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• The American Marketing Association holds more than twenty conferences annually.
• Hyatt and Marriott share the majority of the AMA’s conference business, with Marriott’s
share close to three thousand room-nights a year.
• AMA plans & hosts conferences because members, marketing managers, suppliers, and
educators, have attended past conferences on these topics.
– if a particular conference receives poor attendance, the AMA drops it from future
schedules
• Ultimately, demand for association member products determines the demand for
association meetings.
• Hotel managers need to understand the financial health of the corporations &
associations they serve.
– if clients fall on hard times, managers need to look for healthy industries to
replace the lost business, before it affects the revenue per available room
(REVPAR)
• Compared with consumer purchases, a business purchase usually involves more buyers
and a more professional purchasing effort.
• Corporations that frequently use hotels for meetings may hire their own meeting
planners.
• A corporate travel agent’s job is to find the best airfares, rental car rates, and hotel
rates.
• Once the meeting is sold, the account is turned over to a convention service manager
who works with the meeting planner to make sure the event is produced according to
the meeting planner’s expectations.
• Outside the hotel, jobs relating to meetings include corporate meeting planners,
association meeting planners, independent meeting planners, and convention and
visitor bureau salespersons.
The Organizational Buying Process - Types of Decisions and the Decision Process
• Organizational buyers face more complex buying decisions than consumer buyers.
• Their purchases often involve large sums of money, complex technical features,
economic considerations, and interactions among many people at all levels.
– the more complex the purchase, the more likely it is that several people will
participate in the decision-making
• In the organizational buying process, buyer and seller are often very dependent on
each other.
• Buyers - have formal authority for selecting suppliers and arranging the terms of
purchase
• When a buying center has multiple participants, the seller may not have time/resources
to reach them all.
• Most deciders like to feel in control of the purchasing decision, so going over a
decider’s head & working with the boss will be resented.
• In most cases the boss will leave the decision up to the decider, and the ill will created
by not dealing with the decider directly will result in him or her choosing another
company.
• Larger sellers use multilevel, in-depth selling to reach as many buying participants as
possible.
• Organizational buyers are subject to many influences as they make buying decisions,
and some vendors assume the most important influences are economic.
• A study of buyers in ten large companies concluded that emotions & feelings play a
part in the decision.
– when competing products differ substantially, buyers are faced with many
decision variables other than price
• The various influences on organizational buyers may be classified into four main
groups:
• Factors such as the level of primary demand, the economic outlook, and the cost are
important.
• In a recession, companies cut their travel budgets, whereas in good times, travel
budgets are usually increased.
Major Influences on Organizational Buyers - Organizational Factors
• The hospitality marketer has to be as familiar with them and wants to know…
• The buying center usually includes several participants, with differing levels of interest,
authority, and persuasiveness.
– hospitality marketers are unlikely to know the group dynamics taking place
during the buying decision process
• Salespeople commonly learn the personalities and interpersonal factors that shape the
organizational environment and provide useful insight into group dynamics.
• Each participant in the buying decision process has personal motivations, perceptions,
and preferences.
• Organizational buyers do not buy goods and services for personal consumption.
• Eight stages of the organizational buying process have been identified and are called
buyphases.
• The buying process begins when someone in the company recognizes a problem or
need that can be met by acquiring a good or a service.
– problem recognition can occur because of internal
or external stimuli
• Internally, a new product may create the need for a series of meetings to explain the
product to the sales force.
• Externally, the buyer sees an ad or receives a call from a hotel sales representative
who offers a favorable corporate program.
• Having recognized a need, the buyer goes on to determine the requirements of the
product and to formulate a general need description.
• The corporate meeting planner works with others to gain insight into the requirements
of the meeting.
– they determine the importance of the price, meeting space, sleeping rooms, food
and beverage, and other factors
• Alert marketers can help buyers define their companies’ needs and show how their
hotel
can satisfy them.
• Once the general requirements are determined, the specific requirements for the
meeting can be developed.
• The buyer now conducts a supplier search to identify the most appropriate hotels.
• Hotels that qualify may receive a site visit from the meeting planner, who eventually
develops a short
list of qualified suppliers.
• Once the meeting planner has drawn up a short list of suppliers, qualified hotels are
invited to submit proposals.
• In this stage, members of the buying center review the proposals and move toward
supplier selection.
• In general, meeting planners consider the following attributes in making their selection
of a location:
– staff
• The buying center may attempt to negotiate with preferred suppliers for better prices &
terms before making the final selection.
• There are several ways the hotel marketer can counter the request for a lower price.
• The marketer can cite the value of the services the buyer now receives, especially
where services are superior to competitors
• The buyer writes the final order with the chosen hotels, listing technical order-routine
specifications of the meeting.
• The contract specifies cutoff dates for room blocks, date when hotel will release the
room block for sale to other guests, and minimum guarantees for food and beverage
functions.
• Many hotels & restaurants have turned what should have been a profitable banquet
into a loss by not having or enforcing minimum guarantees.
• The buyer does a postpurchase performance review of the product to determine if the
product meets the buyer’s specifications and if the buyer will purchase from the
company again.
• It is important for hotels to have at least daily meetings with a meeting planner to
make sure everything is going well and correct things that
did not go well.
• This manages the buyer’s perceived service & helps avoid a negative postpurchase
evaluation by the buyer.
• Many group markets book more than a year in advance, and during this time, cognitive
dissonance can develop.
– marketers must keep in contact with the buyer to assure them that they made
the right decision in choosing the seller’s hotel
Categories
• The four main categories of group business are conventions, association meetings,
corporate meetings, and SMERF.
• Conventions attract large numbers, but meetings occur much more frequently than
conventions.
Considerations
• When choosing a hotel, an important consideration for a is whether the hotel can house
the participants.
– most hotels have the potential of attracting hundreds of small meetings, where
larger hotels can attract conventions
• Successful hotels know which groups to attract, how to use group business to fill need
dates & how to sell groups on the hotel’s benefits rather than just price.
CIC - APEX
• APEX’s event specifications provide a checklist for planning an event, and its glossary
brings a common meaning to terms used in the meetings industry.
Conventions
• Hotels with convention facilities, such as the Chicago Hyatt can house small and
midsized conventions.
• Conventions that use a major facility, such as the Jacob Javitts Convention Center in
New York, often have tens of thousands of delegates.
– called citywide conventions because hotels throughout the city house their
delegates
• There are almost 14,000 conventions held each year in the US, with delegates staying
an average of 3.6 days & spending an average $1,500 per event.
• Associations usually select convention sites two to five years in advance, with some
large conventions planned ten to fifteen years before the event.
• Some associations prefer to have their conventions in the same city year after year.
– registration fees from attendees and sales of exhibition space in the trade show
are major sources of revenue
• The price that can be charged for exhibition space is related to the number of
attendees.
– an association looks for locations that will be both accessible and attractive to
members
• Convention planners listed the following as the most important factors in choosing a
destination:
Convention Bureaus
• Convention bureaus are nonprofit marketing organizations that help hotels sign
conventions & meetings.
– often supported by a hotel or sales tax & run by chambers of commerce, visitor
bureaus, or city/county governments
• A hotel relying on meeting business for a significant portion of its occupancy should
have a good working relationship with the convention bureau.
Association Meetings
– unlike conventions, climate, recreation & cultural activities are not as important
as the meeting itself is the major draw
• In selecting a hotel, the association meeting planner looks attributes similar to the
convention planner.
• For the association meeting planner, food and beverage are the most important
attributes.
Corporate Meetings
• Because corporations do not have to develop and implement a marketing plan to gain
attendees, they often plan meetings with a few weeks’ lead time.
• About 800,000 corporate meetings are held with an average expenditure exceeding
$36,000 per meeting.
• When seeking business from corporations, a hotel manager must understand who has
the responsibility for booking meetings.
• The corporation’s major concern is for a productive meeting that accomplishes the
company’s objectives.
• Hotels interested in capturing and retaining corporate meeting business must make
sure that meeting rooms are adequate and set up properly.
• Companies that believe meetings should educate & rejuvenate employees, and build
enthusiasm toward the company are willing to spend more money on food & beverage,
entertainment, and hotel facilities.
Small Groups
• Although small in terms of number of participants, thousands of small meetings are
held every month.
– Sheraton has also developed executive conference centers for board meetings,
strategic planning sessions & training
• Simplifying small meeting arrangements is critical because those who plan small
meetings are often
not meeting planners.
Incentive Travel
• Because travel serves as the reward, participants must perceive the destination & hotel
as special.
SMERFs
• SMERF stands for Social, Military, Educational, Religious, and Fraternal organizations.
– in the US, over 50,000 religious organizations have group travel programs
• The individual pays for the majority of the functions sponsored by these organizations,
and sometimes the fees are not tax deductible.
• Participants usually want a low room rate & often find food & beverage within the hotel
too expensive.
• Because attendees are price sensitive, a challenge is to get them to book within the
room block.
• This matrix reflects the general nature of sales decision variables within the group
market.
• Restaurants are designing their space to take advantage of meetings and meetings of
50 people
or fewer can be a great source of business.
• A room off of the main room that can be closed off for meetings gives the restaurant
the option of using it as part of the public dining space on Saturday night or a meeting
room during a weekday.
– meetings held in space of 700 square feet or less (20 x 35 feet) increased by
over 25 percent in the past two years
• Many times they are held at off-peak times, such as during a weekday.