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Groups Redefining Group Travel

Leisure travelers are being considered 'groups' in ever smaller numbers. What’s the deal with this strategy?

Monday, February 08, 2010
Caryn Eve Murray
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When MGM Mirage decided to make leisure group bookings less of a crowd scene, the change didn’t seem like much of a gamble - even for high-rolling Las Vegas.

In fact, in relaxing some of their requirements recently for group bookings at the 15 member hotels, company executives sensed that the odds would be strongly in their favor: During the past year, after all, leisure travelers had declared Las Vegas the kind of attractive magnet that had formerly been a stronger corporate draw. MGM Mirage reasoned that downsizing required group size could actually help expand occupancy – particularly during mid-week and other flexible, off-peak times.

To match this new demand emanating from smaller, but still desirable, clusters of leisure guests, MGM Mirage properties opted to lower the 25-room minimum customarily associated with a group to more than half the old minimum. With that, group guests could still count on some concomitant perks and amenities, from coupon books to room upgrades.

A purported gamble suddenly looked like a sure Las Vegas bet.

“When times were incredibly strong, we were driving a lot of our business through room reservations at rack-rate business,” said Jeff Eisenhart, vice president of leisure sales and marketing for MGM Mirage. “Now we are looking at ways of complementing our occupancy, and catering more to leisure group business. And we are doing everything we can do bring in more of that business.” That includes making family reunions welcome, he said, “and anything else out there that is coming without needing [formal] meeting space.”

This kind of adaptive change in hotel, tour company and even cruise line bookings has also reshaped and, in some ways, re-energized a travel agent’s business, too. Re-engineering group travel has, to some extent, re-engineered other parts of the travel industry.

“Back in the day, there were very rigid requirements for something to be considered a group, especially among tour companies, cruise lines and hotels,” said Margie Jordan, chief executive officer of ASAP Travel in Jacksonville, FL. “But now we are seeing as few as five people or rooms being considered as a group status, which is almost unheard of. In the cruise industry, with five cabins are you still considered a group. It could actually be a family and it is actually working to the advantage of some travelers because of the different perks and amenities with a group.”

In previous years, Jordan said, she might have booked four average-sized groups a year, in addition to her other clients. “But I can tell you that, from the end of October to the first week or so in December [2009], I had record numbers of calls for people wanting to consider group cruises and other trips. I was actually floored, I had never had that kind of a surge before,” she said.

These more accessible group offers began to constitute an easy answer to recession-era travel, she said.

“It’s dirt cheap and people are taking advantage of it,” she said.

Jordan, who has been booking travel for her clients for six years, thinks 2010 could well become the Year of the Group. “This is the most group travel I have seen in just a very short period of time,” she said.

The change has certainly helped Travel Sisters, a relatively new booking service based in Melbourne, Australia. Travel Sisters enables women to capitalize on group benefits without the penalties of paying a so-called singles supplement.

“When I first came up with the Travel Sisters concept, I wrote a business plan and costed the trips I wanted to offer,” Erin Maitland, the founder, wrote in a recent e-mail. “Two years ago the airlines weren’t so lenient with the smaller type of group bookings I wanted to make.”

Things are different now, she said. “As of late, some of the airlines have really started to offer great specials …I approached the airlines that offer the direct flights I use and Singapore Airlines was the most helpful. They offered me group booking deals with short name change deadlines and a low-rate deposit at the time of booking.”

Hotel bookings have been gratifying too, Maitland said. “I have been quite surprised at the deals that are offered that I haven’t really needed to make enquiries about group bookings as I only book 5 to 6 rooms at a time. The hotels are fantastic when they know I am booking for a group though and often offer room upgrades or add-ons like beauty services or meals.”

“More hotels have been looking at the smaller group market because group pricing can help fill in some of the excess inventory they have in this market,” said Tim Hentschel, chief executive officer of HotelPlanner.com, a site on which leisure groups can solicit bids from hotels. “Everyone wants leisure now because corporate is down so much.”

He said about 10,000 of the 30,000 hotels he deals with have a five-room minimum for leisure groups, with the rest requiring a ten-room minimum.

“Groups are getting a 30 percent discount over the prevailing online individual rate,” he said. “And in addition to the 30 percent rate off we get for groups over the prevailing transient rate, we also get free rooms for the group coordinator and free room upgrades. With certain sports team groups, they get a free hospitality room to meet in.”

All this activity does constitute a double-edged sword, however: “We are a commission-based agency. When their revenues are down 30 percent, our revenue is down 30 percent,” he said. As a result, “we have to be very aggressive about making sure our customers are getting the best deal, and because they are a leisure customer they have a lot of choices out there.”

Meanwhile, some of the MGM Mirage hotels have already created dedicated sales positions in house to deal with the new breed of leisure groups, Eisenhart said. “We now can look at them as a sales group and not just through general reservations. This means we can service them correctly and take care of their needs.”

Indeed, the new positions have already been put in place in the sales departments at the Luxor and Excalibur, to make sure these newer, smaller groups get just what they need at the right price – and with whatever extras the hotel can offer.

“This is opening up rooms and inventory to customers who otherwise would not have chosen to travel,” he said.

Accommodating smaller leisure groups “has opened up a new world to new customers,” said Eisenhart. “We have provided better service, greater convenience and an opportunity to get people acquainted with our properties on a group basis. And that will increase future bookings.”

Caryn Eve Murray
Associate Editor
Hotel Interactive® Editorial Division

Bio: Caryn Eve Murray is a freelance writer and an assistant editor on the news desk at Newsday on Long Island. During her tenure as a business writer for New York Newsday, she covered the city's small business community for which she won the Distinguished Business Reporting Award of Excellence from the New York Newspaper Publishers Association. She has also been a feature columnist and writer and has ...
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RE: Groups Redefining Group Travel article link
It's not so much of a "strategy", but a trend in the group travel industry. Group sizes have been getting smaller as the nature of group travel changes to more specialized, theme based travel. Gone are the days of load after load of uninformed tourists arriving at hotel doorsteps, busload after busload after busload. Search articles on www.leisuregrouptravel.com for more information on group travel trends.
Posted by: Mr. Jeff Gayduk
Email: jeff@ptmgroups.com

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