COLORADO SPRINGS, Colo. - When the bottom fell out of the meetings market earlier this year, the Broadmoor had to make some changes.

The resort's top priority was to find a way to compensate for business travelers who were canceling in droves in the wake of public backlash after bailout recipient AIG went forward with a meeting at the St. Regis Monarch in Laguna Niguel, Calif. The St. Regis Monarch has since gone into foreclosure. The Broadmoor, like many hotels in the luxury market that have long focused on business and meetings, cut rates and changed its advertising and marketing campaigns to target the leisure market. The strategy helped fill its rooms this summer, but it also brought forth a whole new host of challenges, some anticipated, some unexpected. Luxury and meetings-focused hotels have recently found themselves scurrying to adapt to a new reality, whether it be altering housekeeping schedules, predicting erratic restaurant demand, welcoming more dogs or filling a growing appetite for incidentals such as pool chairs. "We have definitely had to reinvent ourselves," said John Washko, vice president of sales and marketing for the Broadmoor, a five-star resort near Colorado's famed Pikes Peak. And while neither Washko nor most of his competition would pretend that the strategy has made up completely for lost meetings business or the dramatic drops in occupancy and rates, it is helping them weather the hard times and, they hope, creating a new, long-lasting customer base.

Open for vacation

Peter Strebel, chief revenue officer of the heavily meetings-focused Dolce Hotels and Resorts, acknowledged he was surprised at how successful his company has been in attracting transient business to fill in the holes of canceled business and meetings travel. "People still want to vacation, to get away," he said. "We had to lower the rates, but the volume is really greater than expected." For example, the Dolce hotel in Barcelona has evolved from a 70/30 business/leisure mix to a 40/60 mix, Strebel said. And occupancy at that property broke 80% in August. "This is a great time to be stealing market share, while my competitors are hunkered down, waiting for the recession to end," said Cedric Fasbender, general manager of the Dolce Hayes Mansion in San Jose, Calif.

To flip those numbers, hotels long accustomed to a majority of their business coming from groups have had to change not only their advertising and marketing campaigns but also their facilities and operations to accommodate more families. At the Broadmoor, Washko said the resort changed its mix this summer from 70% business and 30% leisure to a 50/50 split with two simple, direct strategies that targeted the regional market and families. Its new ad campaign, he said, featured mothers and fathers and "presented the Broadmoor as a vacation option." The resort also launched some aggressive but simple discounts, he said. First, he said, the Broadmoor in late April launched a 72-hour, 50% off sale, with a guarantee that it wouldn't be offering a better deal all year long. "I walked into reservations at 11 o'clock on Sunday night and there were 25 calls in the queue," he said, noting the sale ended at midnight. "That was very successful. We sold 140,000 room nights worth $3.4 million in room revenue."

Cars, kids and dogs

Second, he said, the Broadmoor ran a summer-long special rate of $125 per adult per night (or $250 a room), with free stays and free meals for children. The ads and sales helped bring in more families, particularly those within driving distance. But hosting that new market presented challenges, he said: "What does that do to operations? The number of guests per occupied room skyrockets. It adds stress in the pool, restaurants, cleanliness of the property. For instance, we had to go buy more pool chairs. ... And we definitely saw an uptick in dogs." The regional, family market also necessitated changes in housekeeping. "When there are more people in a room, that means it takes longer to clean," Washko said. "And when you have all this drive traffic, they all want late checkout. So we found we needed to adjust the time our cleaning crew comes in. Instead of having them all come in at 7, we had more come in at 10."

Transient guests also mean uncertainty for restaurant and spa business. Business groups generally have scheduled dinners and some include spa treatments for attendees, meaning that the hotel has a general idea who might be using what facilities. With leisure guests, it's much harder to guess if they will eat at the hotel or elsewhere. If they do eat at the hotel, Washko said, "they all want to eat at 7." To help battle those uncertainties, Washko said the Broadmoor beefed up outreach by its online concierge to get people to make reservations in advance. "It's all about trying to get advance planning as much as possible and adjusting staffing," he said, which means also increasing staff training and cross-training so they can move between departments.

The transient bandwagon

Dolce Hotels and Resorts, which has historically focused mainly on meetings business, turned its attention to the leisure market quickly and aggressively as the global recession grew in severity. "Fortunately we jumped on the transient bandwagon back in the first of the year, when group [business] went down the tubes," said Strebel. "We spent a lot more marketing dollars and a lot more energy on the transient business. ... We even convinced owners to make capital investments in order to accommodate stronger leisure markets."For example, he said, at Dolce Basking Ridge, which had no double rooms, "we convinced the owners to turn 60 rooms into rooms with two double beds." And the Dolce Norwalk in Connecticut renovated its ballroom to attract more social business. Strebel said that changes have been made throughout the systems at Dolce hotels, from creating lower-priced packages to heavier participation in distribution channels. The properties have also begun negotiating better deals with third parties and spending more money to ensure the properties show up in a better position on online travel agencies' sites and in search engines. Another big push for Dolce has focused on marketing the facilities they use for group meetings during the week as venues for weddings and other social occasions. In Aspen, Colo., the Aspen Meadows resort, which hosts the annual Aspen Institute think tank, is organizing its first yoga festival . "Over the years, we have had a few inquiries by yoga professionals who wanted to bring an event like this to our property, but nothing has ever come of it," said Doug Crawford, the property's director of sales. "Times are changing, and we found a partner, and we are working to build this program into a successful event." Additionally, Dolce properties are adding things like outdoor barbecue areas and children's programs like golf clinics. They are tweaking menus to add more affordable, family-friendly options and increasing pool service. "We really have quickly changed the footprint," Strebel said. While most of the talk since the downturn has been about travelers, particularly business travelers, trading down, the sales and packages that were heavily promoted over the summer also resulted in a lot of trading up. And luxury hoteliers hope that once those customers they lured with discounts get a taste of their products and services, they will come back, even when the prices are higher. "We have the unique opportunity to cash in on a population that right now has traded up," said Giles Priestland, head of leisure sales at the Park Hyatt at the base of Colorado's tony Beaver Creek ski area. "Two years ago, they might not have been able to afford it, but once they have tasted the difference, it's a difficult thing to give up. A few years down the line, they might be in a better economic situation to be able to come back and join us."

Renting customers

Lalia Rach, divisional dean at New York University's hospitality school, said many luxury hotels are just "renting customers" with their rate cuts. "When you are bringing in a new market demographic, you better make sure your most loyal market demographic is not turned off," she said. "That's a fine balancing act. No. 2, are they going to be attracting people that will in fact see this as a place they want to affiliate with, or are they just seeing this as , ‘Gosh, I have never been able to afford this, and I never will again, but I will take advantage of this opportunity'?... Can you build business on somebodywho can maybe stay there once a year? ... It's a crapshoot." Tony Potter, CEO of Malta-based CHI Hotels & Resorts, which operates Europe's luxury Corinthia Hotels, noted that with price cuts often come service cuts. "I've seen products out there at the moment that have cut prices but also cut services, and I think that's not honest," he said. "You've got to stay true to the brand." Washko agreed that "a lot of people are going to get what they pay for." But he insisted the Broadmoor could stay true to its standards despite the rate cuts because it is privately owned by the same family that started Gaylord Entertainment. The property has no debt, he said, and it doesn't have to worry about answering to shareholders every quarter. To show its confidence in being able to maintain its luxurious standards, the Broadmoor earlier this year offered a sweeping guarantee for groups that they will be completely satisfied or the meeting is free. Because of that, Washko said, "We are never going to be the cheapest guy." But he intends to continue aggressively competing. In addition to attracting new customers, Washko said he was optimistic that old customers who have been forced by the economy or concerns about the so-called AIG effect to trade down will be back in 2010. "That's when the rubber is going to hit the road," he said. "As soon as that vice president of sales and marketing or that CEO picks up the phone [for service] and it rings seven or eight times ... there is nothing more irritating than an unanswered phone when you're sitting in your guestroom." In the meantime, he said, the Broadmoor continues to focus on change. "We are bullish about the future," he said. "We realize we have to be value-oriented. It's all about reinventing ourselves. I think the industry is going to look different in six to nine months. ... I just don'tknow what that means."

DOLCE'S INITIATIVES

Dolce Hotels and Resorts, which has largely focused on meetings business , acted quickly and aggressively this year to attract more transient and social group business to replace revenue generated by traditional meetings.

Some examples of what Dolce hotel managers in North America are doing: Seaview, a Dolce Resort, Galloway Twp., N.J., near Atlantic City

Sales and marketing initiatives

• Culinary Adventure, a two-night stay including welcome cocktail, Friday seafoodbuffet and Sunday brunch, for $235per night

• Buy One Get One Free offer

• Progressive discounting based on length of stay

• High-end golf clinic for kids, where they have the opportunity to learn from a former PGA professional Golf clinic for adults in partnership with entities including Bird Golf, a widely known golf academy

• "Dive-in" movies by the pool

Dolce Basking Ridge, Basking Ridge, N.J.

• Reconfigured selected rooms from kings and queens to double-doubles
• Developed family-friendly programs

Dolce Norwalk, Norwalk, Conn.

Sales and marketing initiatives

• Renovated ballroom to accommodate social functions
• Added room service

Aspen Meadows Resort, a Dolce Resort, Aspen, Colo.

Sales and marketing initiatives

• Organizing the resort's first yoga festival
• Launched advertising campaign focused on the local community

Dolce Hayes Mansion, San Jose,Calif.

Sales and marketing initiatives

• Optimizing placement on online travel agencies' listings (always on first page,among the top five in San Jose)
• Banner ads
• Stay Friday, Stay Saturday Free offer
• Bed and Breakfast offe

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