I Lost Over $10,000 Overbooking A Room Block (So You Don't Have To)
Avoid This Costly Mistake When Planning Your Next Offsite...
Before starting Offsite during the pandemic, I ran a series of summits for entrepreneurs called Meeting of the Minds.
Every 3 months, I hosted 3 day conferences where I personally managed all the logistics, budgeting, agenda planning, facilitation, and more (in addition to marketing the events and selling $3,000 tickets to attend).
Doing too many things at once….sound familiar? Every founder, Chief of Staff, EA, and “people” person can relate. 🙃
Anyways, during our first international summit in Bermuda, I accidentally over-booked our room block and ended up spending over $10,000 on unused rooms (even after applying the standard attrition rate, or rooms you’re able to “drop” before an event).
Here’s what happened, and how you can avoid the same issues when planning your own team retreats, offsites, or customer conferences in the future.
Why Hotels Require Room Blocks For Large Groups
For those who don’t know, a “room block” is simply a pre-committed number of hotel rooms for an event, such as an offsite or conference.
Depending on the hotel, once you hit either 8 or 10 rooms per night, you can no longer book under one reservation directly through the website with real-time pricing and availability at your disposal.
At this point, you need to contact “sales”, “meetings”, or some other department at a hotel (and honestly, they don’t make it easy to know who to contact at a hotel, nor do they respond quickly, which are two of the many reasons I started Offsite).
This makes sense because hotels need to appropriately plan their capacity, and (depending on the size of your group) they may not have enough rooms for you on your chosen dates. Or they may need to place your group in varying room sizes other than what you see online (such as premium rooms if they run out of standard rooms).
To lock in revenue weeks, months, or even years before the dates of your event, most hotels will offer discounted pricing on room blocks. This saves them added marketing and sales costs to fill the rooms with other groups or individual travelers on those same dates, and in return they can pass savings onto you.
There’s also the likelihood you can give them even more business, by bringing additional groups back to the hotel and/or purchasing meeting space, food and beverage packages, activities, and more.
How I F**ked Up And Lost Over $10,000
If you play your cards right, you can leverage a room block booking to save 20-40% (or more) on your room rates, meeting space, F&B, etc by negotiating with potential venues for your offsite.
Places you can save include:
the nightly room rates
taxes (if the rates are lower, so are taxes)
meeting space fees (they can be reduced or waived)
F&B minimums (they can be reduced or waived)
resort fees (they can be reduced or waived)
concessions (even if you can’t lower costs, you can get free upgrades and amenities to increase the value of what you are paying for)
When I planned Meeting of the Minds, I committed to a larger room block in order to access waived meeting space fees and a reduced F&B minimum. All good there.
But here’s where I went wrong…
I overbooked my room block...by a lot!
There is a small “out” in hotel contracts called an attrition rate.
An attrition rate is how much you are allowed to reduce the room night commitment in your initial room block contract by a certain cut-off date (typically 30 or 60 days out) without liability.
When booking a room block, it is critical to negotiate the most flexible attrition rates (20%+ if possible, even though 10% is standard) as well as the most flexible cut-off dates (30 days, instead of 60 or 90 days).
Once you pass this deadline, and if you utilize less rooms than what you contract for, you are charged for the difference.
My mistake was being overly confident on my attendee count. I ended up selling less tickets than I planned, and even though I tried offering comped event tickets to friends who would pay for their hotel rooms, the event was in Bermuda which is not the cheapest to travel to or stay at.
At nicer hotels, this can add up quickly. With taxes and fees, each room night in my “block” cost over $400. For a 3 day event, this meant every person I miscalculated cost me more than $1200. Being “off” even 5 or 10 attendees meant I was left with lots of unused rooms in my room block relative to the total event size (about 30 attendees, including some who didn’t need rooms because they were local).
Thankfully, I was able to mitigate some of the damage because we planned 2 different summits at this hotel over 2 years, as well as a 100+ person conference with spend on meeting space as well as F&B. The General Manager allowed me to use some of the unused room block spend to upgrade to a penthouse filled with millions of dollars in artwork on the walls (the hotel owners collect Picassos, Kaws, Koons, and more), which we used for an evening reception one night.
I was also able to pay off the remaining overages in installments, but ultimately I still spent LOTS of money on rooms that sat completely empty during our stay. Boo! 😒
How You Can Avoid Making The Same Mistakes I Did (And Save Money Instead Of Wasting It)
If you’re running a conference, CEO peer group meeting (for EO, YPO, or Hampton as an example) or mastermind event, be extra conservative when it comes to the size of a room block you commit to. Attendees may flake at the last minute, or you may miss your projected ticket sale number.
Even if you meet your projections, some attendees may choose to find cheaper accommodations close to your venue, thus lowering the amount of rooms booked in your room block.
If you are planning a team retreat or offsite, you should also book your room block conservatively. If you are adding headcount to your team, go with a lower number of rooms than your expected headcount by the time of your offsite.
As long as there is availability, most hotels will allow you to add to your room block at the same discounted rates you initially commit to in a contract. You might even negotiate this into your contract, pending availability for additional room nights.
If you want to be cautious, consider a hotel with lots of rooms, versus a more boutique property you might buy out. There are benefits to a buyout, but it comes with the added risk of overbooking accommodations, so if budget is your main concern…plan accordingly.
Worst case, you can find an overflow hotel (or Airbnb) within walking distance or a short drive of your venue to place any additional attendees who are added above-and-beyond your room block if the hotel maxes out and you can’t add additional rooms to your initial room block.
I created Offsite (in part) to help people like you avoid making costly mistakes like this when planning your team retreats, offsites, or conferences.
Given we now process tens of millions in spend between our clients and ~1000 hotel partners globally, we can help you:
find vetted, boutique venues perfect for any type of offsite and group make-up
negotiate greater room block rate discounts, meeting space discounts or concessions, F&B discounts or concessions, resort fee discounts or concessions, and more
connect with the right salespeople at hotels you’re interested in with the click of a button, and receive responses in as little as a few hours or days, rather than weeks
mitigate risks associated with hidden fees in hotel contracts, attrition clauses, and more
Kristin, our Head of Marketplace, has developed partnerships between Offsite and ~50 boutique hotel brands, as well as global brands like Hilton, Hyatt, Accor, Sonesta, and Marriott. When you make a free account at offsite.com, you can search Airbnb-style through ~1000 offsite venues to find properties that are perfect for your needs.
Once you submit requests to any venues, we “auto-suggest” an additional 3 venues that are similar in price, amenities, and location to the venue you submit your initial request for, thus creating a bidding war on your behalf with hotels.
This drives further savings for you and urgency among venues vying for your business.
For free account holders and end-to-end offsite planning clients alike, Maya (below) and the rest of our offsite planning team work closely and quickly with our hotel partners to secure you the best rates. Between our software and customer success efforts, you are unlikely to get better room block rates anywhere else.
With that, I hope my experiences save you from making the same mistakes.
Whenever you plan offsites in the future, make a free account at offsite.com to search our curated marketplace with ~1000 amazing offsite venues globally where you can save 20%-40+ savings on room blocks, meeting space, and more.
Plus, we offer end-to-end offsite planning services if you want a “done for you” experience. See why hundreds of companies like Buffer, 15Five, HiBob, Metabase, Hampton, and others trust Offsite for their team retreats.
Thanks for reading!
-Jared