The Truth about Hotel Room Blocks

July 14, 2009 by Lakita
Filed under Practical Advice

The Truth about Room Blocks

When attending an event outside of your local area, it is tempting to try to save a few dollars by booking our hotel room "outside the block", in other words at another hotel, through an Internet site, or with an employee or family discount. While this may seem like a good idea, often there are indirect financial consequences.

Hotel meeting room space is very expensive. It costs thousands of dollars to use the space for a few evenings. Hotels are willing to discount the cost of meeting room space if you can ensure them revenue through other means (sleeping rooms or food & beverage).

Typically, the hotel will discount the cost of the meeting room space in exchange for a guarantee on the amount of sleeping rooms that will be allotted for your event. This is the room block.

Depending on the details of the hotel contract, the event organizer is responsible for filling a certain percentage of the rooms. Anything below that percentage, the event organizer is responsible for.

For example…if an organizer contracts for 100 room nights and has a contractual obligation to meet 90%, then 90 room nights must be filled under the block. For each night below the allowed slippage (in this example 90), the organizer has to pay for that room night. So…to continue the example, if only 70 rooms are booked under the block…that is 20 room nights short of the allowed slippage of 90%. If a night in the hotel is $99 (let’s say $100) then the organizer is responsible for the difference: 20*$100 or $2,000. This is called attrition. This is in addition to the thousands paid for meeting room space.

Larger corporate events are usually able to write this into their budget or increase registration on future events in an attempt to recover losses. Heavy attrition fees can cripple any size budget.

This is why it is always appreciated to book your room under the block whenever possible!