination for groups from Denver, Pueblo, Colo., Arizona, New Mexico and Wyoming.

“I think the worst is behind us,” Ault said.

Many people in the industry would agree with him.

At the Antlers Hotel downtown, group and convention activity is up 16 percent year-to-date, said Allen Paty, general manager of the hotel, which has 27,000 square feet of meeting space.

Paty anticipates growth next year in the 5 to 6 percent range. About 35 percent of the hotel’s overall business is group; 22 percent of its overall business is government-group.

At Cheyenne Mountain Resort, much of the growth this year has been from national associations, said John Branciforte, vice president of marketing for the resort.

Group occupancy for the year is up 16.9 over last year, while group revenue has increased 14.9 percent, he said.

Although occupancy rates and group business might be flat in 2011 compared to this year, the resort expects to increase its average daily rate about 11 percent.

“We’re in the hunt right now to close as much business as we can for next year,” Branciforte said.

At The Broadmoor hotel, group and convention comprises 70 percent of its business. The hotel has 185,000 square feet of meeting space and 744 rooms — the largest hotel in the city.

For much of this year, the hotel’s business has been from smaller groups, in the 10- to 20-room range, but that could soon change, as corporations increase their bookings.

For 2011, the pace of group reservations at the resort is already up 25 percent compared to last year at this time, said John Rovie, director of sales for The Broadmoor.

Preparing for the recovery

As it is everywhere, group business is a highly competitive market locally. Adding amenities and refurbishing are some of the ways to grab market share.

Several hotels did extensive renovations in 2010, including Cheyenne Mountain, Crowne Plaza and the Broadmoor.

“We think we’re positioned very well going forward because of the continued enhancements to our property,” Rovie said.

The Broadmoor’s west-tower rooms, west lobby and west lower-level meeting room were all redone this year.

Cheyenne Mountain refurbished its conference rooms, all of its 316 rooms, and revamped landscaping.

Colorado Springs’ second-largest hotel, the Crowne Plaza, recently installed a $1.5 million HVAC system and new carpet in 250 of its 500 guest rooms.

Groups and conventions comprise 60 percent of the Crowne Plaza’s business. The hotel — which has 50,000 square feet of meeting space and is the second-largest hotel in the city — attracts a lot of government business from Washington, D.C., as well as from sports groups.

It doesn’t hurt matters that the Crowne Plaza received the Society of Government Meeting Professionals 2010 Company of the Year award.

As business builds up, many of the major hotel chains nationally expect to see their revenue per available room, or RevPAR, rise between 6 and 8 percent.

“We’re going to be pushing our corporate customers very hard to see rate improvements,” Hilton Worldwide CEO Chris Nassetta told HotelNewsNow.com.

In Colorado Springs, large hotels plan to raise their average daily rate next year by 3 to 11 percent.

“The corporate market still lags, but it’s starting to loosen up a bit,” The Broadmoor’s Rovie said.

Raising room rates is a process that takes several years. Whether rates can return to pre-recession levels remains to be seen.

National forecasts for 2011 indicate that bookings will continue to be made with little lead time and growth will be modest. Locally, expectations are similar.

For an industry beset by rate cuts and declining occupancies over the past few years, that’s not an ideal forecast, but it’s a start.