Successfully managing your event room block requires an understanding of how the hotel forecasts group occupancy.
There are probably more factors that can affect your ability to reach your room block than you think: the economy, air travel, layoffs, mergers and acquisitions, budget cuts and so much more. Most are completely out of your control despite all your efforts to promote attendance.
The good news is that hotels know and understand these factors and most are completely out of your and the hotel’s control. But knowing how hotels deal with the uncertainty will help you make better decisions in managing your room block.
There are three strategies that hotel revenue managers depend on to help them make the most of their room inventory: blind cuts, cut-off dates, and attrition. Over the next couple of posts, I’ll bring you behind the curtain into the hotel revenue management office to give you a sneak peek at how they manage their inventory with each of these strategies — and, more importantly, how it affects your room block.
The blind cut
Asking for 100 rooms for three nights? Both you and the hotel want to see that happen just as planned, but the hotel will often hedge their bets a bit and will forecast your actual pickup at 80-85% of your contracted numbers. This process is known in the industry as a “blind cut” because that forecast is often not shared with the client. Some hotels may take it a step further and proactively reduce the room block that is committed to your group if they are concerned that your contracted numbers are too high and not representative of the number of rooms you will actually use.
How the hotel arrives at the forecasted pickup numbers — and how they decide when and how much to blind cut a room block — is a process that includes a review of your group’s previous meeting history, the type of event, and the overall demand in the hotel and the city. Hotels have more data on how room blocks pick up than you’ll ever want to know, and they’re usually right.
So what does this mean for your group? Generally nothing, if the hotel isn’t going to sell out. If you need more rooms than the hotel is forecasting, they will be able to meet those needs. However, if the hotel is very busy over your meeting dates and has your pickup forecasted too low, you can save yourself from a bunch of pain and get ahead of any problems by knowing the real room block numbers that the hotel is actually expecting from your group. Here are some strategies for managing this conversation with the hotel.
- Knowledge is power: Before you sign the contract, ask what the hotel will be forecasting for your actual pickup. The sales manager may be surprised to hear that question from you, but gaining an understanding about how the hotel manages your block after the contract is signed will give you the insight you need to stay on top of things.
- Set expectations on room block communications: The sooner you can convey your thoughts on your pickup, the better for both you and the hotel. Although it’s unlikely you’ll have any real indication of pickup before 30 or 45 days out, you can do some work on your end to help you add confidence. Send out a quick survey to the potential attendees. Talk with the meeting owner about their thoughts. And of course, review your meeting history (if the meeting has been held before).
- Ask for the hotel forecast: When your event is 60 days away, ask the hotel what total occupancy they’re forecasting over your meeting dates. Then have them update you every other week until your arrival date. Most hotels begin building forecasts months in advance. However, there are still a lot of assumptions in place. If you find that the hotel is forecasting a 90%+ occupancy on any day over your meeting dates, you’ll want to have a conversation. The conversation can go two ways:
- If you feel you’ll meet or exceed your block: Let them know this ASAP. Right now that forecast likely has you achieving only up to the blind cut. Giving the hotel your thoughts on pick-up will help them protect your block while better forecasting their occupancy.
- If you’re likely not going to pick up your full block: Tell them ASAP. When a hotel forecasts 90% or higher occupancy, they’ll begin to cut down on different channels in order to get the highest rate possible. Letting them know ahead of time will enable them to keep these channels open longer.
Accurate forecasting is a key way that hotels manage their inventory and maximize their occupancy. Knowing how your hotel partners manage that forecasting process will help you protect your own block, while avoiding attrition penalties or possible walks.
Next time, I’ll talk about attrition, as well as three key points to keep in mind when negotiating the allowable attrition clause in the contract.
Written by: Mike Mason