A new online platform aims to tackle hotel room block attrition. The founders of Florida-based RoomRite say this is a $21 billion industry problem. According to their research, attrition fees can range from $10,000 to $250,000 per event, with 10% being the median rate.
The solution they promise is simple: an online marketplace that lists hotel rooms in contracted blocks and makes them available for booking at the original group’s contracted rate. While the concept makes sense, becoming the go-to place for planners to reduce their attrition exposure is a tall order.
The Initial Concept
In mid-2022, Teresa Guastella, RoomRite’s chief industry relations officer and co-founder, recalls thinking about the biggest challenges for event planners. Response time for Requests for Proposals (RFPs) was one, and the other was attrition. She decided to tackle the latter with co-founder Michael Weiss taking the CEO role. Tom Murphy joined soon after as chief technology officer.
RoomRite helps planners deal with attrition by offering them a secure marketplace to resell their event space and hotel rooms. It works much like StubHub does for ticketing.
Beyond helping meeting planners recoup losses, the platform can also give hotels new leads and create upsell opportunities.
Rooms are free to list. Buyers pay a 15% service fee to buy a whole or a part of a room block. RoomRite does not collect commissions from hotels. They are still paid in full to the contracted owner of the room block.
Planners listing rooms on the site are vetted when they sign up. The company recommends listing rooms from 120 days up to 60 days before the start date of the block. Unsold rooms are automatically removed from the marketplace by the contract cutoff date.
Partnership With Hotels Is Crucial
While the solution shows potential, it depends on the goodwill and cooperation of hotels. Most room blocks have a no-resale clause that must be waived for the rooms to be listed. Still, the founders are confident hotels would rather waive this clause and allow listing than enforce attrition charges.
“The hotel’s benefit because they’re getting new business, they’re meeting their revenue forecast that they have projected. They’re building new relationships with the new client. They’re maintaining relationships with the current client. There’s just so many benefits. It’s a win-win for everybody,” said Weiss.
Even when hotels are happy to allow the resale of rooms, planners remain liable for anything that doesn’t sell. There is little to no risk involved for the planner or the hotel, but there are also no guarantees.
How it Works
RoomRite has been built on a robust and secure tech infrastructure, according to Murphy. “It’s a PHP Laravel backend running against the MySQL database hosted in AWS with all the security pieces that need to be in place to make sure that we’re insulated from bad actors and things like that,” he said.
RoomRite’s future vision includes integrating with hotel and room block management platforms. The team is actively looking to work with hotel groups that will be able to roll out a platform to multiple properties once one integration is complete. However, for the moment, it remains a standalone platform.
Since launch, RoomRite appears to have had limited success, with Weiss reporting only one room listing for 60 room nights. By his calculations, the platform needs 300 room nights per month to be viable.
Despite this, RoomRite’s leaders remain optimistic, banking on their platform’s appeal to meeting planners and hotels. They are actively consulting with planners and hotels and exploring partnership opportunities.
Future Vision
Addressing challenges such as contractual modifications and securing hotel cooperation remains a priority for RoomRite. Additionally, Guastella is working with hotels to provide pre-negotiated rates to planners outside the RFP process. The idea of helping hotels fill valleys in occupancy is something that was part of Murphy’s previous work at a startup that was acquired and eventually shut down.
When asked if RoomRite would consider pivoting to focus on helping hotels with low occupancy periods, Weiss is not against this. He is keen to explore different ways to bring the hotels and planners closer together to work collaboratively and avoid attrition. Regardless of the focus, the platform will remain agnostic to make it work for everyone.
Is RoomRite making waves in room black? Not yet, but it offers a potential solution to an issue that only a select few have even attempted to tackle. No one likes to charge or be charged attrition fees, so RoomRite’s approach could yet make a welcome impact on the industry.