In many areas of the United States, the lodging industry has recovered from a deep decline in the economy and meeting planners are facing a seller’s market where negotiations with hotels and other lodging facilities are tougher. Unless you are booking short-term (usually within 30-60 days of your event), it will be difficult to find a hotel willing to commit space for your meetings and functions if there are not enough sleeping rooms also being booked and guaranteed by your group. Why is that?
Hotel priorities when evaluating group business
Hotels must have meeting and function space available in order to book conferences that will fill their sleeping rooms. There is a much greater profit margin from sleeping room revenue than any other revenue generated from services provided by hotels, so sleeping rooms are king. Because so many groups experienced lower than expected attendance and used less sleeping rooms than booked during the economic downturn, lodging facilities were left “holding the bag” and suffered incredible losses.
Gone are the days that hotel properties will risk committing rooms and space to a group that does not have well-documented history from recent meetings or events that show exactly how many guest rooms were booked AND used and how many participants actually attended each planned function during the event. The hotel wants to ensure that they do not turn solid business away because of groups on the books that may not perform as required by their contract. Bookings in many hotels have to be approved by the Revenue Manager, the most powerful position on a property, and solid evidence that a group will materialize as booked is now required in order to justify making a commitment to block rooms and function space.
Each property has developed a ratio of how many sleeping rooms are required to justify confirming a portion of their meeting space. For example, 10 sleeping rooms may justify only the use of a Board Room and it may take 50 or 100 or more to justify the use of one section of a ballroom. You will also find it extremely difficult to book a first-time event that has no history from past functions unless you are trying to book less than 30 days in advance. Once you are within 30 days, hotels are not likely to book a conference that will use a significant block of sleeping rooms so they will be more flexible about committing space for events that do require few if any sleeping rooms.
Negotiate effectively to avoid attrition penalties
Facilities have required a clause in contracts that guarantees payment for a certain percentage of any sleeping rooms in a group block that are not used. Although this policy is not new, it is likely to be more clearly defined in contracts and strictly enforced by most lodging venues today. It is the same principle as if you were booking a hotel room for an individual traveller, and it makes sense.
If a room is sold without a credit card guarantee and the traveller doesn’t show up, the lodging facility can’t reduce the price of that room and sell it later as if it were a tangible product. Without a guarantee of payment, reserved sleeping rooms that go unoccupied result in lost revenue that can never be recovered; and this, in turn, will affect the hotel budget, its personnel and the quality of services it can provide in the long run. Multiply this by 10 or 50 or 1,000 rooms being held for a group and imagine the lost revenue!.
A similar policy requiring guarantees will also apply to the food and beverage functions you book although the language will be different. Attrition policy may be negotiable in regards to the maximum number of rooms that must be used from your block before penalties kick in, and how much the penalty will be. Ask that your group be responsible for the profit lost rather than the revenue lost. It can make quite a difference in how much you pay. Also, watch for significant and numerous fees that are being imposed on sleeping rooms that may not be disclosed until check-in. The lodging venue will have no control over fees that are mandated by taxes or city surcharges, but ask specifically about these fees and negotiate them if you can. It is unlikely they will be waived, but you may be able to ensure they will not be increased beyond the current rate at the time the contract is signed.
Why you need to clearly understand the demographics of your group
Because of the change in the market today with increased demand for sleeping rooms and function space and attrition penalties, booking guest rooms at a venue that appeals to the participants expected to stay overnight has become a primary, bottom-line budget concern. Unless your organization mandates attendance and pays for everyone’s sleeping rooms or your event will take place at a venue separate from the sleeping rooms, you will need to have a clear understanding of the decision-making factors that are influenced by the demographics of your attendees on whether they will travel to your event, whether they will stay overnight if they do, and if they will choose to stay at the venue you have booked.
Not only will you be competing against lodging facilities located in close proximity to the venue you have booked, you will be competing against discounters offering reduced rates over the Internet at budget hotels and exclusive hotels all across the town or city. Meeting attendees have become very prudent and selective shoppers for lodging and no longer feel compelled to stay with the group, so it is important for meeting planners to be knowledgeable about their demographics and preferences before signing a contract. It can be very costly to your group if sleeping rooms blocked are not actually used!
So, what should you do to succeed in a seller’s market?
To negotiate your lodging contract successfully with the venues you prefer, get back to the basics and prepare in advance before attempting to book. Reevaluate your group’s priorities so you know what you must have rather than what you would like to have and negotiate from that point of view. Above all, be realistic in your expectations and remember that you are in partnership with your lodging contacts. Be nice – always.
You may want to look beyond the norm in today’s market and try something new. The types of hotels and guest room accommodations that are available range from elite to budget properties, full- or limited-service hotels, family or luxury resorts, preferred hotel groups, bed and breakfast inns, university campuses and more. Most meeting and event participants understand the need for organizations to be more cost conscious and sensitive about luxury items but, depending on the type of group, they may still resist attending if they have to “go bare bones!” Low sleeping rates may not be the biggest motivator for them to register at the venue you selected. Once this basic homework has been done, you will be ready to start the booking process. Here are steps to walk you through that process.
Lodging Guidelines Step-by-Step
Before booking a block of overnight sleeping rooms for your group, create a checklist than a timeline to ensure all necessary arrangements are handled correctly and on time.
Lodging Checklist Instructions
Creating a lodging checklist is the first thing you should do before contacting hotels or other lodging facilities. If your group will need more than 10 sleeping rooms and you are inquiring about availability at a full-service hotel, you will be referred to a group sales person on-property, in most cases, and your checklist will need to be more comprehensive.
If less than 10 rooms will be needed or if you are interested in booking a limited rather than full-service venue, your rooms will be confirmed through a central reservations system or front office personnel and fewer tasks will need to be included in your checklist.
However, small bookings of less than 10 rooms can still be complex if the guests are VIPs or dignitaries, in which case upper management of the venue should also be involved and your checklist expanded to include all special arrangements.
Although you and your lodging team may work independently from others planning the meeting or function for your group, it will be important to stay within the overall timeline and communicate back regularly on your progress to the one responsible for the event. If any one component of the event runs into problems that cause delays or budget adjustments, it can adversely affect the capability of others involved in different areas of the planning process to perform their duties effectively.
Prepare a Timeline for Booking Group Sleeping Rooms
The first step to creating a lodging timeline is to consider how far in advance you are at this moment from the start date of the conference or event and when overnight guests will begin arriving. If you are only weeks away, your timeline will have to be compressed significantly and each task prioritized differently than if you have three, six or 12 months to prepare. Similarly, if your lodging needs will be for less than 10 rooms, the tasks associated with reserving so few rooms will be easier to accomplish. However, small bookings of less than 10 rooms can still be complex if the guests are VIPs or dignitaries, in which case the timeline will need to be expanded to allow enough time to make the unique arrangements that will be required.