Combatting Room Block Pirates Who Is Selling Hotel Rooms to Your Attendees?

December 29, 2015

 

Article By Barbara F. Dunn O’Neal, Esq.

Guess who is back? Room block pirates! After many years of being the only ones to market and reserve housing for their meeting attendees, many groups have unwanted “helpers” – namely, housing companies soliciting their attendees for hotel room reservations without the group’s authorization.

These so-called housing “pirates” and their aggressive solicitation tactics are most unwelcome and financially damaging. So what can groups do to address and combat room block pirates?
The Problem:
The standard course of action is for room block pirates to contact the group’s attendees and exhibitors via telephone or e-mail. In such communications, they frequently state or imply to the person that they are calling on the group’s behalf to secure hotel rooms for them for the conference. The pirates will refer to the conference city and often the conference hotels and use aggressive sales tactics such as telling the person that the room block is nearly sold out, and that they need to reserve their rooms now.

Unfortunately, many organizations that are contacted by these pirates fall prey to their aggressive sales tactics. They will give the pirates their credit card information, and complete room block reservation forms. At some point in following this process, many organizations realize that this process might not be run by the group hosting the conference. When they realize this fact, they often contact the group and are quite upset that they gave sensitive information to the pirates.

Further, the pirates may or may not have actually reserved rooms for the organization. If they have reserved rooms, often the terms of such reservations are less favorable than they would be if the organization had booked such rooms through the group or its authorized housing agent. For example, the rooms may have onerous prepayment and cancellation terms that, once finalized by the organization by way of the pirates’ housing forms, cannot be modified. In other instances, the pirate has not made hotel room reservations for the organization and it is not until the organization attempts to confirm its reservations or check in at the hotel when it discovers this fact. Again, all of this results in much unhappiness for the organization.

The Solution:
Communication with the Pirates
It is important for the group to provide notice of the pirate’s communication to its attorney. Typically, there is a legal basis for the attorney to send the pirate a “cease and desist’ letter on the group’s behalf. The legal basis for such demand often is that the pirate is misrepresenting itself as the group’s agent and that the pirate has infringed on the group’s trademark (if it used the group’s name or logo). The attorney’s letter should demand that the pirate cease all communications with attendees. This cease and desist letter should then ask the company to sign a letter of agreement that it will in fact cease such conduct.

The challenge in these situations from a legal standpoint, however, is that these pirates are often savvy enough to avoid a trademark infringement claim. Rather than using the group’s name and logo, they might simply say to an attendee, “Are you going to [CITY NAME] for the conference?” That way, they avoid use of the group’s trademark but still give the attendee the impression that they are calling on behalf of the group. Other legal arguments, such as intentional interference with contracts, may be difficult and costly to prove. Thus, it’s often the case that the group’s legal options are limited, leaving only business options such as those outlined below.

Communication with Attendees and Exhibitors
My recommendation to groups combatting pirates is rooted in a well known sports saying: The best defense is a good offense. That is, the best thing the group can do if the pirates are contacting its attendees or exhibitors is to communicate with the attendees early and often about these pirates. It is important in such communication that the group advises that there may be companies that contact them to assist in making their reservations, and that these companies are not authorized by the group; and then provide them with the information as to the only authorized housing agent of the group. Here’s a sample communication:

**Housing Alert: Annual Conference in CITY, STATE**
In order to ensure the success of the Annual Conference & Expo in CITY, Group has negotiated and secured hotel rooms at three hotels in CITY which are conveniently located within walking distance to the Convention Center: HOTEL NAMES. Please note that Group and its service partners do not solicit hotel room reservations via telephone, e-mail or fax. Group has recently been notified that there is a company that is soliciting conference attendees by telephone and e-mail and is offering to make hotel room reservations for them. Please note that Group has no affiliation to this company and cannot ensure the integrity of the reservations process. Instead, attendees should coordinate their own hotel reservations directly through one of Group’s official conference hotels.

Communication with Hotels
It is important that the group should notify the hotels contracted for its conference of the existence of the pirates as often they are unaware of the circumstances. The hotels can often assist the group with confirming whether reservations made via pirates have been accepted, and may also be able to terminate distribution channels that permit the pirate to receive lower room rates.

Further, the group should ensure that it will get credit for all room nights utilized by its attendees regardless of rates paid or method of reservation. This would include any rooms that are booked by pirates. The group should work with the hotel to compare its registration list with the hotel’s guest list to ensure all room nights are properly credited. Such calculations will have an impact in terms of complimentary rooms, commissions and rebates, and attrition fees.

Conclusion
Even if the pirates are here to stay, there are a number of strategies groups can implement to combat their tactics. Hopefully, over time and with education of attendees and correspondence from attorneys, these pirates will cease their contact with meeting attendees.

MM&E

For more information on this topic, contact: Barbara Dunn O’Neal at barbara.dunn@btlaw.com or (312) 214-4837.

Barbara F. Dunn O’Neal is a partner with the Associations and Foundations Practice Group at Barnes & Thornburg, where she concentrates her practice in association law and meeting, travel and hospitality law.

©Copyright 2014. Barbara F. Dunn O’Neal, Barnes & Thornburg LLP. Chicago, Illinois, USA. All rights reserved under both international and Pan American copyright conventions. No republication permitted without the express written consent of the copyright holder.

About the author

Joe Clote

Joseph W. Clote is owner of Publishing Concepts, LLC a communications and marketing firm based in Saint Louis, Missouri. Mr. Clote is Group Publisher of MeetMed™ and Missouri Meetings & Events™ (MM&E) magazine, a quarterly publication read by thousands of meeting and event professionals, and producer of the St. Louis and Kansas City trade shows under the MM&E name. Mr. Clote has extensive sales and marketing expertise in the travel, tourism, fine art, insurance, and software development industries.