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Ask A CLINKer : Hotel Blocks 101

Our “Ask a CLINKer” series contains questions asked to us by our clients or readers. Please feel free to send your questions to info@clinkeventsblog.com.

Many of our clients are interested in setting up special group blocks of hotel rooms so their guests can all stay together. Room blocks are a great way to save your guests the time and effort of researching on their own, and greatly simplify group transportation to and from your event, so here are some tips for you to keep in mind about hotel blocks.

b&w bellhop

How many blocks should I set up?

The number of blocks you set up is dictated by several factors – where you are having your wedding, the financial means of your guests, and the size of your guest list. For example – if you are having your wedding at a hotel, your main block will probably be at that hotel. If it is a luxury brand hotel, you may want to do a second block at a more mid-range hotel. If you have a large guest list, you may need to do blocks at two hotels, especially if you are keeping the size of your block low in order to avoid “attrition” (see below).

Will hotels give me the best possible rate?

While room block rates are better than the “rack rates,” your budget-conscious guests may do a quick online search and find a better rate. This can be challenging because then your guest is not listed under your rooming list and it can be hard to find where your guests are staying, and make sure the revenue from their room is counted toward your guarantee, if you have one.

Wait – a group block rate isn’t the best possible rate? What?!?

The point of a room block is not necessarily that you get the lowest possible rate. The benefits are:

  • The group rate is lower than the rack rate.
  • That rate is guaranteed – meaning when their online rates start to increase because the hotel is filling up, your block rate will stay the same.
  • Room availability is guaranteed – the rooms are taken out of circulation so they will be available for your guests until the booking deadline.

How many rooms should I block?

Most hotels require a 10-room block in order to go through the administrative work of setting it up – less than 10 rooms is not worth their time. Beyond that, you should be conservative in your projections because not everyone will use the block info provided. Some of your guests may go online to find a better deal, some of your guests may be brand loyal, and some of your guests may belong to Points Programs and book at those hotel chains to rack up more points or use points for a free stay. And then there is the “A” word – Attrition – to keep in mind.

What is Attrition?

For a hotel to reserve a room block without any threat of penalty for non-performance is a big risk. What if you have a 20-room block, and only one room gets booked? The hotel has then lost a lot of revenue. In order for a hotel to take rooms out of circulation for you, they typically require some kind of guarantee that they will make a certain minimum amount of revenue on them. The penalty you have to pay if you do not hold up your end of the bargain is called attrition. In contract-speak, it is liquidated damages. A hotel block agreement is a contract, and you agree with the hotel ahead of time that the rooms you have blocked represent a certain amount of revenue, and you guarantee a certain percentage of that revenue (for example 80% or 85%). So if your guests do not pick up all of the rooms in your block, and the revenue from your rooms does not hit the required percentage, you are obligated to “top it off’ and pay the amount required to hit that percentage (a.k.a. attrition).

That sounds scary. Should I just forget it and let my guests fend for themselves?

Not necessarily – here are some tips on limiting your risk on hotel blocks:

  • There are still some hotels that offer a Courtesy Block – which means no financial guarantee or risk. Three or four weeks before your event, on the “release date,” they take back any rooms in your block that have not been picked up, and you are under no financial obligations. These Courtesy Blocks are becoming more and more rare – especially in the busy season and in downtown/busy areas. Courtesy Blocks are typically only for a smaller number of rooms – usually 10-15 rooms, during off-peak times of year, and/or at hotels that are not centrally-located. The disadvantage of a Courtesy Block is usually that the rate will not be as good as a true Room Block.
  • You can mitigate your attrition damages by making sure that the contract says that the revenue from any rooms booked by your hotel guests – even if not as part of the block (e.g. they got a better online rate at your hotel, so booked outside the block) – still count toward your guarantee. The challenge is finding these guests, as there is not always a way for them to let the hotel know they are with your group – you typically have to send the hotel a list of your guests who stayed at the hotel outside of the block. Also, if the hotel sells out (typically 90% occupancy), attrition damages will be waived (because this means they were able to re-book those rooms, and so didn’t actually suffer any damages). As cities go, Austin runs at very high occupancy, and so sold out situations are still quite common, especially during high-season for events.
  • Some hotels offer a Courtesy Rate – this means they set up a “Group” with a special rate (not as good as a block rate), and anyone from your group gets this rate as long as they have rooms available. In other words, they haven’t taken any rooms out of circulation, so your guests need to act fast.
  • At the very least, if you decide not to reserve blocks for your guests, you may want to recommend one or two hotels on your wedding website, so that your guests have some direction and do not have to do a lot of research on their own. Just make it clear that they are “Recommended Hotels,” but no rooms have been blocked, so guests should book quickly.

Do all hotels charge “gift bag fees?”

Pretty much! We always include these fees in our clients’ budgets from day 1 so they are not surprised later. Gift bag fees range from $2-5/room, and some offer the option of delivering the gift bags to the room (for a slightly higher fee) vs. having guests pick up their bag from the front desk when they check in. There is also often a higher fee if you put a specific name to each bag.

How do I keep track of where my guests are staying?

Your sales manager contact at each hotel will provide you with rooming lists to keep you updated on who has booked within your block. Then – by process of elimination – you will know who has NOT booked within your block and you can inquire with those individuals to see if they have found a lower online rate at that hotel (so you can be sure they are counted towards your attrition guarantee) or if they have made other arrangements (other hotels, staying with friends, etc.)

So what does it all mean?

Managing your room blocks takes time and effort – it’s not easy, but it is a really nice, thoughtful thing you can do for your guests to ease the burden of traveling to your destination. At CLINK, we take care of our clients’ room blocks from start to finish – by providing recommendations for several hotels, setting up the blocks, negotiating the contracts, requesting rooming lists and ensuring our clients’ guests have a smooth experience from booking through the end of their stays. We have excellent relationships with hotel sales managers in town, and are able to give our clients the best options and service!

 

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