Attrition, the job's single biggest headache for many a meeting planner, has occasioned some creative responses from professionals in the field. "Blockless" housing -- drastically shrinking, or eliminating, room blocks to reduce liability for unused, contracted rooms -- is a radical new approach to the problem that's remarkable for both its popularity and the controversy it's generated across all segments of the meetings industry.
While some planners and suppliers are cautiously open- minded about the new trend, others are not. "I think going blockless will work for some meetings, but not others," allows Mary Power, CEO of the Convention Industry Council (CIC), the McLean, VA-based umbrella association that represents over 30 meetings industry organizations. In January, CIC released the final report of Project Attrition, a 70-page dossier that details many techniques for fighting attrition, including reducing the room block.
Other experts are less generous. "Get rid of your room block? You're setting yourself up for disaster!" says Bruce Harris, president of Conferon Global Services in Twinsburg, OH. Harris has a litany of reasons why room blocks are still the best way to handle housing for most groups: Chiefly, they ensure discounts on rates and meeting space, and guarantee housing for attendees. "The bottom line," he says, is that the planner "still has an obligation to provide housing for attendees." But does that mean you have to use a room block?
No Blockheads Here
It's a typical story of a vanishing room block. Following a nasty attrition scare in San Francisco a few years ago, Eric McNulty, managing director of conferences for Harvard Business School Publishing in Watertown, MA, began gradually reducing the room blocks he employed for client conferences, going from blocking rooms for all attendees, to blocking rooms for just half of them, to finally arriving at a blockless strategy in May of 2003. "We had no room block for a 150-person meeting," he recalls. "Instead of using hotel meeting space, we used a private club for the meeting venue. It was in midtown Manhattan so there were a lot of hotel rooms nearby. We talked to the Plaza Hotel, which was right across the street from where we held the event, and they gave me a rate with no guarantee. We also provided attendees with a list of six or seven other hotels within a two-block radius of the meeting venue, and there were no complaints or problems."
Since then, McNulty has employed blockless strategies for events in Chicago, London, and Atlanta. "The London event was a 100-person meeting and we used meeting space that was associated with the hotel," he relates. "I took out a block of twenty rooms for speakers and staff, and a few attendees coming from Asia who wanted the assurance of the block. London is a city with a huge hotel inventory, so we gave the rest of the attendees names of the hotels that were closest, and basically said, 'Go for it.' " The result? Happy attendees, and fewer risks for McNulty and his managers.
Blockless meetings, says McNulty, "are a little more expensive because you're paying for the meeting space." But compared to attrition charges, meeting space rental is cheap. "When I was using room blocks, I was factoring in attrition charges anyway, so the net cost increase is marginal. And the blockless approach gives attendees more control over their own housing costs, because it allows them to stay wherever they want to stay."
Blockless housing has worked well for McNulty because it's a carefully reasoned response to the changing conditions of the meetings industry. "It wasn't that we woke up one day and said, 'Let's get out of the housing of attendees," he explains. "Rather, there were three distinct forces at work: First was that attendees increasingly use online resources to find lower rates that we can offer through a block, too often at the same property." Hoteliers in recent months have begun to scale back their use of last-minute Internet retailers to dump rooms at big discounts, but it's safe to say the situation won't change significantly, at least not anytime soon, as online travel sellers like Orbitz, Expedia, and Travelocity continue to enjoying booming business, and attendees grow more Web savvy by the minute.
"Second," he continues, "corporate travel offices seem to be getting stricter about requiring people to stay at certain properties where they have negotiated rates. This precludes people from using our block," since most of the attendees must adhere to corporate travel policies. This trend, the rise of managed travel in large and mid-size businesses, also shows no signs of slackening.
"Third," McNulty finishes, "the properties are reluctant to let us do a true audit to verify attrition, despite agreeing to [audits] up front. They generally cite guest privacy, but it leaves us in a difficult position because we can't verify room pickup easily." Actually, in most cases the hotels' claim to privacy is erroneous (see this month's Law column, page 22).
With hotels receiving bookings from a number of disparate sources, checking the rooming list is the only sure way to see which attendees stayed at that property. Says McNulty, "It isn't that we don't trust the properties, but mistakes get made when attributing bookings to blocks."
The Big Gamble
Big block, small block, or no block, group housing involves speculation and risk. If you book a large block for your event, and it does not get filled, you will face substantial attrition charges. If you book a smaller block, or none at all, you could be stuck without housing for attendees. Las Vegas-based planner Thomas Licata, CEO of third-party planning firm Creative Endeavors, had a lot to lose when he employed very small room blocks for the Glass Craft Expo, held at the Cashman Exhibit Center in Downtown in Las Vegas last March: "Over 7,000 people came through the doors for that show," but Licata employed a block of just 300 rooms for event staffers and instructors. The rest of the attendees were directed to a third-party housing outfit that provided unblocked rooms in nearby hotels. Fortunately, Licata's gamble paid off. Smaller blocks, he says, "take the pressure [of managing housing] off of us, when we're busy handling the logistics of the rest of the event."
Beyond the glass show in Vegas, Licata uses microscopic blocks for several smaller shows he manages in secondary cities around the country. "If it's a trade show, we take the smaller room-block approach," he explains, even though this means paying for event space. "We pay the published rate for the square footage we use at Cashman Center in Vegas, and we're comfortable with it. This way, we're just buying space and we're beholden to no one."
Blockless management works well for smaller corporate meetings, too, says Fred Hufnagel, CEO of Blue Ridge Management Group in Warrenton, VA. "When a client is doing small meetings with sessions held somewhere other than a hotel, such as the home or a field office, we will work without a room block," he says. "We'll look for two or three hotels that are close to where the meeting will be held, and we'll offer them as options. We won't take blocks with the hotels, but we will watch to make sure they aren't full."
Most of Hufnagel's blockless meetings are for under 100 attendees, and he says he's never run out of housing. "With our system, we can search hotels within a certain radius of the meeting. We start out three miles from the hotel, and if that area sells out, we can expand the radius to include more rooms. Or we open it up to the whole city." Housing management is tricky, says Hufnagel, but "one thing is for sure: It's easier to increase your block than it is to reduce it once you've already signed the contract."