Sourcing Academy

Housing Pirates

Protecting Your Event from Hotel Housing Pirates

In this video, you’ll learn what housing pirates are, how to avoid them, and what to do if you encounter housing pirates leading up to your group’s event.

Experts

Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP

Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.

Overview

• Companies that try to attract attendees to reserve hotel rooms through their agency rather than through the group’s authorized Travel Seller.

Group Perspective

• Housing pirates are an ongoing issue in the industry and it is one that both groups and hotels should be aligned to address.
• Example: The housing pirate company will say, ‘Coming to Chicago for the meeting stay with us. Here are our lowest rates.’ And the group attendee looks at that and says, ‘Heck these are half the price of the group’s rates. This is a really good deal.’ And then in some cases, they’ll go through that process and reserve a room only to find out that it might not be a cancelable reservation and it might not even be a real reservation at all.
  • It’s an issue for the group because the housing pirate company is speaking on behalf of the organization. In some cases, even using the organization’s name and logo. When of course it’s not authorized to do so. So, groups can consider including language and hotel contracts that speak to a bit of a cooperative effort on behalf of the group and the hotel, that if one or the other becomes aware that a housing pirate has acquired rooms in the hotel and is reselling them that the group and hotel will work together to combat that. Because a cease-and-desist letter can come not only from the group, but it can also come from the hotels.

Tip: the best defense is a good offense.

• Make sure you’re educating your attendees, your exhibitors that these pirates are out there.
• Inform your group members, that they might receive a phone call or an email from a company representing that they’re in connection with the group’s meeting. However, provide a reminder to your group members that our official housing company is ABC company or that housing can only be made through this link.

Hotel Perspective

• Groups will often request clauses saying, ‘Hotel agrees, it won’t allow pirates to do things or hotel won’t do secret marketing.’ Hotels don’t want these pirates out there any more than the groups do.
• The hotels can’t stop it, but they will try. However, it’s important to understand the hotel may sell a certain allotment of rooms to wholesalers and then those wholesalers resell the room to yet another wholesale company. That’s the pirate. So, this is an organization that the hotel does not know and has no relationship with.
• In wholesale contracts, it always has a provision that the wholesaler is not allowed to sell those rooms to groups or other types of events in the hotel. They’re always supposed to be sold for specific purposes using leisure travelers.
  • So, the contract is not being breached by the wholesaler that the hotel deals with, it’s being breached down the line.
• If this comes up and you contact your hotel partner and say, ‘Hey somebody’s contacting our attendees and claiming that they have rooms.’ The hotel will always work with you to send that cease-and-desist letter. They don’t want this to happen either, they’re not engaged in misconduct. And the most frightening thing that happens is that sometimes these pirates don’t have any inventory at all.
• Unfortunately, situations have occurred where people have reserved rooms from these third parties down the line, they get to the hotel to check-in and there’s no room for them at all. And now they’ve pre-paid they can’t get the money back and they don’t have any place to stay.
• Alignment and the partnership between the group and the hotel are very important. The parties need to work together to identify when this is happening and reach out to whoever it is that’s engaged in that piracy and get them to stop.