I grew up in the world of sales for hotels, convention centers, and convention and visitors bureaus, where everything revolved around room blocks. I am fascinated by the room block dilemma, which never seems to go away and arguably is getting worse.

The fact is the room block is important. It’s one of the primary measures for qualifying the value of a meeting and a key measure for your CVB executive to determine sales productivity and success. Blocked or contracted room nights equate to sales credit and drive a host of processes to effectively ensure hotel profitability and high economic impact to the local community. So let’s take a closer look at what these dynamics are on the supply side.

Risk vs. Meeting Requirements

Meeting space is the asset that drives the sale of a hotel’s guest rooms and therefore generates a significant amount of revenue for hotels. For planners with meetings contained in one hotel, it’s important to note hotels are dependent on this asset to drive a group market mix between 50 percent and 80 percent of its total occupancy, depending on location and market drivers.

Hotel revenue managers maximize the revenue potential from their meeting space asset, so your event may be compared to other meetings or business opportunities. The risk incurred by contracting all their space for your room block must be minimized by evidence your meeting will use all the sleeping rooms in your block. Consequently, a solid two- to three-year detailed pickup history is essential, or the planner may be held accountable for the room revenue through attrition clauses. Hotels have become much more sophisticated in their productivity measurements and are now including qualifiers such as revenue per square feet or revenue per room night. A better understanding of the total revenue potential (catering, audiovisual, high food outlet usage) is therefore important.

What is a Rooms-to-Space-to-Date Ratio?

Attendees staying in noncontracted hotels (called “around the block”) affect both small and large meetings but the dynamics have the most impact on citywide conventions. Analogous to a hotel revenue manager, CVBs are the stewards for applying sales and marketing strategies, which maximize the exhibit and meeting space of convention facilities, thus driving economic benefits to the local community.

CVBs and convention centers use booking guidelines in analyzing the contracted peak rooms or total room nights, amount of gross square feet of exhibit space, number of meeting rooms, and the number of years prior to arrival date of the convention: a rooms-to-space-to-date ratio, if you will. Of course, citywide booking guidelines vary greatly from destination to destination.

In addition to detailed room block history and overall revenue, a more thorough dissection of attendance is required, such as 1) historical guest room occupancy ratio, or the average number of people per guest room; 2) number of local or drive-in attendees not requiring rooms; and 3) number of attendees requiring a guest room. From this data, we can better estimate the overall guest room demand of the citywide convention versus relying only on the rooms we can count.

This information was difficult enough to capture before online technology ruled our lives. The frustrating practice of attendees ignoring contracted hotels in favor of cheaper alternatives found on the Internet or adhering to a chain’s loyalty program doesn’t mean there are fewer people in the city, less money being generated, or less space needed in the convention center. It does mean revenue managers and stakeholders need to look at the business with a different eye. Some points worthy of consideration are:

  • Will the supplier community recognize and credit the citywide convention with these rooms around the block?
  • What does this mean to booking guidelines established by the local community, which are designed to maximize the convention center asset?
  • Can we begin to recognize the real value attendees bring to our destination and realign our decision-making?

Your Credit Rating

As part of the solution, Destination Marketing Association International has developed the Event Impact Calculator, now the CVB standard for measuring the overall economic impact of an event specific to a destination. Economic impact is reported in direct, indirect, and induced sales, jobs supported, and local tax generation.

As you can see, room blocks are important, but we can no longer rely upon them to tell us the whole story. Planners need to be strategists, armed with accurate, verifiable information about the actual number of rooms used and revenue generated; the result will be greater negotiation clout and leverage in the future. If you work with a CVB ,you can make sure your event is correctly captured at www.empowerMINT.com in your “profile”; misinformation can weaken your buying leverage.

There isn’t a more important relationship than that with the CVB to help you find the right hotel, venue, and facility for your meeting—or to help you maintain your meeting history, which is essentially your “credit rating” in the meetings world. 

 

Christine Shimasaki, CDME, CMP, joined Destination Marketing Association International as managing director of empowerMINT.com and the Event Impact Calculator in 2009. Prior to joining DMAI, “Shimo” served as executive vice president and chief strategy officer for the San Diego Convention and Visitors Bureau and before that spent 10 years with Marriott International. Her job responsibilities include oversight for two partnerships—empowerMINT.com with Tarsus, one of the top 10 global trade show producers; and the Event Impact Calculator with Tourism Economics, a subsidiary of Oxford Economics.