Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: January 13, 2003

Many groups are suffering near-catastrophic losses from attrition charges because attendees are finding and booking devastatingly low rates on the Internet: rates far lower than the contracted group rates. Recent data shows that approximately one of every five associations (20%) faced significant attrition liability in 2002.

This is a critical issue and Conferon is working closely with industry leaders and through public forums to arrive at an industry-wide plan that will ease the problem for all parties. The goal is to create attractive incentives for attendees to stay at the group’s contracted hotels. After data for 2002 are analyzed, hotels, planners and groups can focus on possible incentives.

Some ideas for incentives for associations:

• Provide a registration fee discount for attendees booking rooms in the contracted block. For example, the registration fee could be increased by at least $100 and a discount of that same amount provided for those utilizing the group conference housing.
• Link the housing and registration processes together to determine who is and who is not staying within the block.
• Require locals to pay a higher registration fee. (They use the meeting facilities yet don’t help pay for it through the room rate.)
• Establish a fund with the fees collected from attendees booking outside the block that will be used solely to pay off future attrition or for meeting cancellation insurance.
• Educate the boards of directors and attendees about the problem.

Ideas for incentives that the hotels could offer:

• Give points, vouchers, or discounts at the hotel’s restaurants, etc.
• Provide links to a chain hotel’s Frequent Guest Program and give additional benefits to those who book at the hotel.
• Add the hotel chain’s Internet link to the association’s website and in the association’s e-marketing material.
• For city-wide meetings, provide busing only to those who stay in the contracted block. Hotels could have room keys imprinted with the association’s name, and a member of the bell staff could check for room keys at the bus stop. The bureau could provide the same service at the convention center.

An obstacle to acceptance of many of these ideas by groups is the fear that attendees would be "turned off," which is a real concern. Associations must balance the impact to their associations for many tens or hundreds of thousands of dollars in attrition fees versus somewhat lower attendance at the meetings. Like most different ideas, there will need to be a time to gain acceptance for ideas such as these.

Unfortunately, the likelihood of increased attrition liability in 2003 and beyond is extremely high. Unless associations can create a positive reason for members to book within their block, Internet reservations at nearby hotels could grow well beyond the 30% figure in 2003. Many associations are struggling for their very existence. Hits to their treasuries in the form of attrition payments are paralyzing their ability to provide member services. With so much work to be done as associations re-invent themselves, attrition problems are truly a great hindrance.

In the meantime, while all concerned work to find solutions to the problem, be sure that you are covered at the contract level to ensure that your rates are protected and that rooms outside the block can be tallied and counted towards your pickup. Today as always, be sure that you are very conservative on your room blocks. It is easier to find more rooms nearby than to pay attrition fees.

What are YOUR ideas? We welcome your feedback. Please email your response to respond@conferon.com.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)