Room Block Management in the Crossfire

Industry pros take aim at an unrelenting problem

If you haven’t already heard the newest acronyms in the meetings industry ROCH (rooms outside contracted hotels) and ROB (rooms outside the block but within contracted hotels) now is the time. j Getting hotels to give meeting groups credit for attendees booking outside the block should be a no-brainer. But that’s not what some meeting planners are finding. These and other issues in room block management took center stage on the CNN Crossfire set at George Washington University, where the PCMA Capital Chapter staged “Meeting Industry in the Crossfire II.”

Four panelists filled the hot seats: Jim Goldberg, Esq., Goldberg & Associates; Bruce Harris, president, Conferon Global Services; Mary Power, president and CEO, Convention Industry Council; and Jean Spaulding, vice president, sales development, Interstate Hotels & Resorts. As moderator, Jacy Hanson, JRH Consulting, presented a series of scenarios and questions that sparked the interchange. Here are some of the highlights.

Hanson: An attendee receives the meeting program listing the hotels in the block. She goes online and finds a rate at one of the hotels that is $20 below the printed rate, and then discovers another down the street $50 lower than that. What’s wrong with this picture?

Bruce Harris: I made the decision to attend the meeting because it has value. If the association can’t get attendees to book rooms into the hotel, it will have to change the model entirely. It will have to raise registration rates to offset costs and pick up additional revenues. If it doesn’t, the result will be debilitating to associations a real liability.

Mary Power: The room in the block has to become part of the experience for example, you get a pass to the cybercafe if you’re in the block. There is always a cheaper room and a better deal elsewhere.

Hanson: How do you create these incentives?

Harris: Put a discount on the registration fee and on meals, Internet access, or shuttle service. An association has the buying power to get these concessions with all blocked rooms. But if more people go out of block, I offer less value and get less meeting space, and it’s harder to generate operating revenues. If the association doesn’t have operating capital, it’s not going to stay in business.

Jean Spaulding: There really is nothing free. The room rate at the meeting contains a lot of things that are not evident to the attendee, so the value is not obvious.

Jim Goldberg: The attendee doesn’t care. Restructure the contract; if you give the attendee a lower rate, you as the planner will pay for and negotiate meeting space rental. Then you’ll know what it costs.

Harris: But when the expense of meeting space is borne by attendees and goes into the registration fees, this becomes a deterrent to attendance.

Power: And what happens two years down the line? The planner becomes even more of a gambler. You have to figure out what’s predictable and what’s not.

Hanson: A group has blocked 60 percent of all rooms at a hotel. The hotel needs to maximize its revenues, so it sells the open rooms online at significantly lower rates. Some group members buy in at the lower rates. How do planners get credit for those rooms?

Spaulding: As we renegotiate contracts, giving credit for those out of the block becomes a big issue. We’re seeing that rooms outside the block at the headquarters hotel are being credited to the host organization.

Goldberg: That should be a no-brainer.

Harris: But many hotels are not giving credit to planners. They are not doing you a favor and saying, “Give me your attendee list.”

Goldberg: For years, I’ve been hearing that “this is a relationship business, and we’re all working together.” That’s nonsense. This is a business relationship, and planners have to get more business-focused. If they’re bringing a couple of hundred thousand dollars or more to the table, they have to ask for things. They will get some and not others.

Harris: Attrition is the bottom-line issue. We as planners may be embarrassed that someone gets a lower rate in the hotel, but it’s only an issue of the meeting planner not taking the list to the hotel. Those rooms away from the hotel are what causes attrition.

Power: One of the biggest challenges is that attrition is the planner’s problem until a $100,000 bill goes to the board, and then it’s everyone’s problem. We need to get that business partnership going, and get people engaged a lot sooner.

Goldberg: You need to work on incentives and rewards for booking within the block and not at another property. What reward will you offer and will it be enough for spending an extra $20 or $50 a night?

Harris: If just doing a lottery would work, we wouldn’t be sitting here. We see incredible plans out there for making the real cash value of staying inside [the block] better than going outside. A group we work with is now up to 98 percent inside the block from 65 percent because it took a different tactic. It told attendees an attrition charge would result in lower services and raised fees. So the registration fee is $300 for those staying in the block, $400 for those who don’t.

Spaulding: That’s the way to start, by building incentives such as advance purchase, but then recognize how important it is for the hotel to make its numbers and the association to make its goals. In the past we’d say, “Let’s see what’s happening and then talk about it,” but we can’t do that now.

Hanson: But to offer a rebate or refund to attendees who stay within the block, and to process it after the meeting just isn’t possible. So does that mean blocking rooms only at headquarters hotels and no other, with everyone on his own?

Harris: The issue is making an incentive, not sending money back to people. It’s not hard to say, “Show us your room key when you pick up your materials,” and give attendees a discount, otherwise they’ll pay an additional $100 or $150 to register. This year far greater than 20 percent [of groups] will run into attrition. We can’t win the battle by rolling over.

Power: You can say to exhibitors, “We’ll work with you,” and take a percentage off exhibit fees if they guarantee within the block. But no solution will be the same for each group.

Goldberg: The hotel and association sponsoring the meeting have to give me, the attendee, a reason for staying in the hotel. If I can save $50 a night, I’ll go there.

Harris: I disagree. You’re putting all [the burden] on the hotels. We can negotiate concessions, but it’s my responsibility as meeting planner to bring people to a hotel and make sure they show up.

Goldberg: It shouldn’t all be on the association. Hotels are our partners, but are they giving double points and free Internet access, or waiving long distance charges?

Spaulding: I can pull meeting contracts from anyone in this room and show you that all those are available for the asking if you don’t ask you don’t get. It’s to our advantage to have attendees within the block, so we can give discounts for a minimum stay.

Goldberg: Planners have to start asking for things and not just accept what’s put in front of them in the contract.

Spaulding: But the last thing hotels will do is put 30 items on the table.

Goldberg: If you’re not going to put those 30 things on the table, it’s up to me to ask for them and say, “Get real. The $9.95 a day Internet fee isn’t costing you that, so give it to those in the block for $1 a day.”

Harris: How does the buyer measure $50 in cash here (the room outside the block) and a lower Internet fee there (the room in the block)? It will have to be a $100 package [of discounts to offset] the $50 rate savings. As we get closer to the meeting, and I can forecast $200,000 in attrition charges, we have to talk to the hotel about what to do and get high quality information in advance, not after. If I find out 4,200 of 9,000 rooms are outside the block, the reality is that the hotel will make far less from attrition than with people there. If there’s a significant drop in rate, I can make some dents in attrition. I’d rather deal with calls from attendees about lower hotel rates than $200,000 in attrition.

Goldberg: Why should a hotel do that? It has a contract saying you’ll pay $189 a night per room. I’d rather anticipate the problem upfront: “If this happens, this is what you will do.” I’d rather put in [the contract] booking a new meeting there in place of attrition. 

From the audience, Charles Robinson of HotMeetingDates.Com comments that the concessions in hotel contracts benefit the association, so it might be worthwhile to turn the concessions around to benefit the attendee.

Harris: I wish the concessions were worth $200,000. Sometimes attrition far outweighs the dollar value of benefits you get.

Spaulding: We need to look at the communication and review process: At what point do you give back inventory to sell? My job every day is to sell out the hotel. I need communication at the right time.

Goldberg: Communication must be based on good history and data how many attendees book 60 days out, how many cancel 29 days out. Checking the hotel list against the reg list to find out where everyone is staying. Determining that next year my block will be smaller.

Power: You have to stay current with members and new trends. Hotels can use technology as a competitive advantage, to announce changes in the program on in-room TV, a service only available to those staying in the block.

Harris: What we’ve done in the past is block reactively, and that doesn’t solve the problem. With the war and economy, meeting planners are forced to be proactive and regain control of our blocks. We’re asking the wrong question with: “Is my block OK?” We should ask: “What percentage of people who register stay in contracted hotels?” Hotels want the greater percentage of your group. They don’t just want the 10 percent you’ve given them; they want 80 or 90 percent.

Spaulding: The Internet has changed everything. It also makes possible better communication and offers to people coming to meetings.