Don't blame the attendees. They're just getting the best rate they can. Don't blame the hotels. They're just managing their inventory. Don't blame the meeting planners. They were promised great rates. You can blame the Internet if you want, but it's here to stay.
The problem is unfilled room blocks because of attendees who pass over a meeting planner's negotiated rates and book the contracted hotels at rock-bottom Internet rates using Expedia, Travelocity, Orbitz, or any of the many discount travel sites out there.
“When Internet booking started, there was fairly good data that showed that the customers they [online discount hotel sites] were bringing to the table were, in fact, different than our traditional customers,” says Christie Hicks, senior vice president,sales, North America, for Starwood Hotel and Resorts. But that was back in the 1990s, when online travel booking was still gathering steam. Since then, it “has taken on a life of its own,” says Hicks. “I don't think we as an industry on either the planner side or the hotel side understood what the impact was ultimately going to be.”
Independent meeting planner Michelle Santee Tupps, president of Event Resource Inc. in Safety Harbor, Fla., which counts tech companies as a key part of its client base, has certainly felt that impact. The number of attendees booking her meeting hotel outside the block has “gone from zero to 5 percent four years ago — one recent group may have been as high as 30 percent.” And the economy isn't helping, she says. “They [hotels] are dumping rooms at a much faster pace.”
Indeed, stories of 20 percent and 30 percent of a group finding better rates at contracted hotels online is no longer unusual. Take Progress Software. Despite healthy attendance at its 2001 User Group Conference, the company was staring down a monsterpenalty. Something was definitely wrong. Pam Corcoran, senior manager, corporate events, knew it was unlikely that so many of her developers had booked rooms outside her meeting hotel, Washington, D.C.'s Wardman Park Marriott. It didn't fit with her history, and it didn't fit her attendees' style.
Armed with the meeting registration list and the hotel rooming list, Corcoran assigned a colleague to the tedious task of comparing the two. A full day and a half later, the facts were in. Progress attendees were indeed at the Marriott, but they had booked outside the block. Marriott gave Progress credit for the rooms, and the attrition penalties went away. But the story isn't over.
Jump ahead to the June 2002 Progress Users Group Conference at the Hyatt Regency Chicago, and it's déjà vu. The general pick-up report showed Progress with 3,031 room nights, well short of its block, but a follow-up screening of the hotel rooming list (this time the hotel did it) found an additional 541 room nights. That works out to about 135 attendees booking outside the block at the headquarters hotel — nearly 20 percent of the 700-plus attendees.
“After the D.C. conference, we thought it was the Internet,” says Corcoran. After Chicago, she was sure. “We had a lot of attendees complaining to us after talking to other developers who had booked the property at a lower rate through Internet discount sites.” And contractual obligations are only half the battle. “They [Our attendees] don't understand how the hotel business works,” Corcoran says. “Attendees think Progress is making a big profit when in fact the conference rate is a standard 10 percent commissionable negotiated rate. … People were getting rooms for $150 [online] and the conference rate was $220, so attendees thought we were making $70 a night,” she says.
What's a Planner to Do?
Corcoran doesn't see the situation getting better any time soon, so for future meetings she says she'll developlanguage to protect her company, which is exactly what has helped Santee Tupps. “The most important thing that I do in my contract is include a clause that states that they [the hotel] will review my attendee list against the rooming list — and I have a right to participate in the review,” says Santee Tupps. “I say in my contract, ‘You will review our attendee list and give us credit for everyone who is in the hotel, no matter how they booked or the rate that they pay.’ Those rooms go toward our comp ratio. And I also try to get commissions on all the rooms — some cases I'm successful and some I'm not.” (See sample contract language, page 82.)
But isn't the contract at the same time asking the planner to guarantee a certain number of rooms at a certain rate? “Certainly,” says Santee Tupps, “but if they're going to dump a large percentage of rooms and put me in a position where there's a lower rate, it makes it almost impossible for me. They really put me in a bind. I understand the position they're in, but they sort of undersell me. When they take 30 percent of their property and offer it [online], I have to be able to protect my client.”
Planners we spoke to have been successful at getting protective clauses in their, and hotel representatives seem cognizant of the difficult position planners are in, but it's a tenuous peace. Some planners have added policing the Internet sites to their list of meeting responsibilities. In Santee Tupps' case, one major central Florida resort insists that she do the cross-checking of her registration list and hotel master list herself.
“It's a time-consuming process, but it's the right thing to do,” says Ty Helms, vice president of sales, Hyatt Hotels and Resorts, regarding cross-checking. “You have to have a reservation manager or sales manager take time away from what they're supposed to be doing to match up lists to try to track down all the individuals. At a hotel like the Hyatt Chicago with 2,000 rooms, it can take some time.”
Hicks seconds that view. “It's is an extraordinarily cumbersome process. It makes the planners crazy and it makes the hotels crazy, and it's not a good use of time,” she says. “There are huge technology changes that need to be made in all systems that can look at channels as one code — how did the reservation come in — and rate as another code, so you can identify the person regardless of how they made the reservation, and the rate paid. … If we could get the technology in place, hotel contracts could look completely different in two years than they do today. Maybe the premium at that point isn't the rooms, maybe the premium becomes the meetings space.”
While hotels, at least on a case-by-case basis, are doing their part by giving planners credit for rooms no matter what the booking channel or rate, many hoteliers feel that planners need to take some responsibility as well. “It's a two-way street,” says Helms. “What if planners use the registration vehicle to tie in to the hotel block? In other words, there might be a higher registration fee for someone who didn't book through the preferred housing vehicle. The onus in some cases is on the planner.”
Starwood is also brainstorming with clients about a more proactive registration approach. “We have talked with some customers — we haven't done this yet — about an educational approach,” says Hicks. “What if we were to tell attendees that they can make their reservations on the Internet, but if they do, they've got to pay in advance, can't cancel, and all the rules that are around that. Those rooms will be one price. There will be a limited number and when they're gone, there's a next level of rooms. If attendees want to make it through a traditional channel later in the process, it might cost them more — almost a floating rate scenario.
“When you think about that on the surface,” continues Hicks, “it's a very scary proposition, but there are, in fact, a handful of people I have spent time talking with who are at least willing to think about it. Right now, planners don't tell attendees about this stuff because it's not an easily solved situation. … Instead of this hurting us, let us educate attendees as to all the reasons they want to be in the headquarters hotel, and what happens if they don't.”
Santee Tupps has, for some meetings, packaged core guest-room nights into the conference fee, but she says it's more complicated than it sounds. “People book, then they change their flight. Every change then has to go through the planning organization, because the group is paying for those rooms on the master bill.” And if you want changes to go through the hotel, “it gets a little hairy. … The hotel doesn't know what subblock we were going to put that person in. If we're paying for it on master, I don't want to give the attendee the right to make changes. They could upgrade themselves.”
Steven Hacker, CAE, president and CEO of the International Association for Exposition Management, has a different suggestion: Hotels in the room block should offer an incentive for attendees to book those rooms at the negotiated group rate — maybe a complimentary spa treatment, a bottle of wine, fruit in the room. When a hotel offers discounted Internet rates and at the same time holds an event planner's feet to the fire on attrition clauses, that's a double-bind too great to bear, says Hacker. “At some point, I as an event planner am going to have to get out of the crossfire and say to my attendees, ‘Here's a list of hotels in the area. Book your own rooms and rates.’”
For Santee Tupps, the bottom line is an understanding that you're starting out with the fairest hotel rate possible. “If meeting planners are able to stand strong and say, ‘We understand where you're coming from; we know thatis the bottom line. That initial rate has to be a very fair rate because I'm going to make you give me credit for the people who are at the hotel because of my meeting.’ If we demand that, we won't see so much disparity between the rates.”
Get It in the Contract
Tyra Hilliard, J.D., CMP, assistant professor, meeting & event management at The George Washington University in Washington, D.C., suggests the following contract wording to help guarantee your group credit for all attendees at the meeting hotel:
Hotel will use its best efforts to code all Group attendee reservations to the Group block and will ask all persons making reservations to identify whether or not they are with a group prior to finalizing the reservation. Group will encourage attendees to mention the Group name and/or Group reservation code when making reservations.
If Group reasonably believes that all Group attendees have not been coded to the Group room block for purposes of calculating pick-up, an audit will be conducted to compare Group's attendee list with a list of hotel guests in-house over the meeting dates. Representatives from Hotel and Group will conduct this audit together. Both Hotel and Group agree to protect the confidentiality of the other's proprietary information.
All rooms occupied by Group attendees will be credited to the Group room block for pick-up purposes regardless of the sleeping room rate paid.
(Optional Rate Clause) Hotel will not offer sleeping room rates over the Group meeting dates that are lower than the negotiated Group rate unless the lower rate is available for all Group rooms.