The Case for Smaller Room Blocks

One problem I see time and again is organizations reserving a hotel room block that is much too large and then paying attrition damages. There are any number of reasons why an organization may overestimate its rooming needs, including faulty historical data, a sudden downturn in the economy that causes a shortfall in attendance, or simply being overly optimistic. 

Whatever the reason, the fact remains that groups reserve room blocks that are too large for them the majority of the time. And when they do, it often ends up being a very costly mistake due to the attrition damage clause in the contract.

While no planner wants to turn people away from the headquarters hotel because the room block is full, there are better strategies than inflating your expected needs. Here are three options. 

1. If registrations are stronger than expected, some hotels will simply let you go over your room block and honor the group’s prices as long as there are still rooms available. So in many cases, the block stated in the contract is not a hard ceiling on the number of rooms that is available to your group. In fact, it is sometimes possible to get hotels to agree to a contract clause that will allow a group to exceed its room block and keep the benefit of special pricing as long as the hotel has rooms in inventory.

2. Some hotels will let a group exceed its room block only if the meeting owner agrees to formally amend the contract to increase the block. Hotels do this because by making you increase your contractual room block, you also are legally increasing exposure to attrition and cancellation damages. If a hotel insists on a formal contract amendment, go ahead and do it. Such an amendment presents only a minor risk, as long as you wait until you are sure that the original room block is going to be filled and that any increase is well within reach.

3. If registrations for a meeting are stronger than expected and the hotel will not expand your room block (perhaps because the hotel is filled to capacity), you have one other possibility: using nearby hotels as overflow facilities. It is far better to book a small block of rooms at the last minute in a hotel across the street than it is to risk attrition damages by reserving a large original room block that turns out to be far too optimistic. In order to avoid annoying your primary meeting attendees, you can always send your staff to the overflow hotel first, followed by last-minute registrants. 

In short, there is seldom a downside to underestimating room block needs, other than perhaps some last-minute attendees staying at an overflow hotel. But in today’s weak economy, when attendance can be unpredictable, there often is a downside to overestimating the room block because of contractual attrition damages. Bottom line: when in doubt, keep the room block small.