Don’t be fooled by generic concessions and terms offered by hotels. Having the right negotiating strategy will save time and money.
Negotiating event hotel contracts is a push-and-pull exchange between event professionals and hoteliers. Hotels do not dole out concessions easily. Meanwhile, the hospitality industry remains plagued with staffing issues that can potentially impact the attendee experience. The reason? Hotels understand that they remain the only game in town to provide lodging options for large groups. As a result, hotels only attempt to provide some level of transparency to set realistic expectations.
Planners winning the best possible terms for pricing, cut-off dates, and attrition comes down to strategy. Experienced planners will be brushing off canned offers. They know that only by clearly understanding the big picture can open negotiations and reveal the possibilities.
Negotiations Must Start Early
According to Kate Patay, vice president of engagement at Terramar, a DMC Network company, negotiations must start in the earliest phases of the contracting stage. “The planner can ask for distressed dates if you have flexibility on lead time,” Patay said. “Otherwise, hotels will base their pricing, terms and conditions based on historical performance.”
During busy periods, when room demand is up overall, hotels anticipate making up the difference if attrition is high. It is less likely that hotels can fill vacant rooms when business is slow during the off-season.
Patay says to leverage better deals during the off-season while avoiding the liability of attrition by kicking off marketing efforts as soon as possible to increase the event’s visibility and pique excitement.
“During the off-season, you have a lot of leverage – shop the competition to do a rate and attrition comparison,” she said. “Then negotiate with the hotel you prefer.” This requires thoughtful coordination with the client and hotel.
Consider the Hotel’s Perspective
The prominent stance hotels take is to cover all bases, minimizing any potential for monetary losses while offering competitive deals, according to a source close to the contract negotiation process of a major hotel brand.
There is no one-size-fits-all approach when it comes to negotiating contract specifics. While hotels consider the client’s needs and budget, concessions are based on the overall profitability of a particular arrangement.
According to hotel group sales professionals contacted by Skift Meetings, the standard cut-off date is 30 days. However, if planners provide a rooming list, it is not uncommon for the hotels to adjust the cut-off to 14 days out. While attrition rates can go as high as 10% during the off-season, attrition is moot if the hotel knows it will be selling out regardless during the high season of business. Outright cancellations are often set on a tier depending on the room block and can incur between 10 and 30%.
The overarching goal for sales managers within the hospitality industry is to service successful events. Most do so knowing that when it comes to room blocks and food and beverage, they are expected to be adjusted by 10 to 20% of what is requested to reduce the stress placed on the event planner to hit their minimum. The bottom line for planners is to be conservative when booking their block.
Focus on Building Relationships
Patay also noted the importance of building relationships with hotels and their role in negotiating. This helps to facilitate more disclosures regarding what options are available. Patay pointed to an example of the logistical overlap of two events scheduled back to back. As a result, the hotel suggested that her client’s event be hosted at an off-site venue while reducing the food and beverage charge to compensate for the inconvenience.
“A great working relationship and transparency from the start can set the tone for how middle ground is reached,” Patay said.
She explained that both parties should work together to determine if the hotel fits a particular client’s needs. In some cases, compromises can’t be reached on deal breakers, so elevating the issue to upper management might seem the right move. While it may get the contract across the finish line, it will also sour the relationship in the long term. “Not every battle is worth fighting,” Patay said. “Sometimes, you just shake hands and move on to something else.”
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