Hotel rooms for the SLA annual conference have always been a hot topic: Why are they so expensive when there is a cheaper hotel down the street? Why can't SLA get better rates, and why can I get a better rate on the Internet?
Although arranging conference hotel reservations may seem simple, it is actually a complicated web of decisions and circumstances that affect each other greatly. Here are a few questions and answers to help sort it out:
- How are official hotels chosen?
In many cases, it is the hotel that chooses SLA. When SLA is searching for a new location for the annual conference in a potential city, the city's convention and visitors bureau sends out a bid to all the hotels in the area, stating the dates we are arriving and departing and the predicted attendance. The hotels then offer a certain number of rooms (depending on what is going on in the hotel at the same time) and an estimated range of rates they would offer SLA attendees. Some hotels may not offer us rooms. This usually is because a conflicting event has been contracted in the hotel, or the hotel does not feel the group is compatible with its usual guest base.Once hotels have put in a bid to SLA, staff goes and visits the hotels-looking at factors such as distance to the convention center, amenities, safety, cleanliness, brand reputation, and affordability of potential rates. Contracts are then negotiated with each hotel.
- How are rates decided?
A rate base (the lowest rate in current-year terms the hotel is willing to give) is decided during contract negotiations. As the rate is only a base, most of the time the hotels will insist on adding an increase clause, stating that they have the right to raise the rate by X percent each year until the date of the conference, in order to cover any change in price climate. The rate base is a combination of factors: how many rooms the hotel is holding, whether we need to reserve meeting space, how much we would spend on food and beverages in the hotel, where the hotel is located (close location to the convention center always equals higher rate!), and what amenities it provides. These factors are calculated to come up with a suggested rate base that would cover the hotel's in-house expenses and create profit. (Whether we like it or not, hotels are out to make a profit!) SLA will negotiate with the hotel to come to a compromise on that base rate. - Why can I get a cheaper rate on the Internet than SLA can provide?
In the meetings industry, this is the number one controversy. Meeting planners claim that putting lower rates on the Internet is unfair (because when attendees reserve the discounted Internet rooms, the group doesn't get credit for the reservation), while the hotels argue if they have extra rooms that need to be filled, they should have a right to sell them at any price they want. When travel websites first became popular, many hotels signed contracts with the sites promising to sell a certain amount of their inventory on the sites at a discounted rate, regardless of the rate promised to SLA or other groups. As time goes by, most of the hotel chains are realizing this practice is bad for the meetings business, for it hurts them in the long run. Current trends show hotels limiting their inventory on travel sites to very small numbers. Therefore, when you see a discounted rate on the Internet, most likely only five to 10 rooms are being offered at this price. - Why have SLA's conference hotel rates been so high and so limited in the past few years?
The past few years have been very challenging for SLA in this area. As mentioned before, the conference rate and the number of rooms reserved for SLA are negotiated through the contract. For the past few years, SLA has been forced to work with high rate structures, yearly increases, and a dramatically overestimated number of reserved hotel rooms in hotel contracts that were negotiated and signed by former SLA staff members approximately seven to 10 years ago. These factors are affected as well by attrition clauses, which commit SLA to paying a large sum of damages if we do not fill up the number of rooms originally promised. While years ago many of these factors could be negotiated out, the climate in the industry has changed so that hotels rely on these rate increases and penalties to make up for any revenue loss (when SLA has fewer attendees stay in the hotel) that was anticipated 10 years ago.SLA has worked hard to negotiate with the hotels about these troublesome contracts. While the hotels recognize our situation, many believe they were not given realistic projections because SLA had significantly overestimated our room blocks at the time of the contract. This means that many properties were not willing to cut back the SLA room block to the levels needed-they felt that would cause them to lose too much revenue. Since the hotels had signed contracts, they did not need to compromise. Therefore, while SLA recognized the need for lower rates and more diverse properties, these surmounting penalties prevented us from moving forward with other hotels-in the hope that concentrating the number properties would help fill the overestimated blocks as much as possible.
- Why does SLA need to have room blocks anyway? Why can't attendees just book their own hotel room?
When SLA chooses a new destination for a conference, we begin working with that city's convention and visitors bureau to come up with a rental agreement at a convention center. Most convention centers are run by city government, which uses the convention center in conjunction with city hotels to bring in as many tourism dollars as possible. Therefore, the rental agreement for the center is tied in very closely with how many hotel room nights (called a room block) a group is willing to guarantee. If a group is not willing to guarantee that a certain number of people will stay in their hotels, many cities will not be willing to work with the group on a reasonable rental fee for the center. Without a guarantee of hotel rooms, the convention center can either choose not to work with a group at all or charge fees too high for the group to to afford.
Please help us fight our current housing challenges by booking through the SLA Conference Housing Bureau. Attrition penalties are crippling, and if they are not brought under control, they will affect conference attendee costs. For example, a $200,000 penalty would translate into $17 per member or $75 per full-paying conference attendee! By fending off these attrition charges, SLA will be able to keep down the costs of our other products and services that benefit you. We hope this gives you some insight into the complicated world of conference hotel reservations. SLA continues to be committed to getting the best rooms and rates available for conference attendees, and is dedicated to improving the housing selection process in future years.
Information Outlook Vol.8 No.2, February 2004
