The planners were stunned.
More than 2,000 of them, sitting in the Professional Convention Management Association's general session on a Monday morning in January, had just heard two travel experts tell them that unless they offered package deals and other incentives to convince meeting-goers to stay at official hotels, their attendees and exhibitors would continue to cause attrition problems by booking around the block.
But what made this message even more galling—if the mutterings of audience members were any indication—was that it came from the executives at Travelocity.com, and Expedia.com. How dare these Internet discounters, outraged planners whispered, deliberately lure away their attendees, then blame the planners for not trying hard enough to keep them?
Often the strongest tonic is the hardest to swallow. If the message of PCMA's general session wasn't enough of an eye-opener, consider this: Just a few weeks ago, Meeting Professionals International announced it was "tackling attrition head on" by offering a $50 coupon good toward future MPI purchases to attendees who book within the block for its World Education Congress next month in Denver. When an association of meeting planners has to rely on incentives to convince its members not to book outside the block, can anyone doubt that the bigwigs at Travelocity and Expedia were right?
"Associations have to come to grips with the fact that the world changed when access to hotel data became available on the Internet," declares Bruce Harris, president of Conferon Global Services, Inc., in Twinsburg, OH, who describes himself as "passionate" on the subject of attrition. "But many, if not most, associations are making only small changes in response. The reality is that we have to transform how we think about the entire relationship between the attendee and the event."
Fortunately, planners are catching on. Following are stories from some who, using a variety of means, successfully precluded attrition headaches by convincing their attendees not to book outside the block. Read on to see if their methods could work for your group.
The Punisher
Two years ago, the Healthcare Information and Management Systems Society found itself with a huge potential problem on its hands. Its 2001 citywide had been such a success that, admits Director of Meetings Karen Malone, "We'd gotten a little lax." The result? In 2002, fully half of HIMSS' 600-plus exhibitors booked outside the block. Luckily, Malone, who'd negotiated contracts with no attrition clauses, didn't have to pay. But she feared she would in the future if she didn't improve her exhibitor pickup—fast. So for her 2003 meeting, she got tough.
First, Malone says, "We went back and reassessed everything we did regarding housing, for both attendees and exhibitors. Even things that worked we decided to improve." When her research showed that exhibitors were getting better-than-average deals on the rates they paid for floor space, she took an "aggressive" stance in one area in particular—freight, which she decided to deny to exhibitors that didn't book into the group housing.
Of course, this wasn't done without ample notice. "We educated them first, explaining in our exhibitor newsletter that convention centers lease their space in proportion to the number of hotel rooms used, so that it'd be difficult for us to get the necessary space for them if they didn't stay in the room block," says Malone, who requires exhibitors to book two hotel rooms per 100-square-foot booth. After three months of hammering this point home, she announced the new policy of freight refusal in the next newsletter. Five weeks out, she sent certified letters to the 30-odd exhibitors that still hadn't made housing arrangements, warning them again that their freight would be denied if they booked outside the block.
"Maybe a dozen called me, saying, 'How can you do this? It's not right,' " recalls Malone. "But when I explained to them that the alternative was incurring attrition charges, which the association would have to pay for by raising exhibitor dues or membership fees, they understood." Indeed, Malone had hardly any pushback. Of 650 exhibitors, only two balked in the end. While many view this method as playing hardball, Malone doesn't see it that way. "As a planner, I don't get it—why block rooms for your exhibitors if you don't expect them to use them?"
Malone, in fact, doesn't even view her tactics as attrition-fighting, but merely effective housing management, and applies it equally to the attendee side. As soon as housing opens, for instance, she e-mails all attendees from the prior two years and encourages them to book their housing even if they haven't registered yet. "It amazes me how many planners require people to register before they can reserve housing," she notes. "But housing closes three to four weeks out, and seventy percent of our attendees register during the last six weeks." Her Web site also links registration and housing, so that as soon as attendees complete one process, they get an instant e-mail reminding them to do the other. Once on site, attendees must submit a ticket—on which they have to write the name of their hotel—in order to receive their conference materials; Malone then uses that housing information as part of her audit process.
Malone's strategy isn't all about punishment—she also rewards exhibitors for following the rules, with extra priority points for booking within the block, booking early, and actualizing 95 percent of their block. And if she didn't manage housing so effectively, she points out, she'd likely wind up with segregated room blocks where all exhibitors book one hotel and all attendees book another. "The meeting isn't just about what happens at the convention center—obviously a lot of networking goes on at night," she notes. "By controlling who stays where, we make sure there's a good mix of exhibitors and attendees at every property, which extends the conference experience into the evenings."
By the Numbers
Like Malone, most planners trying to prevent attrition problems combine rewards and punishments to steer attendees and exhibitors toward official room blocks. An increasingly popular method at citywides, for instance, is to require a room key from official hotels as a "ticket" for the free shuttle service. But Christy Richards doesn't have to rely on such carrots or sticks—the room rates she sets for her meetings are so competitive that "they drive attendees to us," she says.
How does Richards, who plans 100 meetings a year for the National Association of Realtors (NAR), manage this? Via a combination of heavy numbers-crunching and skilled negotiation. The Chicago-based planner's hallmark is the weighted-average model, which begins with tracking the room rates at her chosen property every day during a typical month, then calculating the monthly average. Richards says this model (which was in use at her association before she was hired) is fair to both the group and the hotel since it incorporates high and low prices over the month.
Next, Richards negotiates a discount of 25 percent off the average based on her belief that "the purchaser of volume should get a better deal." For meetings scheduled several years in advance, she uses inflation multipliers or recalculates the rates a year out from the meeting. Either way, Richards' numbers speak for themselves: Using no incentives other than low room rates, she routinely gets 95 percent pickup on her room block and has never paid attrition charges.
Richards' method sounds labor-intensive, but she insists it isn't. She employs two staffers to research room rates—mainly by checking both official Web sites and Internet discounters as well as calling hotels directly—but this isn't their full-time task, she notes. "It takes less time than people think," Richards says. "Other planners tell me they can't afford the resources to do it, but I say they can't afford not to."
It's not clear, however, that every planner can successfully employ the weighted-average model, especially as the economy recovers and hotels look to boost room rates accordingly. "NAR is an awesome customer—they fill our 100,000-square-foot exhibit hall and take every room," says Dan McKeon, former director of sales and marketing at the Marriott Wardman Park in Washington D.C., where Richards brings a 5,000-room-night convention each year. "But it would be difficult to apply their logic [in setting room rates] across the board." McKeon's colleague Richard Green, vice president of industry relations and association sales for Marriott International, is more candid: "I don't think all hotels would agree to it."
Even so, it behooves planners to adopt at least part of Richards' model and regularly check Web sites and other sources to see the rates on rooms outside their blocks. This is research that allows you to anticipate potential pickup problems if you see discounting going on at nearby or even official hotels (if the latter occurs, work to have the discounted rates closed off to your group, and keep copies of screen shots of the hotel's Web site to use to negotiate and get booking credit if you end up with attrition charges). Then you can develop or modify your incentives for booking in the block accordingly.
Hook 'Em and Book 'Em
Many planners and hoteliers say that the most effective way to convince attendees not to book outside the block is by offering them at least $100 off the meeting registration fee if they stay at host hotels (easiest done when housing and registration are linked via Passkey or another housing management tool). Harris—who recommends that planners simply raise registration fees accordingly, but announce it in advance and explain the reasoning behind the change—says this strategy routinely results in pickup rates of over 90 percent, not just for the block, but for all rooms used.
If planners aren't comfortable with the idea of tinkering with registration rates, they could try some of the "soft" dollar incentives that have proven popular with groups. Lynne Tiras, president of International Meeting Managers in Houston, recently organized a meeting for a radiologists' association at which she held a drawing from the names of all guests of the host hotel; the winner got his four-night stay free. "He was very excited," Tiras says.
Other planners raffle off airline tickets (often obtained gratis from official airlines) or offer additional "perks" to those staying in the room block, such as discounts on meals, meetings merchandise, or Internet access. Keep in mind that you'll probably have to offer a wide variety of incentives to appeal to enough attendees, and that many might still prefer the certainty of paying a lower room rate at another hotel to the possibility of, say, winning a raffle prize or getting to use the spa. "Research shows that you have to provide three times as much value in soft dollars as people would save by booking outside your block," Harris warns.
Whatever methods planners decide will work best with their groups, they should never do nothing, even if they haven't never had attrition problems in the past. Experts say that with the improving economy, hotels are far less willing to negotiate contracts with no attrition clauses. And many properties have raised their minimum pickup rates necessary to avoid attrition fees from 80 to 90 percent. "For years, associations thought that if they just put out a brochure [about the hotel], attendees would show up," offers Karen Vogel, CEO of New Generation, a Fairfield, CT-based event consulting firm. "But it doesn't work that way anymore. You have to change attendees' behavior."
SIDEBAR
Attrition Attack
Don't wait until pickup becomes a problem. Try these tips to keep 'em in the block
1. EDUCATE. Explain to attendees and exhibitors that if they don't stay in the block, you not only can't secure enough meeting space but you'll have to raise membership dues or exhibitor fees to cover attrition charges. "They may not like that, but they understand it," says Karen Malone of HIMSS. Include a letter from the association's president to drive home the point.
2. DISCIPLINE. Start with exhibitors (historically the most likely to book around the block, says Conferon's Harris). Make them take two rooms per 100-square-foot booth; if they don't, deny them exhibitor badges or refuse freight. "People who've used this solution had very little pushback--exhibitors didn't go awsay," notes Harris. Reward compliers with perks like extra priority points, VIP passes, or free attendance to networking events.
3. EXTEND HOUSING. If possible, put a "cancel and replace" clause in your hotel contract, which allows the hotel to keep selling rooms past your official cutoff. "A lot of planners don't realize that by closing housing early, they're encouraging members to book rooms elsewhere," notes Malone.
4. LINK HOUSING AND REGISTRATION. Sites like Passkey let planners see who's registered but not in the room block; often a simple e-mail reminder is enough to increase pickup. "A lot of people just forget to make their room reservations otherwise," says Mark Holland, senior attorney/meetings with the Rocky Mountain Mineral Law Foundation in Westminster, CO.
Originally published June 1, 2004.