A major change is taking place in the hospitality industry. For years, event planners have looked enviously towards the tourist trade, where search engines can locate a suitable hotel in seconds and where aggregator sites provide travellers with a quick and easy way to compare packages. Similar online tools are now becoming available for booking conferences and events, and a huge opportunity awaits those hotels and conference venues that are shrewd enough to take advantage of them.
We are all familiar with the leisure travel sector’s marketing strategy: most of us, when looking for flights or hotels, will use a combination of search engines and comparison or aggregation sites to help us in our selection process. It’s easy to tap in a few simple criteria, such as length of stay, number of guests and preferred facilities, in order to receive an easily understandable list of options and recommendations. Hotels and travel organisations have made good use of these tools, using them to gather information about our preferences and offer us additional services tailored to our individual needs.
On the Cvent network alone, $8bn of business took place in 2014
When it comes to group business and the MICE sector, however, things have been functioning very differently: planners have traditionally been obliged to go directly to venues in order to request pricing for their event, or to trawl through websites in search of a likely location. The proposals that they then receive are frequently presented according to the venue’s own pricing packages, making it extremely difficult to compare one offer with another.
Hotels and conference venues have also suffered because of the lack of online tools. To reach event planners, they have been obliged to rely on ‘old school’ methods such as direct mail, advertising and even cold calling, which are becoming increasingly ineffective. According to IBM, three quarters of B2B buyers are now influenced by social media, and over two thirds of the buyer’s journey now takes place digitally. Ultimately, the old marketing techniques just don’t work any more.
Part of the reason for the lack of new digital tools on the market is that hotels have been slow to push for progress. The chunk of income that the sector receives from group business has habitually been smaller than that it has received from tourist or transient business, thereby making it less of a focus for sales and marketing efforts. But the market is still vast: according to Frost and Sullivan, group business is bringing the sector $103bn in income every year, compared with $250bn from transient and leisure business. Significantly, however, the hospitality sector spends only four percent of its group business income on marketing, compared with 10 percent of its transient and leisure income.
Innovative event solutions
The good news is that the market is still wide open. 63 percent of planners say that they don’t have a preferred venue in mind when they begin their search, so it’s just a question of which venues are able to reach them with the most relevant information at the right time. With the right tools, hotels can soon catch up with their business customers – and there are already products on the market that enable a hotel or venue to manage its proposals, integrate with other sales and marketing systems and analyse success rates.
Cvent, which specialises in technology for events, has operated an online venue finding platform for the MICE sector since 2009. From the statistics gathered from its use, it is clear that demand from planners is increasing rapidly – since the company’s inauguration, the number of planner organisations issuing request for proposals (RFPs) for the first time on the network has grown by almost 1,000 percent. The numbers have increased steadily year on year and clearly demonstrate that planners are not merely using the internet as a search tool, but are also placing their orders there. On the Cvent network alone, $8bn of business took place in 2014.
The growing demand for online search tools for planners looks set to continue: Generation Y (in this instance, those people born in the two decades in the run-up to the millennium) are children of the digital age, and with many already in their 20s and early 30s, their attitudes are becoming representative of the workforce as a whole. If we ignore their opinions, we do so at our own peril.
Cvent’s own research into the opinions of Generation Y event planners pinpointed more reasons why marketing efforts towards them need to be focused online. Firstly, the research showed that Generation Y planners are more likely than their peers to think that negotiating with a venue is the most difficult part of the sourcing process, indicating that they would rather discuss terms at a safe distance. When deciding how to contact a venue, the telephone is far lower down on the list than online sourcing tools or using a search engine.
Cvent also found that Gen Y planners are highly influenced by social media and blogs – something that is hardly surprising, coming from a generation that is used to online shopping and having access to peer and professional reviews for everything ranging from clothes to holidays.
Gen Y planners are also less likely to feel loyal to a particular hotel brand, or to source directly from a venue – being used to instant answers from online sources, they frequently feel that venues are too slow in responding. Finally, the research showed them to be 14 percent more likely to feel that responses are not fast enough, and so will quickly grow impatient and move on to the next option.
Picking up the pace
Hotels and conference venues need to move fast. Competition is on the increase as smaller players enter the market and boutique hotels begin to compete for group business. Cvent’s statistics indicate that smaller group bookings are on the rise, a trend that will further enable smaller players to compete with the giants of the conference and events world. The geographical spread of competitors has also extended, thanks largely to the internet. Hotels that might have previously been sitting below the planner’s radar, in regions such as the Middle East, are able to line themselves up against venues in central Europe. This is very helpful for the planner, who faces a wider choice of locations, but is yet another squeeze on hotels and venues.
All of these factors suggest that hotels and conference venues need to participate more actively in this online market in order to respond to the growing demand. In 2014, over a third of hotels lost market share, while the number of online RFPs from event planners increased by 27 percent. Even so, it’s an exciting time for event planners and hotels alike: the group business sector holds enormous potential for the hospitality sector with its multi-room, multi-day bookings, and the discipline of a more open online market will make life far easier for planners. The move to an online model for researching, comparing and booking venues for events is already happening, and it’s happening fast.
Those hotels wanting a share of the action will need to move themselves into position as soon as possible.