Policies and Procedures Manual

Financial Considerations

The hotel industry has become intensely revenue-driven with increasingly restrictive postures on meeting room rental and instituting charges for meeting services that were once provided free of charge. The driving force is the amount of sleeping rooms blocked and used by an organization. The Regions and most Sections use a great deal of meeting space compared to the number of sleeping rooms required. During the proposal process, hotels weigh this ratio of meeting space to sleeping rooms to determine if a proposal will be offered and, if so, what the room rate and other terms offered shall be.

The hotel’s decision to commit meeting space to a group over a particular set of dates is dependent on the number of sleeping rooms the organization is willing to block contractually. Often, hotels with large amounts of meeting space will not provide a proposal for a small group a year or two in advance, preferring instead, to hold the space in the prospect of another client that will block a larger number of sleeping rooms that would provide greater revenue.

Once a block of rooms has been contracted, then the group is usually committed to using 80 percent or more of them. Should the block utilization fall below the usage percentage, the Region or Section is faced with paying the hotel meeting room rental and/or an attrition fee which runs into thousands of dollars.

One problem Regions and Sections face is that many times attendees who may be staying in the hotel are not credited to the group’s block for a number of reasons: (1) attendees use a travel agent who does not identify the booking as part of the AAA (travel agents receive commission on the booking); (2) attendees do not identify themselves as part of American Accounting Association when they call to book the room; (3) attendees book at a different rate; 4) attendees book at a different hotel. Every attendee that books outside of the contracted block increases the Region and Section’s exposure to attrition payments.

Regions, especially, face the added problem of drive-in attendees. While a location that affords a large number of drive-in opportunities may increase meeting attendance, it generally means that fewer hotel sleeping rooms will be used, affecting the block and exposing the group to potential attrition fees.

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