In an audioconference held August 20, the Professional Convention Management Association pitted three industry professionals against what is arguably the biggest issue planners face these days: the dreaded attrition factor that seems to be proliferating by the day. In fact, a pre-con survey found that 84 percent of the planners listening in have faced attrition liability, and 54 percent have paid related penalties.
The reason for the audioconference became even clearer when D. Bradley Kent, vice president, national sales, Wyndham Hotels & Resorts, pointed out the "most alarming statistic" from the pre-con survey: 53 percent of those who found themselves in an attrition situation didn’t even know how many of their attendees booked around the block. In 2002, more than a quarter of all citywide meetings faced some kind of attrition penalties, said David Radcliffe, president of The Radcliffe Co. and leader of the Convention Industry Council’s Project Attrition. "Interestingly, lowered attendance was not necessarily the problem. In reality, attendees were using other means to secure the reservation."
Culprit 1: The Internet
Karen Malone, director of meetings, Healthcare Information & Management Systems Society, joined Kent and Radcliffe in accepting the fact that around-the-block-booking is here to stay—as is the Internet’s role in the situation. While Kent doesn’t blame the Internet for planners’ attrition woes—"Pricing is based on supply and demand, not the Internet"—all agreed that low-ball discount sites such as Hotels.com and Expedia are not going away. However, their impact may lessen as pricing comes up and the demand for space catches up to all the new supply that’s come onto the market in recent years. Radcliffe said that by 2005, it’s estimated that more than 60 percent of hotel reservations will come electronically.
Radcliffe said that one of Project Attrition’s goals is to speak with companies that currently distribute discount hotels rooms on the Internet to "learn how to integrate some of their services into potential long-term solutions to this problem." (Go to www.conventionindustry.org for more on the project.) Kent mused that some day, these Internet sites may become more like ticket brokers than discounters, with attendees who use the association’s housing reservations getting the best deals and the rest getting what’s left online.
But Malone can’t wait. With 52 percent of her attendees preferring to register for the annual meeting through the HIMSS Web site, she has a tech-savvy group that’s just ripe for the picking for Internet housing discounters. Her philosophy seems to be, if you can’t beat ’em, join ’em. "We actually go to the Internet sites and buy the rooms they are selling to our attendees," she said. "We use them for our VIPs and speakers to start with, and if we need to, we release them to our attendees for overflow."
She also monitors the sites on a weekly basis and contacts the hotels regularly to see how their transient rates stack up to her group rate. In addition, her contract negotiations include asking hotels to black out HIMSS dates, or, if the hotel isn’t willing to do that, to give her first options on the rooms and rates that otherwise would be released on the Internet. "We also ask the hotels to give us a list of the sites they work with on a contractual basis, so we can monitor those Web sites."
Culprit 2: Fickle, Faithless Attendees
Even meeting industry associations aren’t immune from around-the-block booking: More than 800 of the 2,400 attendees at Meeting Professionals International’s recent annual meeting booked outside the official housing block, according to Kent.
What drives people to go outside the block? Could be rates, frequent flier bonuses, brand loyalty, or a host of other factors that Project Attrition is trying to pin down. Radcliffe said that the second phase of the project, after getting a handle on the scope and size of the problem, is to survey the attendees to see what drives their behavior. "Until we know what’s motivating attendees, and what might motivate them to behave differently, we may have a tough time overcoming their seeking housing outside the contracted blocks," he said.
Malone’s already done a study of her attendees to find out what motivates their housing choices. "Do they book early or late? What incentive could change that?" she asked. She found that fully 70 percent of her attendees registered for the meeting in the last six weeks. "That was a red flag—what if they also don’t register for their hotel until then?" She also found that Internet registrations were steadily increasing from year to year and made some changes to accommodate the trends.
For example, when attendees register for the meeting online, a screen pops up that says, "Click here now and make your hotel reservation so you get your choice of hotel." "It’s important to get to our attendees before they go to another site," she says, adding that they also do a push-e-mail encouraging prior attendees to make their reservations well ahead of time, even if they haven’t registered for the meeting yet. As soon as attendees register, they get a housing e-mail, then regular reminders to follow up until they register within the block. HIMSS’ housing company checks the list to make sure e-mails only go to those who haven’t made their housing registration.
"We also highlighted how the credit card deposit actually works," she said. "There’s a huge misunderstanding out there that their credit cards will be charged right away, and they don’t want that charge on the bill six months out. We told them that it wouldn’t be charged to their card until two weeks out." In addition, HIMSS collects hotel information on the tickets it sends to attendees in the advance badge mailing. Attendees trade the tickets for their conference materials on-site. "During down time, our registration staff enter the hotel information in their registration record and run reports by hotel for auditing purposes," Malone said, adding that getting an audit clause in the hotel contracts is vital. "Last year, we found 4,800 addition room nights by doing an audit," she said.
Culprit 3: Exhibitors on the Lam
Exhibitor housing control is key, said Malone, whose annual meeting is a citywide convention with a 700-exhibitor show. "Hotels have given us larger inventories for our block [since HIMSS instituted its new policies] because they know they’re not going to get a lot of transient exhibitors." Also, if she didn’t control the local hotel inventory, and by extension the hotel meeting space, "exhibitors could go straight to the hotel and set up exhibit space there, competing directly with your exhibit hall."
After surveying its exhibitors to find out their needs and wants, HIMSS instituted some new practices and procedures. "We educated them on why they should stay within the block," including the convention-center-space-to-hotel-room ratio, Malone said. "Because they told us they wanted to stay where their clients stay, not with other exhibitors, we carefully proportion our block to give them that contact with attendees."
HIMSS also elevated its level of exhibitor service. "If we want them to stay in the block, we have to make it easy for them. We contacted every exhibitor as soon as a contract was received. Our housing company starts to book room reservation the year before, when we start to contract booth space. We sell 70 percent to 75 percent of our booth space the year before, so it’s important to have our housing company taking reservations at that time." HIMSS’ housing company also sits in on the exhibitor site visit it holds one year out.
But that’s just the start: "We provide extra priority points for exhibitors that book their rooms early, which helps us gauge where we are with our rooms reservations. We also provide extra priority points for exhibitors who actualize 90 percent or more of the rooms they book," Malone said. "It’s a great bonus if they book within your block, but it’s even more beneficial when they use the rooms they booked—your actual pickup will be close to where it needs to be." HIMSS also requires that exhibitors block rooms according to booth space, for example, two rooms for a 10- by 10-foot booth.
But the big shocker was HIMSS’ new policy requiring all exhibitors to stay within the block and use the organization’s housing company. "I know a lot of you are gasping that this is strong-arming them, that it’s bad customer service. We didn’t do this lightly, but made the decision after reviewing their objectives, their price points, their need for proximity to the convention center, and our ability to provide an enhanced level of service." While HIMSS did ponder whether this restrictive policy would cause exhibitors to pull out of the show, "we figured that if they do, we have a larger issue with our show than housing. And we’re not asking them to incur any cost they wouldn’t normally be incurring. They need hotel rooms; we just ask that they book them through us."
While two or three "were really irate" about the policy, the other 698 or so exhibitors went along with it seemingly happily. "We’re an in-demand show, and we didn’t get much pushback when we instituted this policy," she said.
How are all these new policies and procedures working? "We had 28,500 room nights in 2002, and 41,600 room nights in 2003," she said. "And we ended up actualizing over 98 percent of our block."