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by D. Benson Tesdhal | November 01, 2012

Because the internet has made it so easy for people to compare prices and obtain last-minute discounts on hotels, many organizations discover, to their dismay, that event attendees have booked their rooms at nearby hotels because they obtained a cheaper rate, instead of staying at the headquarters hotel.

The result of such price shopping by attendees is that the organization sometimes cannot fill a sufficient percentage of its contracted room block at the headquarters hotel and must pay attrition damages. With some creative thinking, however, there are a number of strategies that you can employ to prevent this kind of attrition from happening.

Minimizing Attrition
Some organizations have been successful at filling their room block by encouraging attendees to stay at the headquarters hotel. This is accomplished in a few different ways.

First, some organizations have set a hard-and-fast policy that a person cannot register for and cannot attend the event unless the person can show proof - both at the time of registration and also at the time of attendance - of having a valid reservation at the headquarters hotel. However, this policy can be difficult and time consuming to police.

Other organizations use a softer approach, and offer a lower meeting registration fee if the person simultaneously books a room at the headquarters hotel. The only catch is that some cross-checking must be done to ensure the person does not cancel the hotel reservation after registering and stay at a different hotel after securing the discounted event registration fee. One way to preclude this is to make room reservations non-refundable.

Another option is to offer attendees early-bird room discounts of 10 to 20 percent for those who book by a certain date with the headquarters hotel. This forces people to fill the block early and gives the organization an advance cushion of reservations.

Another Option
A variation on the above idea is to offer a limited number of new attendees the chance to book a guest room at some incredible discount that is simply too good to pass up. This could be something like 50 percent off the listed price, with the meeting sponsor quietly paying the hotel for the 50 percent balance of the room price.

You may wonder why any organization would be crazy enough to eat that much in room fees. The answer is one of simple mathematics. Let's say that the hotel contract stipulates that 90 percent of the room block must be filled or else the meeting sponsor will have attrition damages equal to the cost of the shortfall. Assume further that rooms are selling for $200 and that two weeks before the meeting, the sponsor can see that it will fall 20 rooms short of filling 90 percent of the block. The normal attrition damages in this example would be 20 rooms multiplied by $200, for a grand total of $4,000 in fees. However, if last-minute attendees willing to pay half price could fill those 20 rooms, the meeting sponsor only has to pay the other half of the cost of those rooms, which would be $2,000.

Those who booked their rooms early may be mad that last-minute attendees received 50 percent off the price of their rooms, a policy that seemingly rewards procrastination. But this kind of policy can sometimes be justified if those receiving large room discounts are limited to people who have never attended the sponsor's meetings in the past, or if the discounts are only offered to people who also agree to pay dues to join the org-anization or incur some other cost. In other words, large room discounts can sometimes be justified as a one-time membership recruitment incentive.


Ben Tesdahl, Esq. is an attorney concentrating in nonprofit, corporate, tax, and contract law, including meetings and convention law. He is with the law firm of Powers, Pyles, Sutter & Verville, P.C. in Washington, DC. He can be reached at (202) 466-6550 or at ben.tesdahl@ppsv.com.