The Hotel Groups Technology Deficit
It's not hyperbole to say that hotel groups technology has not gotten the love it deserves. Obviously, the percentage of group business varies widely, depending on the type of hotel property. But overall, the groups business represents anywhere from 10-50% of a hotel's bookings, and the level of automation and enhanced sales capability in the groups space does not reflect that reality. Both technology providers and IT budgets fall short in their recognition of the importance of group sales as a differentiator for a hotel's business. That's why we refer to it here as a "technology deficit". It's a bill that is due but hasn't been paid.
When we look at the technology solutions used by hotel Group Sales departments, whether they are hotel-specific like Passkey or Delphi, or they are more generic like Salesforce, they are generally focused on catching the big fish. The focus is on meeting planners, group organizers, and conventions. There are actually several very good technology solutions to solve problems in these areas. Passkey is one example of a company that helps with the registration of large groups. Delphi helps manage the catering and billing for very complex scenarios. In terms of innovation, there are some really stunning solutions being used at convention centers. Pre-COVID, these solutions were being used, and they will be used again once large group meetings return..... AND THEY WILL RETURN when it's safe to meet in large groups. An example is AI to match potential buyers with potential sellers onsite and way-finding apps with geo-fencing to promote a better flow of attendees.
What seems to be missing is a "solution" for the "problem" presented by small and medium-sized groups. This is the root of the technology deficit. Small and medium-sized groups, 10-50 rooms with limited catering or meeting space requirements present a unique challenge in two ways. One, they aren't perceived to move the needle from an individual sales executive's perspective. Why would a salesperson invest the effort to negotiate and contract with 10 groups that need 50 rooms, when they could focus on just booking ONE 250-room group? The fact that those smaller groups add up to a lot of opportunities doesn't mean it's not a lot of work to coordinate for their needs. The second obstacle is that the organizers of these groups often have very different expectations. They aren't all professional meeting, wedding, or event planners. They could be the father of the bride, the team coach, or the church secretary. These planners don't necessarily understand the contracts, the block and cutoff dates, or the concept of pickup. Additionally, these customers' expectations are colored by the rest of their day-to-day experiences. It may not make sense to them that they would have to call and negotiate a rate. What they want is a good price for 15 rooms…not a 3-day process of chasing down a group sales associate.
When we refer to the technology deficit in the area of groups, we really are referring to the lack of automation and solutions for small and medium-sized groups. Ironically, large groups expect and in many cases deserve a level of 1 to 1 interaction that technology solutions may not be well suited to resolve. We, technologists, are certainly capable of building a chat bot that can automate room rate negotiation based on detailed AI and analytics to optimize the process with large groups. But if that process annoys even a handful of organizers of conventions that need 1000+ room nights, it's really not worth it. The goal of technology for large groups should be to deliver the best capabilities to support live group sales agents and their ability to close contracts for these meeting professionals. Those technologies exist, and we could devote many column inches to discussing whether they do a good enough job. But what we mean by the "technology deficit" is not that these larger group solutions are inadequate. It's that the automation to support small and medium groups has been non-existent up until now.
The lack of automation affects the Group Sales function at a hotel in critical ways. Obviously, a large group is more complicated than a smaller group. A large group may have more needs and the process of organizing hundreds of rooms, coordinating meeting space, breakouts, and dinners on-site, etc. is more complex and takes more time. But contracting and blocking rooms for 20 rooms for a family reunion still takes time and this is time that is diverted from getting the larger groups sold and supported. There are many ways to handle these opportunities, like splitting them up among less senior sales associates or directing these groups to simpler online RFP tools. But at the end of the day, a lack of automation means time will be spent handling these less productive groups. In many cases, though a group is relatively small, they loom large in the organizer's mind. 50 rooms may appear to be a small number to an event organizer with 2000 attendees, but it seems like a lot if you've never booked two rooms together before. A wedding may not be equivalent to a massive trade show in terms of revenue or complexity but it's the most important day in at least two people's lives and so their expectation of time and attention is not unwarranted. As an additional note, there are no great solutions today for series groups either. A church group that needs 50 room blocks semi-monthly is blocking 1200 rooms annually. That organizer needs automation comparable to planners who utilize that many rooms in one weekend.
In September 2019, IBS Software's Hospitality Solutions team launched an online booking tool for groups, allowing self-service for small and medium-sized groups. This capability takes into account all the business rules of the hotel but also respects that the online user wants an automated process that does not require the complexity of blocks and pickup. The customer can pay for some or all the rooms at the time of booking or send a link to attendees so they can pay for themselves. The solution allows quoting and booking online, while conforming to the hotel branding, making it very easy for the property to implement. IBS is also in the process of enabling group functionality via 3rd party travel sellers so the automated quoting, booking, and rooming list management can be extended to multiple channels as well. The result of these efforts is that the hotel's group sales department can now focus on the negotiation of rates and execution of contracts with larger groups and STILL close the small and medium-sized groups business. An unexpected but potentially even more impactful consequence of implementing these solutions has turned out to be that more small and medium-sized groups are being booked with less effort. Many customers prefer self-service, as this aligns with their individual shopping and booking practices. And a 3rd party's ability to quote a customer on the spot translates to more groups booked for hotels that can offer this capability.
About the Author
Will Berrey, Senior Director, Product Management, iHospitality, IBS Software
Will has been involved with hospitality operations and technology his entire life. From Will's first job at a Golf Course in Western Pennsylvania at the age of 12, through his 3 years at IBS Americas, he has held roles in hospitality.
Will worked for over a decade for PMS companies including Micros|Oracle, and Springer-Miller. He moved into the digital world at VEGAS.com, Caesars Entertainment, and Las Vegas Sands. Will is currently managing IBS Software Groups Distribution, Internet Booking Engines, and Analytics.