With the hotel industry on the rebound from recession, negotiation may require even more strategic thinking now than it has in recent years, including a savvy approach to what you put on the bargaining table.
“There is not a lot of new inventory coming on board, so hotels are in a stronger position,” says hospitality industry attorney Lisa Sommer Devlin. “They know there are other customers out there.”
However, seasoned planners say working out a strong contract that benefits both sides is well within reach.
Achieving this, though, means that planners need to consider the hotel’s viewpoint as well as their own. Some elements of the meeting may be relatively easy to win concessions on, while others may not.
“Knowing your ultimate needs versus your wants will help you determine where to spend your time and energy negotiating,” advises Leslye Norman, sourcing supervisor for CWT Meetings & Events. “Always aim high and ask for more than you expect to get.”
THE BIG PICTURE
Room rate is often considered the most important element to bargain for, but planners make a mistake if they pour too much of their negotiating energy into this one point, experts say. It’s the overall cost of the meeting that counts, and getting concessions on other elements such as meeting room rental, food and beverage minimums and technology is often easier.
“Your hotel makes most of its money off of the room rate, so it’s the hardest point to negotiate,” says Tricia Van Every, an independent contractor who is a director of National Accounts for Premier Event Resources. “You’ll have better luck with everything else. It’s not just about the room rate, it’s about the whole picture.”
Devlin agrees, adding that hotels can be generous in “soft dollar” areas where their financial outlay is not great.
“For instance, if the hotel has its own limo, it may be willing to give you airport transfers,” she says. “If they have to hire out, it’s far less likely. Or, if they have a lot of unsold suites, they may be willing to give you suite upgrades. You have to know what is important to the hotel and what is important to your group.”
As a general rule, planners can expect to be in a stronger negotiating position overall if they come to the bargaining table with data about their organization’s previous meetings spend across all categories, including sleeping rooms, food and beverage, audiovisual, golf and spa, according to Robyn Mietkiewicz, director-global meeting management for Meeting Site Resources.
“Use this data to maximize value-based negotiations and measure cost savings,” she says. “The hotel takes spend in all these categories into consideration and looks at the value of your total account.”PageBreak
ROOM RATES
While room rates are the most challenging to negotiate, there are ways to ensure a more favorable outcome. Van Every has found that an effective way to guard against today’s escalating rates is to negotiate a multi-year contract whenever possible. While it’s easiest to do this for meetings that return to the same destination or hotel year after year, it’s also possible to work out multi-year deals at different properties within the same hotel company.
“You can save a lot of money with a three-year contract that locks in the same rate each year—if the rate shoots up, you’re protected,” she says. “Hotels like to have business on the books, so they are often willing to agree to this.”
Getting a decent room rate is especially crucial for an association planner such as Jill Leimbach, director of meetings for the National Association of Credit Management, whose attendees are often paying out of their own pockets. For her, one of the most important issues to address during negotiation are the resort fees that can make an otherwise affordable room rate soar out of reach.
“The resort fee frequently stands in the way for us, so I either try to get the fee eliminated or the room rate lowered,” she says. “You also have to get it in writing that you are exempt from any resort fees that the hotel may start charging after the contract is signed. With more hotels adding fees these days, you should get this grandfathered in.”
FOOD AND BEVERAGE
After room rate, food and beverage is usually the second most costly aspect of a meeting. Negotiating a realistic food and beverage minimum with the hotel—the amount the group agrees to pay in order to qualify for free meeting space and other concessions—is easier to achieve if it can be based on prior history, according to Leimbach.
“Unless you have dramatically changed your program, the amount you spend on food and beverage tends to be consistent from year to year,” she says. “The food and beverage guarantee helps you in that your business looks sweeter to the hotel. It gives them an idea of what they will make overall.”
When negotiating a minimum, Leimbach reviews current menus and not only seeks to lock in menu pricing for the meeting, but asks for a discount, perhaps of 20 percent.
In negotiating the food and beverage minimum, Van Every recommends consulting with the hotel chef.
“The profit margins on food and beverage are slim for the hotel, but if you work with the chef, you can sometimes save money off the standard menu choices,” she says. “The chef knows what dishes cost less. If there’s another group meeting in-house, you can sometimes save money by agreeing to the same menu. It’s cheaper to prepare the same menu for two groups rather than a different one for each.”PageBreak
ATTRITION
Attrition—financial damages owed to the hotel when the room block is not fulfilled—is another challenging but critical area of negotiation. In most standard agreements, the group agrees to pick up 80 percent of the room block before facing attrition penalties, according to both Mietkiewicz and Leimbach. Along with negotiating for a lower percentage, they also say the damages should be based not on the total room rate but on the profit made by the hotel.
“And there should also be a mitigated damage clause to assure any resold rooms are credited to the group,” Mietkiewicz says.
TECHNOLOGY
Internet access in the meeting rooms, a cost with potential to “blow your meeting budget,” is another important element to negotiate, according to Norman.
“There is no pricing standardization across the industry, and rates can be very high,” she says. “So it’s extremely important to understand the specific needs of the group to ensure that you’ll only be paying for what you need. Reviewing Internet usage reports from previous meetings to determine bandwidth and device needs can be very helpful.”
When it comes to audiovisual, Van Every recommends asking the hotel to waive any penalties for groups using their own equipment or contracting with an outside audiovisual company.
MEETING SPACE
While hotels often provide free function space to groups when they meet a food and beverage minimum, there are ways to negotiate lower costs when this does not apply. For starters, never agree to pay rental for a room that is being used for meal service, Van Every says.
“You are already paying for the food and beverage, so why should you be paying to rent the room?” she says. “You can also save by agreeing to have lunch in the same room you are meeting in—do a working lunch.”
