In the October cover story of www.ahhHah.com. Hospel has lectured and written about this housing issue for various industry organizations, and her company has produced a CD called “Mission to Avoid .”, industry leaders suggested several possible solutions to the current housing crisis, in which a growing number of attendees are booking outside the contracted room block, thanks to cheaper hotel rates found on the Web. We posted a short poll on our Web site asking readers what they thought of the solutions mentioned in the article. Here's one particularly well-articulated response — from reader Holly Hospel, president, Ahh Hah! Discovery Tools for the Meetings Executive,
Can offering attendees and/or exhibitors incentives to book within the group room block effectively curb bookings outside the block?
“There is no one answer. Every group needs to find the solutions package that works for its attendee profile.”
What do you think about each of the following tactics used to help reduce booking outside the block?
Reduced registration fees for those who book inside the block: “Hotels are providing discounted room rates so they can fill their inventory. Why make the groups take a financial hit because the hotels are undercutting them? This solution puts more financial hardship on groups that are often small and don't have much margin as it is. And what about groups that don't charge registration fees?”
Priority location points for exhibitors who book inside the block: “It might help, but who verifies that all those exhibitors actually booked inside the block? The often-overburdened meeting planner? This solution requires that a large database of exhibitor names be cross-referenced against another larger database of hotel rooms occupied. It is very difficult to cross-check large databases by hand, and hotels don't typically provide their room inventory electronically.
Those who book inside the block are enrolled in a drawing for such things as a hotel room upgrade or a certificate for free spa treatment. “Not likely, the person who is saving $50 a night already won their sweepstakes and their odds are a lot better.”
Requirement to book within the block in order to qualify for exhibit space: “When so many associations are struggling to woo exhibitors to participate in their show, is it a wise business decision to have policies that penalize them? My guess is those exhibitors will exhibit at a competitor's show where policies don't penalize them for trying to save their company money.”
Rather than factoring the cost of renting a facility's meeting space into the negotiated hotel rate for the group, would it be preferable for that rental fee to be offered by the hotel as a separate fee?
“This is definitely an option for some groups, especially with the increasing availability of alternative meeting space outside of hotels. Of course, groups that get a 10-percent commission from room pick-up numbers don't like this solution because it undercuts their core business model. There is also the risk that if you don't negotiate a block of rooms, all of the rooms in the hotel (or even the city) could be occupied, and your attendees will have no place to stay. But in the short term, whenever you know the climate of the economy and thus the general room availability, this is a good solution.”
What about reducing the numbers of years out that a groupfor hotel rooms?
“The economic climate, room inventory, Internet influences, and technological tools are in a rapid state of flux. Any one of these has the power to significantly influence attendee behavior and pick-up patterns. It may no longer be prudent to book contracts five or eight or 10 years in advance.”
Any other possible solutions?
“Yes, progressive contracting. This is where the group negotiates for a small block of hotel rooms five years out. Then three years out (and based on two more years of history), the group increases or decreases its block, and so on until they have negotiated athat perfectly fits the group's pick-up patterns. This kind of contracting can be done all the way up to six months before the event.
“Another option is to use an indexing clause. Negotiate the contract and space and rooms just as you would have, but agree to indexing the hotel room rate off an agreed-upon source x-number of months out. For example, the group and the hotel agree to use hotels.com prices as the hotel room-rate index. Two months before the event, the meeting executive checks hotels.com, finds that the hotel is charging $150 as the market rate to the person on the street. This number is used an an index: the hotel provides an extra 10 percent discount to the group, because the group represents a quantity purchase and should get something better than the person off the street. Voilè, you have an acceptable hotel rate of $135 for the group.”