The Block's the Limit

With the return of flush times to the lodging business, hoteliers are now steadfastly limiting groups to the exact number of rooms in their negotiated block—and often charging attendees much higher transient rates once the blocks are full. The trend has been gaining strength for a year and a half, but really has blossomed over the past six months, say industry insiders.

"In many cases, we're capping blocks to what groups asked for," says David Scypinski, senior vice president of industry relations for Starwood Hotels. "If groups need more rooms, they're going to have to pay a premium to get them."

The situation is most often occurring in first-tier cities during times of peak demand—say, midweek in New York or Chicago during the spring or fall, when groups are more apt to meet and more transient business travelers are in town.

And in a reverse of a few years ago, planners are finding that the group rates they negotiated back then are now substantially cheaper than the transient rate, sometimes by as much as $100, according to Scypinski. Exacerbating the supply-demand dynamic in first-tier cities in particular is the fact that many conventions are relocating from New Orleans through next year as a result of Hurricane Katrina, Scypinski adds.

Occasionally, even small meetings, usually booked shortterm, can get caught in the crunch. Hannah Greenberg, director of conference services for Meeting Mavericks in Voorhees, NJ, typically books 60 rooms for the second night of an annual fleet-management franchisees meeting, compared with the 75 she books for the first night because, often, fewer people stay on the final night. But she also has negotiated contracts that allow her to increase her block until the final cutoff date and still receive the group rate.

In Chicago last year, the hotel Greenberg allowed a handful of attendees who put the group over the block to pay the negotiated rate, but about five others faced paying the $100-higher transient rate. Those five opted to book rooms at a nearby hotel at a substantially lower rate.

This year in Washington D.C., Greenberg had a hard time getting 14 extra rooms for the final night. After confirming Greenberg's rooming list, a hotel representative said the hotel was oversold and she would have to drop the extra rooms. Greenberg prevailed only after some testy exchanges. "Three or four years ago, the hotels were so grateful to me for being over the block," she says. "Now, they're mad at me."