This is the final installment in our series on room block management, where we’ve pulled back the curtain to reveal how hotels work to manage your room block and their occupancy. Here are the prior two posts about blind cuts and attrition.
When it comes down to negotiating your hotel contract, few clauses have as much impact to the overall success of your event than your reservations clause and cut-off date. As a refresher, the cut-off date is the date when all your room reservations must be made. By “made,” I mean either the date your rooming list is due to the hotel or, if there’s no rooming list, the date when your attendees must have made their own reservations.
Any rooms left unused in your block after this date are returned to the hotel inventory and put up for general sale. Often these rooms are sold at a higher rate than your negotiated group rate. This becomes a real problem for those who procrastinated in making their reservations.
Why do hotels care about my cut-off date?
Before we dive into some key strategies you can use to better leverage the cut-off date, let’s quickly review why the date exists in the first place.
If you’ve read the prior two posts, you know that everything a hotel does relating to your room block is for one purpose: to drive occupancy. The cut-off date is no different. By forcing groups to fill their room blocks early, the hotel has a better shot at managing around the block to fill as many rooms as possible. The more time they have to fill the rooms, the more likely they’ll actually fill them.
So, what strategies can you use to mitigate the effect of the cut-off date on your program? The first, of course, is in your contract negotiations, by working to get the cut-off as close to your arrival date as possible. The hotel will probably agree to anywhere from a 30- to a 21-day cut-off, depending on the demand. Less demand means more flexibility on the cut-off date. In peak season, you may find cut-off dates as long as 45 days from arrival.
But that’s the easy strategy to deploy. What do you do then to manage the cut-off date?
The Key: Hotel occupancy forecasts
Start by asking one question to the hotel reservations manager at 90, 60, 45, and 30 days out: “What’s your forecasted occupancy over my group’s dates?” You see, hotels today have some very slick technology that enables them to predict their occupancy pretty far out. This is great news for you, as you’ll be far more effective at managing your own block with this information.
The hotel’s response will drive all your decisions from this point forward in managing to your cut-off date. I should mention here that if your group is generally good at timely reservations or registrations, then you probably don’t need to read any further. However, if your attendees are like most, procrastinating all the way to the end, read on.
Here’s how to act depending on what you hear.
Response: “We’re forecasting 90% [or higher] occupancy.”
Anything above 90% means the hotel is yielding their inventory – that is, charging higher rates as the occupancy grows – and will not allow you to have your negotiated rate after cut-off. Assume the hotel will sell-out, and act accordingly.
Steps to take:
- React NOW: Communicate to your attendee list immediately. Let them know to get their reservations in by the cut-off date or they’ll likely be out of luck.
- Track it: Create a simple chart to track the hotel’s occupancy forecast each time you call. This will give you more insight into the speed in which reservations are being made and allow you to adjust if, for instance, the hotel is on pace to sell out earlier than expected.
- Pick up the pace: At 45 days out, create a communication plan to get those latecomers to make their reservations quickly.
Response: “We’re forecasting [something less than 90%] occupancy.”
Steps to take:
- Rest easy, but with one eye open: Likely, your cut-off date is now just an exercise to get you to fill the block early. In reality, if you needed more time you just might get it.
- Don’t be fooled: Still ask the “What’s your forecasted occupancy over my dates” question at 60 and 45 days out from your group’s arrival. Things often change quickly (like a last-minute group selling out the hotel).
The most important thing to remember: By communicating frequently with your hotel, you’ll gain the most control over your reservation cut-off date. I should add that it’s also critical to these strategies that you let the hotel know of any challenges you’re having in filling your blocks. Often they’ll step in to lend a hand, whether by creating marketing pieces for you or even by offering early-bird incentives. So, keep an eye on the calendar and communicate with your hotel sales manager well before your event, and you will eliminate surprises.
Learn more about how hotels typically use blind cuts, cut-off dates and attrition, so you can make the right decisions in managing your room block with our free ebook, How to Manage Your Room Block & Avoid Attrition.
Written by: Mike Mason