Hotel revenue managers question value of group travel

Group travel demand has shown a consistent rebound since the outset of the pandemic, yet elevated expenses are placing pressure on profit margins

The trajectory of group travel demand has been progressively regaining strength in recent years, though specialists in hotel revenue management are beginning to detect some weakening in performance, prompting apprehension regarding the segment's future.

Key takeaways

• Given the rise in labor and food-and-beverage expenditures, coupled with marginal growth in rates, it is necessary to deliberate whether pursuing group travel aligns with current profitability objectives.
• At this juncture, when hotels confront substantial uncertainty about the forthcoming business mix, the decision rests between abstaining from group bookings in anticipation of a resurgence or stability in transient bookings, or accepting group reservations at a reduced rate with relatively modest profitability, factoring in food and beverage earnings.
• The frequency of group booking leads has dwindled lately, and exacerbating the challenges for hotels, there's an escalation in expectations – rebates, commissions, and concessions are reverting to pre-pandemic levels, thereby hindering the bottom-line performance.

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