The School, Home, & Office Products Association instituted a no-refund hotel housing policy--without attendees and exhibitors revolting.
Lisa Feldman tried to express it as simply as possible. "If you don't pay for the hotel rooms that you booked," she told SHOPA exhibitors and attendees, "SHOPA will have to pay--and we can't."
It had to be simple. Feldman, vice president of the School, Home, & Office Products Association, was trying to explain a radical new policy. People would have to pay for their hotel rooms in full some 10 weeks before the 1999 show in New Orleans. Otherwise, their reservations would be canceled. And once they paid, there were no--repeat, no--refunds.
The new policy was instituted because SHOPA was under tremendous pressure. "Hotels are confident that they can be a little picky about whether or not they need you in this economy," Feldman says. "They were demandingclauses that could put SHOPA at serious financial risk."
Feldman was also having difficulty getting sufficient rooms and acceptable rates. And she wanted to prevent a recurrence of the "serious walks" of the previous year, when top executives were among the 45 delegates walked.
Fighting Fickleness Only 10 years old, SHOPA lacks the history that would give it serious negotiating clout, although it's growing rapidly. The group'sincreases by 20 percent or more each year, and in 1998 SHOPA was number 116 in the Tradeshow Week 200, up from 151 in 1997. But because it still has met in only three cities (New Orleans, Dallas, and Atlanta), "we were unknown," Feldman says. True, the first four shows had been held in New Orleans, but SHOPA had been away from that city for five years.
Feldman recalls that the negotiations with hotels were at a stalemate for the 1999 meeting. "They couldn't give me the rooms without an attrition clause, and I couldn't sign an attrition clause. I can't be liable for my delegates' fickle attitudes about where they'll stay and for how long." Then she had a brainstorm: "Let's put the onus back on the delegates. Delegates need to know how serious this housing problem is--to rethink what they're booking."
Some New Orleans hotels insisted on attrition clauses in their; some didn't. So Feldman devised a dual system. For the hotels without attrition clauses, delegates had to pay a one-night deposit when making a reservation. They could cancel--and receive a refund--up to seven days before their scheduled arrival. For the hotels that did require attrition clauses, full, nonrefundable payment was required by September 1. If a person made a reservation and didn't pay by the deadline, the hotel could release the room without notification.
The housing information packet made it clear which hotels were in which category. Hotels were listed on two separate pages, one headed "One Night's Deposit Hotels" and the other, "Full Payment Hotels." Each page spelled out terms and conditions. The cover page explained that "most hotels now require a financial commitment for the rooms which SHOPA has contracted. Due to this requirement by select hotels, SHOPA has instituted a new prepayment system. We are compelled to implement this system to negotiate lower rates and obtain an adequate number of rooms."
That page also emphasized the importance of using SHOPA's housing agent, Ambassadors Performance Housing, so that the association would have an accurate pickup history to negotiate with in the future.
What was the reaction? Feldman says that two exhibitors protested. One complained, "You're asking us to put up lots of money. We can't commit to that." SHOPA's response: "If you can't commit, why should we? Do you want us to raise your booth fee because you can't be sure?"
Booth fees, membership fees, or both would have to be increased dramatically to cover attrition penalties, says Feldman. "Ifor 20,000 room nights over a 10-day period. Even if there's a 10 percent wash, SHOPA would be out half a million dollars."
The other protest came from an exhibitor who believed that the New Orleans hotels were doing something unique. He suggested moving the show to a second-tier city--Feldman laughs as she names it--that's totally inappropriate for this group.
Prepay hotels loved the system, of course. Their money was guaranteed--or better. "If someone didn't show, they couldn't sell the room," says Feldman. "If someone checked out early, the hotel could resell the remaining days."
Hotels loved it--that is, once they understood it. Feldman held a preshow meeting at which she reviewed the plan with representatives from all the prepay hotels. "If people check out early, they don't get their money back," she reminded them. When the reps asked incredulously, "You really want us to make them pay?" she replied, "If you don't, my word is no good."
In fact, a couple of non-prepay hotels found the system so appealing that they wanted to revise signed contracts, adding attrition clauses, so they could switch to the prepay list. No way, Feldman said: "I wouldn't let them go back on the contract."
SHOPA's big gain, she says, was that "prepay hotels couldn't walk anybody--they owned them." But there were some walks at hotels that weren't prepay. Although she doesn't yet have the final report, "the wash factor was minimal." Prepayment also had given her the leverage she needed to negotiate better rates. The 1999 meeting drew 7,000 attendees and 7,000 exhibitor personnel.
SHOPA will use the prepayment system again this year in Miami, as well as Ambassadors Performance Housing. "I couldn't have developed this system without the people at Ambassadors," she says. "If I were to give this policy a grade, I'd give it a 95 percent." *