Another session at thePasskey Housing Forum was a free-flowing discussion of today’s burning housing challenges, from attrition to underblocking to bookarounds. Here are a few things we talked about.

How to deal with that no-man’s land between when the housing company cuts off reservations and the hotel gets its inventory back to sell to attendees individually. Attendees who want to register are told to wait, which is far from ideal. One suggestion was to be sure to remove the notes to refer people to the housing company from the hotel’s call center, and to send reminder notes to the hotel before the shutoff date telling them to remember to update their reservation center.

This one was harsh, but the person said it worked: “Give them the direct number of the hotel reservation managers—it will get updated fast!” One person on the hotel side said their weekly meeting included which groups were cutting off and how those groups wanted to handle reservations after cutoff.

There was a bit of a kerfuffle between hoteliers who wanted the rooming list before cutoff and the planners in the audience. Planners say that, with systems like Passkey (this was a Passkey users group meeting), they can see the room types booked and pickup; why would they need actual names? Hoteliers say it’s so they can accommodate special requests, like an adjoining room for family members, which they can’t guarantee until they have the names.

Another issue was how the hotel sales staff can better communicate to the front desk not to give away blocked rooms before they get the list back from the housing company or CVB. Some said they educate front desk staff to only take registrations from non-rooming list groups. A CVB person said they give a list of all the groups that will be meeting in the city that year, along with who will be handling each group’s reservations, and an admonition to refer all calls to the housing handler. Another CVB person said they send a word-for-word script for the front desk to follow when answering questions about rooming-list groups. A planner said he called the hotel himself and tried to make a reservation. If they don’t refer it to the right person, well, you can guess the rest.

Some like to get tiered pricing blocks, particularly for single-hotel shows, to help eliminate the problem of running out of rooms in the main block. That way, they can offer overflow at a higher price, but still in the same hotel. I’ve seen a lot of organizations do this lately.

To deal with underblocking of shoulder nights, one possible solution offered was to set a minimum stay, so if someone comes in on a shoulder night, they have to stay through peak nights as well. “Once peak night sells, we lift that restriction.”

Went to another great session yesterday at the Passkey Housing Forum, this time a roundtable discussion on maximizing room blocks. My favorite quote from this one:

“Thou shalt not quote lower rates during my dates.”

My table came up with some good ideas, I thought, such as making sure everyone up and down the line, from hotels to CVBs to planners, is communicating about what’s in the contract, and what it all means. I also heard, though I don’t know any specifics, that there are software programs out there that will allow hoteliers to change rates across all channels at once, so if they do agree to keep rate minimums to your group rate during your dates, they can do it easily.

Passkey’s Smart Alerts also got rave reviews from everyone I talked with, overheard, etc., as a good way to help monitor what’s going on with the block to manage the potential for attrition. From what I understand, you can set the system to e-mail you when your block hits 80 percent, for example; you also can set it to automatically e-mail you pickup and block status reports on a regular basis, say, 9 a.m. every Friday. Granted, the people at this forum were interested in and/or already users of Passkey, but everyone went nutty over this feature. I can see why.

History was key for a number of key issues, from managing pre- and post-show blocking, track how many usually stay outside the block. My little offering on this was to include something on the evaluation saying whether or not the attendee stayed at the host hotels, and if not, where they stayed and why. I figured it would be good to know what percentage of your group has to stay at a brand mandated by their company, for example.

Another idea to get people to go to your housing company, not to the hotel directly: Make sure your meeting site’s home page only includes links to the housing site, not the hotel’s 800 number.

Everyone who’s been to a meetings industry conference likely has heard John Foster, Esq., of Foster, Jensen, & Gulley, LLC, talk about contracts. I know I have, many times. And yet I always learn something new. That was the case yesterday when I heard Foster speak at the Passkey Housing Forum yesterday in Boston.

Some key points from his session:
• “Hotels today don’t hesitate to sue their clients,” he said. They’re also trying to shift as much of the risk as they can to meeting planners which, he said, “I don’t think is unreasonable as long as they do it the right way.”

• John’s Golden Rule:
If you ask for something before a contract exists, it’s called negotiating. If you ask for something after a contract exists, it’s called begging.

• Use a three-step process for your contract. The first time, look the contract over for clauses that are vague, one-sided, or overly burdensome. The second time, look for what’s missing that needs to be added. Citing the case of the International Women’s Bowling Congress v. Hyatt, where the lack of an attrition cause led to a lawsuit, he said, “If the bowling group had just one more sentence, they could have avoided two years of litigation.”

The third step is to revise, provide addenda, or rewrite the contract to include all the new terms and conditions. “Give the other side what they’re asking for, but change the terms—that’s the secret of compromising,” he said.

• “Penalties” are meaningless in civil litigation, with “penalty” being defined as something that allows the injured party to benefit more than they would have if the contract were performed. Contracts should always talk about damages, not penalties.

• Damages equal lost profits, not total lost revenues. In hotels, the average is 75-85 percent profit margins on guest rooms; 25-35 percent on catered food; and 80-85 percent on alcohol beverage functions. I loved how Foster said to respond to a hotelier who insisted on getting 100 percent of revenue for guest rooms: “Are you crazy?” He added that they should ask why you should pay for expenses they don’t incur.

Sales bonuses are based on total revenue, he said, not profit, which is why salespeople tend to think this way. “It’s not your obligation to help them meet their revenue goals,” he said. If they won’t budge, ask to speak with someone who is authorized to make those changes, because this really isn’t up for dispute.

• Hotels like to have groups guarantee they’ll spend a minimum amount of revenue for guest rooms in their attrition clauses. Foster says, don’t let them do this. This shifts all the risk to planners. For example, what if you booked the meeting in 1999 for a 2002 meeting? The economy completely changed, so your negotiated $200 group rate won’t look so hot when the rack rate is now $150. If your contract was written to guarantee revenue, you’re basically out of luck if you can’t make the minimum. “It’s not your responsibility to manage a hotel’s room rates,” he said. “Why should it be the hotel’s responsibility to manage the planner’s revenues?”

A better way is to base your formula on guaranteed room nights, he said. Also, include an audit provision so you can check for rooms that should be credited to you.

There was a whole lot more, but my fingers are getting tired. Go see him speak at the next conference you go to, if you haven’t already.

Greg Malark, chief operating officer of HelmsBriscoe, kicked off the Passkey Housing Forum yesterday in Boston with some serious style. He is a funny guy and, as he talked about where we are as an industry, and where we’re headed, he had me both shaking my head and giggling. OK fellow boomers, can you related to this one as an example of how fast things are changing:

“I have now bought the Dark Side of the Moon by Pink Floyd five times: Vinyl, eight-track, cassette, CD, and now DVD.”

Another favorite, which he says his wife made him include: “Forty percent of women feel their spouse creates more work around the house than they perform.”

But he did do a lot of serious talking about how things have changed, and how they continue to evolve. Calling the past seven years “the most dramatic we’ve ever had in our industry,” Malark outlined the ups of 2000, when there was an oversupply of hotels relative to the demand, then the downturn that started with the bursting of the Internet bubble, hotels losing control of their inventory through deals with online travel sites, and, of course, the terrorist attacks of 9/11. “The high-end hotels took low bids,” he said, which drove profit down for everyone. Then supply slowed down through few new hotel builds, hotels going condo, and Hurricane Katrina taking many hotels off the market in the Gulf Coast of the U.S. The result, he said: “The last three years have been the most profitable ever in the hotel business.”

While Malark predicted that the market will stabilize, don’t expect the cost of rooms to come down. “The top markets will get more expensive, while the secondary markets will hold steady,” he said. Keep in mind all the changes that the hotel business is going through, he added. For example, hotel owners, no longer content to passively invest, now are pressuring management companies to be profitable, or write a check for the difference from forecast at the end of the quarter.

Capital also is now being used to reposition hotels, and planners should pay attention to where their headquarters hotel is in the capital cycle—is it about to be renovated and repositioned? Has it peaked and now is getting a little outdated? Has it recently had some money invested in it for renovations? Hotels also are being inundated with RFPs these days, in large part due to online systems that make sending multiple RFPs a snap compared to those of yesteryear. They’re now looking to redeploy business as much as possible to shoulder and non-peak times even more than in the past.

Business Itself Is Changing
It’s not just hotels that are changing the way they do business, Malark said. He predicts that, in the very near future, we’ll see more and more organizations using a structure of decentralized independent contractors, similar to HelmsBriscoe’s model. I’m not entirely convinced that we’re ready to pry our fingers off the traditional command-and-control, hierarchical model, but as someone who spent 10 or so years as an independent contractor, and another however-many it’s been in this job as a telecommuter, I hope he’s right about business going virtual.

Organizations looking to morph to new ways of doing business can take some tips from what HB has learned over its 15 years of working as a network of independent contractors.

For example, you have to provide the same support in a virtual environment as you do in a traditional office. “If you don’t, they’ll go all Howard Hughes on you, eating microwave popcorn and peanut butter straight off the knife,” he said with a laugh. “You have to coach them on how to start working, and more importantly, when to stop working.”

You also have to help people figure out how to work around family members and friends who think that, because they’re working from home, that they’re not really working and can be the errand runners. And you have to provide them with both straight data (number of guest rooms in a specific hotel, for example) and anecdotal information (how well that hotel worked for someone’s group).

And, in good news for meeting planners, you also have to do more social interaction face to face, including intensive training and lots of networking.