Having planned plenty of conferences and trade shows, I can tell you that you're absolutely right. And conference organizers are aware of this...it's an issue they grapple with all of the time. But conference organizers have to walk a fine line. If they don't set aside enough rooms and hotel space is tight, then they run the risk that attendees cancel because they can't find acceptable accommodations. On the other hand, as more and more attendees stay at other hotels, the conference organizers have to pay more to the hotel...and those costs will eventually work their way back to the conference attendees.

You won't see conference fees increase the first year it happens, but in subsequent years the conference rate will increase because the hotel is shelling more out of pocket to the hotel. I can tell you that hotels give a lot of free and discounted services to meeting organizers...free use of the meeting space, free rooms for our speakers, free or discounted food & beverages for attendees, etc., in exchange for the fact that we're bringing paying guests into the hotel. If those guests don't arrive, the conference organizers won't get those discounts and freebies, and their expenses increase. Sooner or later those increased costs will get passed on to the attendees.

Now, I will say that some conference organizers negotiate a discounted rate with the hotel and then charge attendees a higher rate. They'll tack on $10 or $20, thinking attendees won't price shop. Alternately, the conference organizers negotiate a commissionable hotel rate, then arrange to split the commission with their travel agent. Without the commission, they'd be able to negotiate a lower rate. I don't like these practices, because I do think it's short-sighted. As attendees realize that they could get lower rates, they go to other hotels and again the meeting organizer loses its discounts, which results in higher attendance fees for the conference participants.