Planner Sourcing Guide: Chapter 6: Negotiating with Hotels
The Essential Planner Guide to Sourcing
Chapter 6: Negotiating with Hotels
What negotiating boils down to is synchronized value – in other words, you have what they want (occupied guest rooms, meeting space and food and beverage revenue), and they have what you want (a great hotel at a desirable location). If possible, do your negotiations in person or via a video chat. Conference calls cannot convey a person’s body language nor can you truly gauge their interest in booking your business.
1. Give Them A Total Economic Value Overview
Before you start with the “Big 4” be sure to outline the total estimated economic value your meeting will have to the hotel and destination. Look at the estimated total spend for:
- Guest Rooms
- Food and beverage
- Meeting Rooms
- Transportation costs, including airfare and ground transportation
- On-site bars and restaurants
- Local attractions
Calculate the total value of spend first and return to it if you get to a sticking point in the negotiations.
2. Sleeping Rooms
Compare the price per room quoted on your RFP against hotel room aggregators.
Look at TripAdvisor, Kayak and Travelocity as a gauge to make certain you are getting a fair deal. Also, be sure to check rates on different days of the week to determine when the hotel may be at their lowest occupancy rate.
Ask for a better complimentary room ratio.
In the industry, it is expected for every 50 rooms you book, you will get one room free. However, many meeting planners have negotiated a 1:40 or even a 1:30 ratio, depending on the day of the week or the season the conference is held.
Negotiate better room block terms.
If you remember from an earlier chapter, your room block is a given number of sleeping rooms under a firm agreement over a set period of time.
Let’s look at an example: You sign a contract with a hotel for 500 rooms for your conference March 23-26, 2016. Let’s say 400 of those rooms are sold by February 22nd and the hotel would like you to release the remaining 100 rooms back to them to sell to the general public (after the cutoff date for your attendees to reserve their room).
However, at the time of contract signature, this date can be negotiated. Since most attendees are last-minute hotel registrants, secure a cutoff date 10-15 days before the start of the conference.
Negotiate a lower attrition rate if your rooms are sold by the hotel.
If you decide to hold onto your block beyond the cutoff date, your organization is liable for an attrition penalty. Attrition happens when a group doesn't live up to their room-block commitment, and a payment is required to make up for the rooms not rented, according to the terms of the clause in the contract. However, let’s say you have 50 rooms that are released from the block late and all 50 rooms are sold by the hotel. Should you receive any charge? Probably so, since you held those rooms in your inventory longer than contracted. But should you receive the standard attrition rate? No way! Work toward a minimum or no penalty clause.
3. Food & Beverage (F&B)
Look at different presentation options as a way to cut costs.
Plated entrees may be less costly than buffet, and butler-style appetizer presentation will cost less than food stations. When looking at reducing your costs, ask the catering manager to weigh in on all the options from a cost prospective.
Ask your attendees what they prefer to eat and drink at the conference.
The answers may astound you and help you negotiate the right meal plan. For example, if you find out 75% of attendees want large amounts of coffee and don’t eat breakfast, don’t waste money on pastries and bagels. Know what they want and pledge to deliver.
Find out if there are other events coming in before, during or after your meeting with the same menu items.
If the hotel kitchen staff purchases food and beverage items in bulk for multiple events, it can help lower your F&B bill, especially on pantry staples.
Provide the Food & Beverage guarantees on the last possible date available.
The venue will try and lock you into high minimums as early as possible. Work with them on a cutoff date that will work. A good way to be fair is to give them a number 30 days out with the flexibility to change it 15, and then again five days before your conference.
4. Meeting Space
Most venues will waive the meeting space fee if your F&B is over a certain dollar figure and/or you book a certain number of sleeping rooms.
However, you will need to ask what that minimum is because it may not be offered up in the RFP. Please remember each destination and venue will have their own minimum requirements, so you will not be able to generalize what each hotel or convention center can offer.
Offer a “one set-up and done” option to reduce your meeting space fees.
Rather than asking hotel staff to reconfigure your meeting room after every speaker or meal, have them set up each space once to save on labor costs and time. For example, the general assembly can be set up in half-moon crescent rounds and after the speaker is finished, lunch can be served.
The breakout rooms can also work this way, although each breakout room can be different (panel, facilitator or lecture format). You can schedule the same type of presentations in those rooms to avoid costly setup and teardown time by hotel employees after every session.
Strike the required vendor listing.
Many times convention centers and hotels will imply you must use their audiovisual and catering vendors, or else they will levy a stiff penalty if you bring outside vendors into your meeting. However, these vendors are not required and if you desire to bring in your own team, there is nothing prohibiting you from doing so.
This is particularly cost-effective with audiovisual vendors as commissions paid to the hotel or convention center by the in-house vendor can approach 60% of the total AV bill.
Ask for free Wi-Fi everywhere.
Wi-Fi charges can appear within the guest rooms, meeting space and trade show floor. Ask for it everywhere and although it may not be possible to gain a carte blanc concession, work on eliminating the guest room fees at a minimum.
Other Key Items of Interest
- Make sure you have read and reviewed the contract before your meeting. Highlight any question or changes you want in the contract. If you still have questions, ask when you might have a resolution.
- Before the meeting, verify that the decision makers will be there. Don’t have a meeting with individuals who cannot make decisions, as it will slow any negotiations down.
- Put every agreement in writing and make sure it is part of the contract.
- Before signing, read it twice and ask two other individuals who are not part of your team to read it. If there are still questions or concerns, have your in-house counsel read it.
- Sign the contract and feel confident that you negotiated a fair deal for all concerned parties.
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Chapter 6: Negotiating with Hotels