If you think negotiating event contracts is only getting harder with each passing year, you are spot on.
According to Meetings Today’s late-March survey of 70 corporate, association and third-party planners, fully 89% said that negotiating contracts and getting to signed deals is either “somewhat more difficult” (64%) or “much more difficult” (25%) than it was two years ago.
Responding planners were also in strong agreement as to which specific areas of contract negotiation are most difficult for them.
Coming to agreement on attrition allowances and minimum guest-room pickup percentages took the most time and effort for 32.5% of respondents. Another 32.4% said that reaching agreement on the financial penalties for missing the minimum pickup percentage is what requires the most time and effort.
For another 25.4% of responding planners, reaching an agreement on audiovisual and production terms and rates required the most time and effort.
The Reasons Behind the Numbers
Why is coming to an agreement with host properties notably tougher than just two years ago?
First, “there are now many layers on the hotel side,” said Meg Pisani, vice president of supplier relations for Maritz, who leads a large team that does contracting for client events. “You used to work with just the salesperson at the hotel and they were empowered to act, to make the business decisions when they received an event RFP. But now there are multiple levels reps must go through because the large hotel chains and even some independent hotels have invested in yield-management systems, just like the airlines.”
[Related: Webinar: Biggest Legal Issues for Meetings]
As a result, “the sales rep must take our event—what we have presented as 'our beautiful baby'—and sell it internally against all the other events that are coming in to the hotel’s sales team.”
Further, when it comes to an issue such as an event’s allowable attrition rate and the financial penalties for falling below that rate, Pisani noted that “hotels are trying to mitigate their financial risk, and technology makes them better at it than ever before.”
Another effect of reps needing to get additional approvals to book an event is that even relatively small meetings now require longer lead times—at least if the host group doesn’t want to pay an exorbitant amount.
[Related: RFPs: Make Hotels an Offer They Can't Refuse]
The proof: A little more than 50% of responding planners said that the typical lead time for meetings needing fewer than 200 guest rooms on peak night is at least nine months. Only 9% said they typically have six to eight months of lead time, while 8% of responding planners said they typically have three to five months of lead time.
To ensure that planners can negotiate an event contract and still have sufficient time to focus on building out the meeting to reach its objectives, Pisani shares two pieces of advice:
- “Share your absolutely necessary items and your deal-breakers right in the RFP, whether they be specific business items or legal terms or whatever else,” she said. “You will really slow things down if you are not sharing those things before you get into the contracting phase.”
“Present solid historical data for each meeting in as many areas as possible, and then be realistic in what you ask for based on that.”
