Cancellation fees, Smaller Meetings, and Shorter Lead-Time

Aug 11, 2016

By: David M. Brudney
Member of Laguna Strategic Advisors

I’m not qualified to write about industry trends, but I can write about trends that I have observed at one of my client’s properties, a very upscale resort located at a great destination, that has done as much as 70 percent group business.

This year the resort is experiencing a huge increase in larger group cancellations, cancellation fees, smaller group meeting demand, and shorter lead-time bookings.

Half way through 2016 the resort has already surpassed the total amount of cancellation fees captured in 2015. Why such a significant increase in cancellation fees?

  1. Corporate meetings booked prior to new CEO coming aboard;
  2. A plethora of company mergers;
  3. Oil prices.

Surprisingly, corporations seem to have no problems paying these cancellation fees. Many of the cancellations have come just two months out of the booked event.

The resort is also experiencing considerable caution on the part of groups booking 2017 and beyond – – very slow to go to contract. Possible reasons? One reason could very well be uncertainty over the upcoming general election.

The property is also experiencing a transition from larger to smaller groups (60 rooms or less), booking an average of three months out or even shorter lead-time.

A profile of these smaller groups:

  1. Corporate and association/society meetings/events previously booked in South America cancelled due Zika virus scare, rebooking in the USA;
  2. C-level or C-suite retreats over weekends;
  3. New CEO bringing 20 or less senior executives from all over the world;
  4. Law partner retreats, midweek and weekends.

These smaller groups fall into two very distinct categories:

  1. Groups where price is no issue; groups want to be “Wow’d”, best experience ever;
  2. Groups on very tight budgets, stretching every possible dollar, agreeing to book over the resort’s low demand dates.

Elsewhere, trends I have observed nationally and globally include more hybrid meetings, more creative F&B functions and menus (more healthier fare, hors d’oeuvres passed vs. more formal sit-down banquets), adapting to new technology, more charging stations, and demand for meeting venues with more natural sunlight, and attractive outdoor venues.

Overall, it’s great to see group demand back. I believe strongly that there will always be demand for American groups to meet.

19th century French political thinker and historian Alexis De Tocqueville said it best in his 1840 book “Democracy in America,” when he observed that Americans constantly form associations – – to gather and to meet. 176 years later, De Tocqueville’s observations ring true today.

As published