How to Avoid Hotel Rate Piracy

A few years ago, exhibitors and attendees of a conference in Fort Worth, Texas, were just looking for a deal to save a few bucks on their stay during the event, so they booked rooms at the Sheraton through a phone or e-mail offer. The problem was the Sheraton was not the official hotel of the conference; the nearby Omni was. What happened? Hotel rate piracy, and it’s not as rare as you may think.

Rate pirates are con artists who use contact info of exhibitors and attendees for transgressions ranging from outright stealing of deposits to sales of substandard accommodations to crippling cancellation policies.

Even if the targets of the scams have a pleasant stay, the event organizers may have to pay huge attrition penalties if enough people are drawn away from the contracted room blocks. A sum of, say, $40,000 for failure to deliver minimum occupancy could affect a organization’s or association’s budget, resulting in cancellation of programs or lobbyist expenses or an increase in membership dues. Worse, as occupancy improves, hotels will feel more leveraged in attrition negotiations.

David Dubois, the president and CEO of the International Association of Exhibitions and Events, ran the Fort Worth CVB when the poaching described above took place. He says while it is not illegal to operate a third-party housing company, it is illegal to misrepresent or infringe on trademarks. Both of these can happen when pirates infer they are associated with the event, either verbally or with a similar or outright duplication of an event-related logo in e-mailed correspondence.

[inlinead align="left"]"'Good, seasoned sales people will go, ‘Wait a minute, there’s a big show at the convention center, are you in for that show? Is this an in-house meeting space?’ “If they go, ‘Oh, we’re going to have our own meeting,’ then, ‘Ok, but you didn’t ask me for meeting room space. You’re going to have your own meeting, 50 rooms for four nights, for the exact dates of the show…where are you going to have your meetings?’ They say, ‘We’re going to have them off-site.'" — David Dubois, president and CEO of the International Association of Exhibitions and Events[/inlinead]

Once exposed, the scammers can merely change e-mail addresses, domains and/or company names, as in the infamous trio of Convention Expo Travel a.k.a. Global Housing Management a.k.a. Convention Housing Services. The seemingly legitimate company was run by ethically dubious figures, who harassed events from 2008 to 2013 under one of the three names, according to a thread on a message board for a 2010 dating industry event.

“They’re like red ants — they don’t go away, they just relocate,” Dubois says. “They’re very, very slick.”

Dubois has been in the industry for 40 years, and says while pirating has been an issue for several years, it seems more prevalent in the past 18 months, perhaps because of the resurgence of the economy and thus, occupancy. Piracy has become enough of an irritant that the Convention Industry Council formed an APEX Task Group to study it in pursuit of its larger goal of providing industry standards, says CIC CEO Karen Kotowski.

Since the scam process is fairly simple—securing contact info from an event website, e-mail blasting with promises of lower rates and perhaps act-now scare tactics such as a report of the scarcity of rooms, phone calls with similar information—there are equally straightforward ways to combat it, say industry experts like DuBois and Gary Schirmacher, senior vice president of strategic account services for planning company Experient Inc.

According to Schirmacher, Dubois, and blog posts by industry players like OneLobby and Kellen Meetings, cautionary tools include: cease and desist letters; better security of exhibitor and attendee contact info; and overemphasis on informing membership and exhibitors not only the names of the official housing company and hotel(s), but also the benefits to staying at the official hotel that are likely negotiated with the block by planners.

They should be advised what to look for in e-mails or listen for with phone solicitation, and instructed what to do if contacted by anyone suspicious. These warnings and instructions should be repeated during the entire registration process, not just once. A logo for official contractors per event is an option as well, to help fight trademark infringement in furtherance of the scam.

“They’re careful not to send (the scam) to the organization, very careful,” says Schirmacher. “No staff, and no board. They’re going to focus in on exhibitors. Let’s face it, not everybody really reads all the fine print.”

Planners should notify CVBs of the official hotels for an event, says Dubois. And while non-contracted hotels can benefit when scammers buy rooms, Dubois says in the interest of the well being of the industry, hotels should be part of the fix as well.

“Good, seasoned sales people will go, ‘Wait a minute, there’s a big show at the convention center, are you in for that show? Is this an in-house meeting space?’” Dubois says. “If they go, ‘Oh, we’re going to have our own meeting,’ then, ‘Ok, but you didn’t ask me for meeting room space. You’re going to have your own meeting, 50 rooms for four nights, for the exact dates of the show…where are you going to have your meetings?’ They say, ‘We’re going to have them off-site.’

“Well, now the red flags should go up. Then you have to do a little more investigating and research. That’s if you’ve got a savvy senior sales person. Junior sales people are trying to make their quota, so it gets a little tricky.”

[inlinead align="left"]Since the scam process is fairly simple—securing contact info from an event website, e-mail blasting with promises of lower rates and perhaps act-now scare tactics such as a report of the scarcity of rooms, phone calls with similar information—there are equally straightforward ways to combat it.[/inlinead]

Dubois cites the actions of an Orlando hotel that canceled a room block once it learned of the buyer.

“They said, ‘You’re illegitimate,’ and the group just went away,” says Dubois. “Boy, were they heroes to that meetings planner, who then gave that hotel business next time. That’s where a hotel can step up and stick its chest out and be proud that they did the right thing.”

Rodahl Leong-Lyons, Hyatt vice president of sales for the Americas, says hotels welcome guidance from the industry on procedures and policies. As the paucity of data and research shows, industry players are doing the best they can, she says. For now, she says following guidelines from industry associations like PCMA is helpful.

“We are still in learning mode about how these organizations are intermediating the reservations process,” says Leong-Lyons. “Telling the difference between a guest inadvertently making a reservation for a conference in a way other than the way the meeting planner had intended, and a pirate organization trying to pose as an imposter of the meeting planner’s reservation platform, is difficult.”