Sunday, September 27, 2009

Economic Recovery & Events – Roll the Dice?

Recently I had an interesting conversation with my friend and client Lisa Thornton, of ACUTA (Association for Communications Technology Professionals in Higher Education).  Our discussion was centered on the impact of the current economy on conference attendance.  Like many organizations, ACUTA has experienced a measurable decline in attendance at each of their (4) four 2009 events.Rolling Dice

Looking ahead to 2010 ACUTA, in partnership with Experient, has carefully reviewed its hotel contractual commitments.  Referencing statistics from 2009, room block revisions were negotiated in alignment with next year’s anticipated attendance projections. As the timing of an economic recovery is not certain, it is difficult to predict with any certainty whether these adjustments were accurate or not.

At some point our conversation shifted to my blog and Lisa suggested I write an article addressing the potential room block management challenges arising from a re-invigorated economy… Great Idea!!

Therefore imagine the following scenario:

Your organization’s conference recently concluded and you, the event professional, are reviewing your final room pickup report.   As anticipated it (the report) reveals the event’s room block performance was fifteen percent less than contracted.  Fortunately the room pickup was sufficient to avoid any attrition liability.  You breathe a sigh of relief!

In consideration of this report and the currently poor economy you strategically decide to reduce your hotel room block for next year’s conference.  The hotel agrees to the revision and most importantly, the attrition liability formula will be calculated utilizing the revised block as well.   Comfortable with the new arrangement you report to your supervisor that everything is under control … or is it?

Fast Forward…  eight months later… Surprisingly, the economy has improved beyond all expectations and conference registration surges!  Your conference team is excited, because it now seems the event will exceed its attendance and revenue projections.

One day, about three months prior to the event, your Hotel contact informs you all the rooms in your “revised” room block have been reserved.  Unfortunately, no additional rooms are available as the hotel is now sold out; with the great short-term booking they recently contracted.  Furthermore, to your dismay, you discover, in researching for potential “overflow” hotels, that none are available.

An improved economy will certainly be welcome by everyone and will hopefully arrive soon!   In the meantime, event professionals should continue to exercise due diligence in managing their organization’s hotel contract commitments and event budgets!  This includes being cautious with room block projections.

The downside to being conservative is the increased risk an event will unexpectedly exceed attendance expectations leading to a shortage of hotel room inventory.  So, the million dollar question is how to adequately prepare for this potential challenge.  Here are some suggestions:

  • Suggestion #1:  Hold a “growth” block at the host hotel on a tentative “first option” basis — The hotel will extend to your organization a “first right of refusal” to exercise that first option (confirm the use of the block definitely) should another potential customer express definite interest.  Typically at a mutually agreed upon deadline, this growth block is released back to the hotel for “free sale” if not utilized by your organization.
  • Suggestion #2:  Hold tentative space at an alternative hotel — This option applies if you are not successful with #1.  Research hotels located nearby reserving a growth block on a tentative basis.  Usually the hotel(s) will negotiate an option date as described above.
  • Suggestion #3:  Create and Maintain a Housing Pace Report — History is your friend … this is a powerful tool to track and forecast an event’s room pickup performance from year to year.  Done accurately it is possible to predict with some certainty how room blocks will perform.

Note:  See Figure 1 for an example of this report.

Pace Report

Figure 1 -- Sample Pace Report

It’s not easy to balance prudence with foresight, and these days determining the appropriate room block for an event is a bit of a “crap shoot.”  Utilizing these tools may improve your odds of success in planning for your event.  Are you ready to roll the dice?

Question:  Do you utilize an innovative tool or “best practice” to forecast your event’s room block performance?  Please share it with us!

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{ 1 comment… read it below or add one }

Jeff Hurt September 28, 2009 at 1:17 pm

Michael (& Lisa):

Great ideas.

I just finished my annual conference and our attendance was 60% less than originally planned three years ago. Thankfully, we were on top of this situation since January of this year and knew it was going to be a down year for us.

Economist Don Reynolds was our keynote speaker and his message was, “The economy has improved and will continue to do so. However, we are in the new normal!” He made it clear that this recession will last a minimal of six quarters. “To expect a normal recovery cycle, whether it is corporate profits or lending or consumer spending or capital investment, or (pick the category) is just not reasonable,” he added.

Our attendees told us to expect the same amount of attendance for 2010 or even less as their companies continue to cut back expenses. I wish I were an optimistic as you were at expecting growth yet we expect decline or plateau.

What tool do we use to forecast our attendee’s room block performance? Engagement, conversations and surveys. Nothing new there although we survey our attendees more than ever in the past.


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