While lavish corporate events five years ago drew a negative stigma that executives tried desperately to avoid, new data show resorts are making a post-recession comeback.
Continue Reading Below
Resort bookings were up 33% year-over-year in the first quarter, according to data from Cvent, a cloud-based enterprise event management platform that can be thought of as the business equivalent to consumer travel sites like Expedia (NASDAQ:EXPE) and Orbitz (NYSE:OWW).
Organizations spent on average 24% of their marketing budget on meetings and events in 2012, according to Cvent. Perhaps even more telling, companies typically spend about 1% of their revenue on these events, which for a company as big as Pfizer (NYSE:PFE), which reported revenue of $59 billion in 2012, can amount to hundreds of millions of dollars.
“The data shows people are back to doing business at attractive properties and resorts that will draw in more attendees,” said Eric Eden, Cvent’s vice president of marketing.
The business travel industry has had a long, rocky road to recovery.
Before the Great Recession companies across all sectors hosted pricey corporate events from internal meetings to incentivize employees to external events intended to draw in new business and boost sales.
When the economy took a nosedive in the tail-end of 2008, companies were forced to cut spending, and the sparkle of fancy hotel parties rapidly lost its lure as consumer backlash against Corporate America reached unprecedented heights.
A stigma was still attached to swanky events as recently as two years ago, including when Bank of America (NYSE:BAC) in 2010 hosted a rooftop party for the bank’s capital markets team despite beginning steep layoffs around the same time, and when Morgan Stanley (NYSE:MS) in December 2011 held a lavish event for departing chairman John Mack at the Metropolitan Museum of Art’s pricey Temple of Dendur, according to FOX Business’s Charlie Gasparino.
To give some perspective of the time's harsh market, some hotels were even inclined to remove the word "resort" from their name in an effort to attract executives wary of having such a high-end name appear on their expense reports.
But the market has slowly started to improve, and as businesses regain their confidence and hiring ramps up, business travelers are once again hitting the road to try and attract new business.
Corporations are now craving upscale properties, and resorts have been quickly improving luxury amenities, offering a cornucopia of swanky restaurants, pristine golf courses and high-end spas to meet the fast-growing demand. As the stigma dissipates, these types of events for some industries have become a priority.
“It’s a different atmosphere than it was a few years ago,” Eden said.
Cvent on Tuesday unleashed a list of 100 of the most popular resorts in the U.S. and Caribbean. Among the top ten are swanky hotels like Panama City’s Sandestin Golf and Beach Resort, which has 1,450 sleeping rooms and 65,000 square-feet of meeting space, Maui’s Grand Wailea, A Waldorf Astoria Resort that has 780 sleeping rooms and 100,000 square-feet of meeting space, Fort Lauderdale’s The Westin Diplomat Resort & Spa and even Las Vegas’ The Venetian and Palazzo Resort, Hotel & Casino, which has a whopping 7,093 rooms.
InterContinental Hotels (NYSE:IHG), which operates the Crowne Plaza Hotels & Resorts as well as other luxury brands like Hotel Indigo and Even Hotels said it has been expanding and updating its resorts portfolio across high-growth meetings markets like Aruba, Puerto Rico, Panama, Cancun and Cozumel.
“IHG is seeing continued growth in the resort business and meetings market, particularly in the Latin America and Caribbean markets,” the hotel giant told FOX Business in an email. “We believe that the modern day business traveler is increasingly looking for a leisure escape.”
Hosting an event in Hawaii, Florida or the Caribbean rather than in less exotic places can help attract more attendees, which not only serves to help corporations swoop in and win new business but can also ensure that a company can skirt excess fees by meeting pre-determined quotas with the resort.
“A lot of executives realize if they want to get sales and grow, they need to have their teams out there meeting people,” Eden said. “They are at a competitive disadvantage if they don’t.”
In-person events, he says, have a higher return on investment than any other type of marketing except for an organization’s own web site, the primary reason why the pace of bookings continues to pick up. While five million rooms at resorts were booked across Cvent’s network all of last year, two million were booked in this year’s first quarter alone, with companies in 2012 spending on average $60,000 per event.
Cvent’s network has more than 200,000 hotel, resort and special event venues around the world, including major resort brands and convention centers, even fanciful places like castles in faraway places.
While the lavishness has returned, the extravagance remains tempered to some extent compared with before the recession, Eden said, with companies taking precautions to keep costs down, such as booking far ahead of the event date.
Cvent, the 13-year old business that connects corporations to resorts while inciting competition by allowing multiple resorts to pitch their offer at once, says its customers in 2012 reported saving 15% -- a substantial amount for events of this size -- as resorts fought for their business. It's easy to imagine why, as one third of business at hotels and resorts come from these types of meetings and events.
In the last 12 months, some of the world’s biggest hotel brands hosting some of the largest corporate events have seen their shares skyrocket as bookings and revenues improved.
IHG’s have grown by 20%, MGM Resorts International’s (NYSE:MGM) have improved 32%, Marriott International’s (NYSE:MAR) ticked up 8%, Las Vegas Sands’ are up 21% and Wynn Resorts’ have soared 32%.