“When Internet booking started [in the mid 1990s], there was fairly good data that showed that the customers they [online hotel sites] were bringing to the table were, in fact, different than our traditional customers,” says Christie Hicks, senior vice president, global sales, North America for Starwood Hotel and Resorts. Now, 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 that impact was ultimately going to be.”
Independent planner Michelle Santee Tupps, president of Event Resource Inc. in Safety Harbor, Fla., has felt that impact. The percentage of attendees booking her meeting hotel outside the block has “gone from zero to 5 percent four years ago — now one recent group may have been as high as 30 percent.” And the economy isn't helping, she says. “[Hotels] are dumping rooms at a much faster pace.”
Today, stories of 20 and 30 percent of a group booking the meeting hotel online is not unusual. “One person finds … a lower rate and they e-mail the entire group,” says Marjorie Maupuy, meeting planner, American Society for Quality, Milwaukee, Wis. “I have one group where at least 20 percent book outside the block.” And while the threat of attrition penalties looms, Maupuy and other planners report trouble with perceptions as well. “Obviously I don't know what I'm doing,” she says dryly.
The first line of defense is a strong contract, 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 some I'm not.” (See sample contract clause, page 13.)
Planners we spoke to have been successful negotiating protective clauses, and hotel reps seem cognizant of the difficult position planners are in, but it's a tenuous peace. Maupuy has added policing the Internet sites to her to-do list, and recently had to deal with one hotel that wanted to charge $15 an hour to do the rooming list/registration list reconciliation. 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. Hicks seconds that view. “It's is an extraordinarily cumbersome process. It makes the planners crazy and it makes the hotels crazy,” she says. “There are huge technology changes that need to be made … so you can identify [attendees] 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 meeting space.”
While hotels, at least on a case-by-case basis, are doing their part by giving credit for rooms no matter the booking channel or rate, many hoteliers feel that planners need to take 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 thinking proactively. “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 [must follow] all the rules 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 [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, it's a very scary proposition, but there are, in fact, a handful of people willing to think about it.
For Santee Tupps, the bottom line is a fair rate. “If planners are able to stand strong and say, ‘We understand where you're coming from; we know that RevPAR is the bottom line. That initial rate has to be very fair, because I'm going to make you give me credit for everyone staying at the hotel because of my meeting.’ If we demand that, we won't see so much disparity between the rates.”
“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 for citywide conventions at the recent International Association of Convention and Visitor Bureaus meeting in Vancouver, B.C.
Shimasaki and her colleague, Sue Davis, director of special projects, SPIE/The International Society for Optical Engineering, 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 “outside” of the block, often due to booking via the Internet, Shimasaki and Davis suggested a new formula, called the Attendee Origin Audit, that would calculate peak room-night pickup based on total registration, less attendees who are local, divided by a double occupancy rate.
Davis is as concerned about booking a convention center far enough out as she is with potential attrition penalties. That's because most CVBs have convention center booking guidelines based on hotel pickup.
According to San Diego's current guidelines, for example, Davis would not be able to book the center more than three years out because her most recent 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 rooms on peak night to book more than three years out.
When she has gone back to hotels and asked them to match their guest master against her registration list, Davis has found a 15 percent to 20 percent deviation. And that only accounts for the hotels she's contracted with.
Shimasaki plans to get as many CVBs to buy into the idea as possible. “The bottom line: “The distribution system has changed and therefore our practices must change,” she said.