All the signs pointed to an extremely successful ENDO 2002 annual meeting for The Endocrine Society this past June in San Francisco. “We had record attendance — 20 percent up — record exhibit sales, and record support from industry and abstract submissions. All indications were that we would have no problem picking up our rooms,” says Catherine Scheck, director of meetings for the Bethesda, Md., organization.
But that wasn't what happened. The meeting drew 8,700 people overall, yet Scheck could only identify about 3,200 rooms picked up among the 17 hotels with which she contracted. That means a mind-boggling 63 percent of attendees booked outside her block.
fees are only half of Scheck's worries. There's also her history to consider. Convention centers require her to prove a substantial peak-night pickup to book far in advance, and in many cities 3,200 rooms won't get you much. “For example, currently for a citywide event in San Francisco,” she says, “when you want to use the entire building, you need to show a commitment of 5,000 peak-night rooms.” And the way centers judge your pickup is through your past hotel records. There's a move afoot to change the way convention centers calculate a group's pickup (see sidebar, page 56), but even if adopted, it doesn't fully address planners' strained relationships with hotels in the Internet booking age.
Scheck's example may be one of the worst horror stories we've heard, but she's certainly not alone. Meeting planners are reporting increases in the number of attendees who pass over negotiated rates and, instead, either book a meeting's contracted hotels or other hotels (an even bigger problem) at a lower rate that they get through any one of the gaggle of online discount travel sites.
Independent meeting planner Michelle Santee Tupps, president of Event Resource Inc. in Safety Harbor, Fla., has certainly felt that impact. The number of attendees booking her meeting hotel outside the block has “gone from zero to five percent four years ago — now one recent group may have been as high as 30 percent.” And the market isn't helping she says. “It's been an issue for a while but it has become quite a bit worse since the downturn in the economy because the hotels are dumping rooms at a much faster pace.”
The first line of defense for the meeting planner is a strong. “The most important thing that I do in my contract is to 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 that 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 — in some cases I'm successful and in some I'm not.”
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.”
Meeting planners we spoke to, including Scheck, 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. The cross-checking between the hotel rooming list and the meeting registration list is “a long process,” says Scheck. “People don't really like to do it. And it's taken some doing.”
For Scheck's recent San Francisco meeting, she owed attrition at two properties. Both did the cross-checking but “one was more cooperative than the other — and that one worked diligently to make sure that rooms were allocated correctly. But it's a tedious task. And there are problems with privacy — with us doing it rather than the hotel — so you do have to put your faith in the property that they are looking at each and every name.”
One property said it didn't have the staff power for the cross-check, but Scheck pushed. “I said I would happily pay for the personnel to sit and check off these names because it means dollars to me. I did resolve it in the end [without having to pay], but it was a lot of back and forth.” In Santee Tupps' case, one major central Florida resort insists that she do the cross checking 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 the 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.”
Christie Hicks, senior vice president, global sales, North America for Starwood Hotel and Resorts, seconds that view. “Today 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.” Maybe at that point contract negotiations will focus more on the meeting space than the rooms, she adds.
Get the Guarantees
Scheck is thinking ahead, strategizing ways to control the Internet booking problem for future meetings. For a 2007 meeting, she is talking to a hotel in Toronto that will guarantee blackout dates at the Internet sites over her meeting period. In the shorter term, she hopes to better enforce the contract clause that guarantees her the lowest rate on the market.
“Next year, I'm going to try to educate my attendees more and have them let me know when they're able to find these [Internet] deals so that I can go back to the hotels with documentation. In our contracts, it says that if a lower rate is offered, then our rate gets dropped to that rate, so everyone would win.”
While hotels, at least on a case-by-case basis, are doing their part by giving planners credit for rooms no matter 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 to look at those kinds of options.”
Starwood is also brainstorming with clients about a more proactive 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 their reservations 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 who are at least willing to think about it.… Instead of this hurting us, let us educate attendees as to all the reasons they want to [book within the block], and what happens if they don't.”
Santee Tupps has tried packaging 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 sub-block 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, International Association for Exposition Management, Dallas, 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.’”
But what about attrition and your meeting history? Scheck says that if she could use her registration numbers rather than hotel numbers to satisfy convention center booking requirements, she wonders if hotel relationships might look radically different in the future. “While you might still book a headquarters property, you could change how you book overflows. You may just say to attendees, ‘My preferred Internet providers for housing are: Travelocity, Hotels.com, and Orbitz,’ and you might have the site track your pickup.” Are the Internet sites doing that? “I don't know that they are, but they certainly could.” (In fact, Orbitz may do just that. See sidebar below.)
“And this also has implications for what hotel sales teams will look like in the future,” Scheck continues. “What if we did partner with Hotels.com — do we really need to work with a sales person or are we just brokering our rooms through the Internet site? How is this going to change our relationship with hotels in the future? There are a lot of unknowns here. I think there's going to be a lot of discussion on this.”
For now however, Santee Tupps speaks for many planners: “Ultimately, the most powerful thing to do is to have a good understanding that you're starting out with the fairest rate possible. If meeting planners 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.”
How About Credit for Registration — Not Room Pickup?
“The room gap is happening and it's getting worse. We've got to blow up our current practices,” said Christine Shimasaki, CMP, executive vice president of sales and marketing, San Diego Convention and Visitors Bureau. She spoke at a packed session about measuring hotel room pickup on citywide conventions at the recent International Association of Convention and Visitor Bureaus annual meeting in Vancouver.
Shimasaki and her colleague, Sue Davis, director of special projects, SPIE/The International Society for Optical Engineering, Bellingham, Wash., proposed a registration-based pickup formula quite unlike anything currently in use. Acknowledging that hotel pickup reports are off by as much as 30 percent because of attendees who go “around” and “outside” of the block, often by booking via the Internet, Shimasaki and Davis suggested a new formula. It is called the Attendee Origin Audit, and it would calculate peak room-night pickup based on total registration, less those attendees who are local, divided by a double occupancy rate (based on the meeting's history).
Davis, one of many planners the San Diego CVB has surveyed about the problem, is as concerned about being able to book a convention center far enough out as she is with potential attrition penalties due to the ever-widening room gap. That's because most CVBs have booking guidelines for the convention center based on hotel pickup. “We are not going to book 20 years out a convention with little room pickup. We're going to wait and see if we can't get a better piece of business,” said Shimasaki. According to San Diego's current guidelines, for example, Davis would not be able to book a convention at the center more than three years out because her most recent convention pickup report showed only 1,382 rooms, out of total attendee registration of 5,226. But, using the new formula, her convention actually used 2,885 room nights. The difference? Being able to book her dates seven to 10 years out versus under three, since San Diego requires a minimum of 1,500 room nights on peak night to book more than three years out.
When she has gone back to the contracted hotels and asked them to match their hotel guest master against her registration list, Davis has found a 15 percent to 20 percent deviation.
Based on feedback from the meeting, Shimasaki plans to take her idea to the next level, trying to get as many CVBs to buy into the idea as possible. “The bottom line is that the writing is on the wall,” said Shimasaki. “The distribution system has changed and therefore our practices must change.”
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 pickup, 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 pickup 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.
Orbitz Takes On Meetings?
While discount online travel sites are wreaking havoc on meetings whose attendees are shopping for deals rather than booking the negotiated block or preferred carriers, at least one of these sites is hoping to be part of a solution. Orbitz announced in July its plans to launch a corporate travel management technology — and a meeting-focused product may not be far behind.
At press time, Orbitz, the discount travel Web site formed in June 2001 by five major airlines — American, Continental, Delta, Northwest and United — expected to launch Orbitz for Business September 1, according to David Cerino, general manager of corporate travel. Orbitz for Business allows corporations to integrate negotiated rates and preferred carriers and hotels into the Orbitz online display and generate booking reports. “Initially, we're going to be doing corporate travel. That's really our entrée,” says Cerino. “We're really only a month into it. I've got a firm list of future requirements and, obviously, meetings and group planning is on it.”
But even as is, the new tracking and reporting function, called TripTracker, has applications in the meeting arena, says Cerino. The system is based on having the e-mail address of everyone in an organization. When an attendee searches for a particular city over the meeting dates, the Orbitz system is designed to recognize his or her e-mail address and float the blocked rooms or negotiated fares to the top of the page. “And I can customize the top of the screen to be the association name,” says Cerino. Importantly, attendees' choices outside the blocked space are also tracked.
The nascent system raises many questions for meeting planners: How would it integrate with a housing provider? What would hotel contracts and room blocks look like? What privacy concerns would arise by sharing e-mail addresses? Nevertheless, according to Cerino, interested planners are knocking at the door. “We have associations calling us now and asking us, ‘What can you do?’” he says. At the same time, he is quick to say that the new business travel management system is not necessarily Orbitz's long-term meeting solution. “I think our long-term solution is to build a significant amount of functionality, which is something we want to do in the future.” TripTracker, he says, “is an option you've got if you want to take it. Are we all the way there? No. Can I give you daily reports? No. There are things that I won't be able to give you initially. But we'll get there.”
Orbitz ticket transaction costs are competitive at $5 per ticket for online corporate bookings, and about $15 for telephone-assisted bookings. For a fee (based on volume), the TripTracker is available to organizations that do not want to designate Orbitz as their travel agency.
Will other Internet sites follow suit? Online travel booking site Expedia, which purchased Bellevue, Wash.-based Metropolitan Travel as a step into the corporate travel market, says it will launch a corporate travel technology by year-end but is not considering a meetings product at this time.