Industry titans Experient and MGM Resorts — in partnership with The Association of Equipment Manufacturers (AEM) — just released a compelling whitepaper and case study about how the concept of dynamic pricing, as developed for the transient side of our business, could work for the meetings and events industry if applied to the housing models.
Naturally, changes in an industry can raise doubts and skepticism. And I expect that there will be some resistance to this change — probably from the same professionals from the meeting planning side who were unsure about dynamic pricing for transient business.
The whitepaper, “Modernize Your Room Block Pricing Model,” can be downloaded for free here
Here’s a key excerpt from the whitepaper: “The challenge for all meeting planners and event organizers is to sell the right rooms to the right customer at the right time for the right price. Planners and organizers need to obtain as many rooms as possible for the lowest rate in order to fill room blocks, while hotels need to ensure they are at the highest occupancy at the highest possible rate. The whitepaper explains how utilizing a dynamic flex pricing model, or rate yielding, is the best way to bridge this gap.”
(For those of you unfamiliar with AEM, their CONEXPO-CON/AGG 2014 is the largest show in North America for the construction industries — and was selected to prove that a “win-win” can be achieved through the use of dynamic flex pricing.)
Also according to the whitepaper, “The results for AEM included greater revenue that could be used for show services, more inventory for longer time frames, additional inventory access, lower entry rates contributed to earlier bookings and increased traffic for the event website.”
For MGM Resorts International, the results included:
- room block growth beyond the original contracted block
- leverage to gain additional inventory for the next event (based on stronger pick-up history)
- additional room nights
- competitive rates
According to Deanna Burgess, Director of Citywide Corporate Hotel Sales for MGM Resorts International, “We saw room block growth in 13 hotels by more than 15% from the original contracted block at lower-than-market rates. That’s something we’ve never seen before.”
So is this a fluke, or is there potential for future event room block management? Only time will tell — but congratulations to Experient, MGM Resorts and AEM. I personally love it and applaud whenever buyers and suppliers get creative and do business outside the normal parameters!