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Housing Pirates In Events

October 8, 2021
Reading time: 6 min

The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.

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.

Check out what Barbara Dunn (Partner at Barnes & Thornburg LLP, representing groups) and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) have to say in Legalease With the Ladies- powered by HopSkip!

Video Transcript:
Housing Pirates

Barbara: Hi, I’m Barbara Dunn, an attorney that represents groups in connection with their meetings travel and hospitality contracts.

Lisa: And I’m Lisa Sommer Devlin, an attorney that represents hotels and resorts regarding convention and group related matters.

Barbara: And together, we're Legalease with the Ladies powered by HopSkip. Thanks so much for joining us today. Today's focus is going to be on the so-called Housing Pirates. Now those companies which try to attract attendees to reserve hotel rooms through their agency rather than through the group's authorized Travel Seller. When we think about pirates, you might think about Pirates of the Caribbean or Pirates on the High Seas. It seems like an odd term to use in this context. And yet for a long time, that has been the word that's most synonymously used with this type of practice. So, essentially the concern is that there are companies out there whose sole job is to try to piggyback on a group's meeting, and siphon if you will off rooms from the group's hotel block to their hotel blocks.

For example, they'll 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 groups 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. So, it's a big issue and it's also an issue for the group in that it's often given a representation that that company is speaking on behalf of the organization. When of course it's not, it's not authorized to do so. In some cases, even using the organization's name and logo.

So, as a lawyer representing groups, every day I get probably 10 clients sending me emails saying, ‘Hey I want you to send a cease and desist letter to this organization.’ We certainly do that - we tell them, ‘Hey you can't do it you're not authorized etc. Going to raise fire and brimstone.’ But often we won't hear back from that housing pirate ever again. They'll either go away like a wave in the night, never see them again or they'll arise in another way. So, it's an ongoing issue in the industry and it really is one that both groups and hotels are aligned to address. From the group's perspective, my best guidance to groups is that the best defense is a good offense. That is, make sure you're educating your attendees, your exhibitors that these pirates are out there. That they may get a phone call or an email from a company representing that they're in connection with the group's meeting. However, reminder that our official housing company is ABC company or that housing can only be made through this particular link.

And these notices, these announcements need to go out with a regularity especially knowing that these housing pirates are going to be out there trying to trick people, to siphon people. And it's really important that the group educates. Often, I say put it in pink neon flashing lights on your website let folks know not to fall for these issues. Now as I mentioned hotels and groups are aligned as it relates to these housing pirates. 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.

And the hospitality community in general is very aligned as well in making sure that there are credible sources and to combat these so-called housing pirates. And Lisa, I know from the group's perspective again this is a daily undertaking. And I know as well I'm sure from the hotel's perspective, that hotels also find it difficult to juggle what comes in as a complaint from a group and how it might interface with its reservations.

Lisa: You're right Barbara. Hotels and groups are aligned on this and I see groups requesting 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 aren't in a position to stop it but they will try. So, what you need to understand is that two kinds of things happen here. First of all, 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 has no knowledge of and no relationship with.

And in the wholesale contract, it always has a provision that the wholesaler is not allowed to sell those rooms to group 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, as Barbara said 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.

We have found situations 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. So, the alignment and the partnership here is 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. I agree with Barbara. I send lots of these cease and desist letters. I think in all the years that this has been going on. I’ve only actually heard back from one of them. Most of the time they just go away and look for another victim and they don't respond to your letter. But usually it just takes care of itself.

So, you just have to be on top of it. You need to educate your attendees, where they're supposed to be making their reservations. If a deal is too good to be true, it probably is. So, keep that in mind when you're working with your housing providers and educate your attendees and talk to your hotel partners and they'll be happy to work with you. Barbara?

Barbara: I agree with you Lisa and appreciate the hotel's perspective on that. And I think groups too should keep that in mind as well that they're not alone that the hotels and the hospitality community in general is out there trying to combat these folks. In addition to trying to sell hotel rooms, often companies like that are also trying to sell attendee data to exhibitors and also even services such as drayage and shipping as well to exhibitors. So, they're out there and the funny story I had in one of the cease and desist letters is in looking up an address for company in order to send the cease and desist letter. Thanks to our good friends with Google Maps, it was deciphered that the address was to a trailer located in the middle of Alaska.

So, we could really hone in on this thing and I pictured my mind folks sitting at their kitchen table surfing on the web, trying to attract folks to buy these rooms. So, it's a common problem. Again, it's one that costs groups a lot of money and headaches as it does hotels. But something definitely to be aware of and again be prepared to combat.

Thank you for joining us for another edition of Legalease with the Ladies powered by HopSkip. Please leave your feedback and comments below. We look forward to seeing you again soon.

The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.

Interested in learning more about contract terms and contract clauses in your hotel contracts? 
Check out the HopSkip Contract Clause Education Center, created by Barbara Dunn and Lisa Sommer Devlin, and become a hotel contracts expert!
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