Los Angeles, July 31: Kevin Mitchell ignores the special hotel deals on offer when he attends conventions. The reason? The Web works better. In a worrying trend for hotel companies, Mitchell and other convention-goers are turning up their noses at room rates negotiated on their behalf by event planners and turning to the Internet instead to book cheaper rooms.

The result is a boon for frugal travelers but an important loss of revenue for hotels facing their third year of room revenue decline, especially upscale ones which depend on conventions for over 10 percent of their business, analysts said.

Mitchell, chairman of the corporate travel purchasing alliance Business Travel Coalition, has his eye on his own bottom line. "You can save 40 or 50 percent," he says, saying he uses the Internet to book a cheaper room in the main hotel or to find a nearby alternative.

"If you are in a convention hotel, you might get goodies delivered to your room. You'll miss some of that. But you can also pick it up at the trade show," he says.

The trend is clear in the top 10 U.S. urban markets where the biggest hotel companies like Marriott International Inc. MAR.N , Hilton Hotels Corp. HLT.N and Starwood Hotels HOT.N concentrate, says UBS analyst Keith Mills.

"What the hotels are finding in some markets is that when a convention comes in, instead of reserving a room under the convention rate at the hotel, attendees will instead go on the Internet," said Mills.

Convention planners used to muster their buying power to get the best rates, but a weak economy, low hotel occupancy and the power of the Internet have turned the tables.

Hilton in its most recent quarter sold rooms to groups at rates in the low-$160s range, to independent business travelers in the low-$150s and to leisure travelers for about $120.
Hilton executives on an earnings call last week said they had some difficulty categorizing clients and were trying to head off some of the attrition to the Web by convention attendees.

Bureau Report