Let’s return to January of 2018. The words ‘pandemic’ and ‘COVID’ were non-existent in the vocabulary of any event planner and ‘social distancing’ was something you only expected from an ex-spouse. The biggest pain point facing our industry was that Marriott had officially announced it would be reducing it’s commissions by 3%, starting March 31, 2018. Other major chains were quick to follow. This immediately sparked conversations within Meetingmax about how we ccould get ahead of the curve and ensure a sustainable business. If commissions and rebates were one day completely extinct how could we, and out clients, stay in business?
Little did we know these early conversations would prove so valuable two years later when a global pandemic would literally bring our industry to a grinding halt. We’ve worked hand-in-hand with our clients and partners to find ways to weather this storm and we believe now more than ever that it’s time for all organizations to review their event housing business models. What are new ways to make money in a post-pandemic events world?
For context, traditionally organizations offering event housing rely on rebates and commissions post event as their main, or only revenue stream. Everyone knows the headaches that come with this; having to carry the cost of your services without revenue, waiting for hotels to slowly report and pay final earnings, and the dreaded post-event reconciliation process that has people seeing spreadsheets in their nightmares.
What COVID-19 has shed light on is the liability that organizations following the above model suffered, and will continue to suffer through unless they are willing to explore alternative business models and new ways to make money. We see the future of housing being revenue collected up-front. This can be achieved through a number of ways, individually or in combination;
1) charging guests a nominal non-refundable fee at the time of booking;
2) building a housing service fee into the cost of registration;
3) charging clients a deposit or fee to offset the cost of housing operations
(1) Charging guests a nominal non-refundable fee at time of booking: We have seen more and more organizations moving to this model, so much so that we’ve included a free integration with Stripe with all of our license agreements, without any transaction fees due to Meetingmax. We are empowering organizations to utilize this tool to generate revenue, be successful, and build their housing operations even further. Attendees are used to seeing service fees (look no further than Ticketmaster), and the key to this model is ensuring your hotels provide you exclusive rates low enough to still allow you to offer lowest public rates, even with a $5-10 per room night service fee at time of booking. With rebate-like revenue coming in from launch, you are no longer reliant on rebates or commissions post-event and hotels can be more aggressive with their rates, knowing they may not require to pay you out of the rate. There are alternative options within this model as well including your average length of stay, event type, etc. You should explore charging a per reservation fee, a flat rate, or cancellation fees.
(2) Building a housing fee into registration: This model is straightforward. Guests are already paying hundreds, if not thousands of dollars in registration. By offsetting the cost of housing operations by adding a $50 fee to registration, you can eliminate headaches and reduce liability.
(3) Charging the client a housing service fee: Two years ago it was wildly unheard of to even consider charging a client a fee for services rendered, but in a post-COVID world, everyone understands the benefits of collaborating and working together to reduce the risk for all involved. Under this model, you would charge your client a fee to cover or offset the costs of housing operations (staffing, software, etc.). This fee can later be returned to the client at the conclusion of their event, pending performance of the block. Using this model, it would force both you, and your client to be more accurate with estimating block size and force more attention onto housing.
The above models are some of the ways we see organizations making money from housing operations moving forward. One thing that has come from the pandemic is an opportunity for organizations to turn their housing operations from a service offered, to a revenue generating function of their business, helping to ensure longevity and security from any future disruptions.