The rumblings are just beginning, in informal conversations with industry suppliers, and with some of the associations and corporate groups that host conferences. There’s no research data to support it.
But we’ve been considering the possibility that we may be witnessing the end of the hotel room block for major meetings and events. If it happens, it’ll be hard to imagine a more seismic shift for the hospitality side of the industry.
You may have already seen the scenario in your own business. A major event reserves space for a large meeting or trade show, but organizers only commit to an official block of 500 or 1,000 guest rooms, saying they’ll take their chances with regular room rates. They still approach the CVB for deep concessions on convention centre rentals, arguing that participants will still book accommodations in the city. But the official hotels lose the certainty of having a large block of guaranteed room nights.
The problem is that the planners have a point. By making discount rooms available through an array of online booking sites, the hotel industry has eroded organizations’ ability to direct participants into their room blocks. A few years into the world Expedia, Hotwire, and getaroom.com, participants are savvy enough to shop for the best rates, and planners have a message for CVBs: if your idea of a successful city-wide convention includes a large room block, we’ll just move on to the next city. A few CVBs have told us they have no choice but to play along.
There may be a solution for hotels that are willing to offer more realistic rates for professional planners offering large blocks with longer lead times, then shift the rate as the supply of available rooms gets smaller. But with online distribution channels bringing hotel rooms to a new level of commodification, it may be a tough sell. One of the basic rules of pricing is that it’s hard to take a discount back once you’ve offered it. The question is: if this really is the end of the block as we know it, what will hoteliers do next?