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Hotels lean on M&E as leisure wanes

Peter Heath, founder, Venue Performance, is optimistic that the sector will see a sprint finish after a thorough warm up.

The year has started out a lot like Usain Bolt. Slow to begin with, but warming up to be strong once it gains up momentum.

January is always quiet and it doesn’t take much to have an above-average month. February is not usually much better, but the quarter is usually saved by March, which comes roaring back.

What is unusual this year is that we are seeing a contradiction against the norm. If we look at booking activity comparing January to December, there's a big jump year on year. The market is clearly eager to get back out there, because we are seeing a spike, but in terms of cash in the bank, it’s still muted.

There are fewer events in January compared to December by quite a considerable margin and if you were being negative you could call a slowdown in the sector. But I think what we are seeing instead is a few moments of calm in January after 2023’s busy year,  with the mood also impacted by inflation and interest rates.

It’s going to be the second half of the year when things really fly and helping this along is the hotel sector, where leisure travel is dropping off because of financial pressures and the end of the pent-up demand we had been seeing after the pandemic.

This is all encouraging hotels to look at the other revenue streams they have to hand and M&E is leaping out because it has been performing so well. Normally M&E goes under the radar in a hotel, but because leisure is falling back, suddenly there is more of a focus on what else is available to fill rooms and bolster F&B.

The growth of remote working has put M&E in a strong position, because people, businesses and organisations have all realised the power of getting together, but are able to do so in a more cost effective way because they are saving money no longer having to pay for offices. That cost has rarely vanished entirely - many businesses keep a small office space - but what we have seen is that teams are getting together around once a quarter and when they come together they spend well.

If colleagues haven’t met for three months there is pressure to make the event a good one, which drives further spend, which is also being drawn from savings on office space which is no longer required. Companies need to meet to work better and for team bonding and wellness, but this option also allows them to save money.

So M&E is growing  -  JP Morgan predicted 8% growth this year  - and with M&E comes F&B. If you’ve got a conference then you have 150 people piling into the bar (on expenses) and most likely also needing a bed for the night, whereas the traditional hotel guest is often reluctant to use the bar or restaurant, preferring to explore the surrounding area instead.

We are heading for quite a dynamic year and, for hotels, one in which they have realised there is money in M&E after all.


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