Hotels Tighten Block Rules

In a maneuver to fill their rooms with higher-paying transient and walk-in business and cope with an oversold environment, some hotels have chipped away at the blocks that they've contracted with meeting planners.

Although these hotels haven't ignored their contractual obligations outright, they have in effect done so by refusing to allow planners to use replacements should an original attendee have to cancel after the cutoff date.

In some cases, hotel management has reinstituted the practice of walking guests because they refuse to add to the block once an established size had been determined.

Couple this with the policy of reserving less of their inventory for groups and the general crowding in popular cities like San Francisco, Chicago, New York and Los Angeles, and the stage is set for mounting frustration.

"I feel like I'm getting pushed out of cities because they're popular," said Carole Sutherland-Wade, director of meetings and incentive travel at the Trade Development Corp. in Los Angeles. "As far as availability goes, the big convention towns don't want my corporate incentive or meeting business because it's too small, and the day trippers are making cities like Chicago practically unlivable from Thursday through Sunday evening."

She said that a recent conversation with the manager of the New York Hilton, David Keyes, confirmed that the hotels themselves are just as flustered about having to cope with the downside of high occupancy: being forced to turn some business down and engage in severely stringent reservation policies.

Several hotel sales personnel confirmed that far less space is being allocated for group business as hotels have repositioned themselves yet again to ride the tidal wave of new demand.

Michael Hausman, director of national sales for Renaissance Hotels International in New York, said that while it is a clear violation of industry ethics to sell into a block prior to cut-off, he knows that this practice happens in properties all over the city "every night of the week." This is not because the value of group business is overlooked as much as it is a defensive stance against getting stuck with empty rooms, Hausman said.

"This is an environment where hotel owners want their ROI," he said. "Hotels are in the business of making money, and of course they are going to sell their inventory in such a way that will maximize their revenue. It's simply a business decision."

Of course, another solid "business decision" is to build relationships with clients, which is why he can't imagine getting into an oversold situation. "We're not going to do well financially if we have each group one time and one time only," he noted. "We need repeat business-our credibility is at stake."

That some properties will take advantage of the current environment is inevitable, although in Hausman's experience, the trouble in many cases is simply that planners are very used to dictating all of the terms of a deal and are bewildered and frustrated now that they are no longer in the driver's seat. "I don't think corporate planners are facing the same issues as associations because its a whole different dynamic," he said. "For the most part, they are used to paying what the market will bear, and they also tend to have a firm handle on their block size."

Indeed, booked-solid properties have become the most daunting prospect for association buyers despite the luxury they have of longer lead times.

"Even though we can document an extremely low wash on our annual citywide and have reiterated this numerous times in writing, verbally in the course of site selection, when negotiating contracts and during several advance meetings with sales staff and front desk personnel, we've still been told, 'you should inform us if you don't have many no-shows,' " said Deborah Davies, manager of assembly services for Presbyterian Church in Louisville, Ky.

This mantra did more than provoke annoyance for the planner. In 1995, she first experienced a major chain's refusal to replace canceled reservations after the cut-off date. "This has happened a few times since," she said. "Now, I reserve the right of individual room reservation replacement as a clause in my contract."

Although she books these meetings several years in advance, Davies is coming up against hotel salespeople who want extremely-some would say obscenely-accurate room blocks in addition to demanding performance clauses on food and beverage use. She said that she would not do business with hotels who insisted on such clauses.

Kathie Niesen, manager of instructional courses at the American Academy of Orthopedic Surgeons in Rosemont, Ill., is irked that providing an accurate history to hotels doesn't counteract stringent hotel booking policy-and in fact, a history of limited no-shows seems to be discounted altogether.

In the highly competitive environment, other niceties have been dispensed with as well. "We no longer have adequate setup and tear-down time for the meeting space at properties," she said. "It doesn't matter if we've filled rooms in the hotel for five days; on day six, they want their meeting room back. This forces us to work overtime breaking down."

Denise Costa, an independent meeting planner based in Sacramento, Calif., recounted that two different planners recently approached her with cases of their blocks being "invaded" prior to the cut-off date. The rationale the hotels offered was that they had typically experienced a 40 percent wash for all groups and thus sold the rooms because they didn't think they'd be needed. Both groups had used third-party housing providers that didn't turn in the lists until just before the cut-off date, which prompted her to wonder if a gradual update to the hotel wouldn't work better.

"Hotels are trying to fit as many groups in their facility as they can fit and bank on the fact that most groups will book more space than they need," Costa said.

All of this dismays Diane Voto, national sales manager for Omni Hotels in New York. "We always honor our contracts and would never think of selling into a block," she said. "It's just not the way to maintain relationships. Booking over block shouldn't be a problem here since the economy has improved citywide, and meetings are on an upswing. It would make sense that properties in popular cities are in the position of overextending themselves.