Hotel Negotiations 101
On many occasions volunteers are given the responsibility to plan a meeting or event. They have little or no experience, no hotel relationships or negotiation experience, and no budget to hire a professional planner. Unfortunately this can cost an agency dearly.
Volunteer planners sign contracts not fully understanding the repercussions to the organization they represent. As a planner with more than 20 years of international experience I have seen agencies lose thousands of dollars by poorly negotiated contracts. Great hotel contracts won’t save your event if it isn’t planned and marketed well, but it will start the planning process on a solid foundation.
Hotel sales staff ought to play an educational role with these volunteer planners; however the opportunity of a long-term relationship can get thrown out with the bathwater in favor of a quick contract, allowing a sales person to meet monthly sales goals. Smart sales people will help volunteer planners negotiate a fair contract. This will create a win-win for both parties, with the planner having a sound contract and the hotel establishing a long-term relationship and a possibility of future business. Sadly, not all hotel sales people fall into the last category.
This post outlines helpful tips to make your negotiations with hotels, resorts and venues a breeze, especially for volunteer planners. Keep these in mind as you plan for your event and start the negotiation process.
They owe me!
I can’t recall how many times I have heard volunteer planners at nonprofit agencies state that the hotel or resort in their town should donate to their event. We’re not talking about donating a weekend stay for the silent auction. They expect the hotel to donate the full cost of the event. “We’re doing good in the community, and they should support that.” I cringe each time someone makes this statement.
First thing to remember is that hotels are businesses and can’t afford to do it all for free, as a matter of fact, they don’t owe you anything. Keep that in mind as you start the negotiation process. It never hurts to ask for some concessions, but you’ll have greater success asking for realistic discounts vs. the expectation to get it all for free. After all, don’t you want to be taken seriously as a planner?
Where to begin?
There are a variety of services to help you at no cost. A Convention and Visitors Bureau (CVB) is a great resource. Most offer a free RFP tool. You complete the application and the CVB will distribute your request to their membership (look for the meeting planner tab on their home page). It’s a great service that may offer additional benefits. The negative is that most only include properties who are members of the organization, and you may miss out on non-member and equally qualified hotels and venues. If you are considering multiple cities, you have to reach out to each city’s CVB. CVBs will only help if you are looking for an event associated with room nights.
Know what you need.
Before reaching out, know all the facts about your event. The more accurate your event information, the more precise the proposals from hotels will be. Many of the details may not be known at this stage, but some key information is crucial in the proposal process.
Present the hotel with your desired dates and times, and provide back-up dates if possible. Being flexible on dates can help you get better prices.
Let the hotel know your event times, but also if you need time prior to the event for set-up or post-event for strike.
What type event are you putting on? Is it a conference, fundraising dinner, training? Some properties have many ballrooms and some may be better suited to a conference than a fundraising dinner. Will you have exhibitors, a general session or silent auction? Will you need an onsite office, storage? Be as specific as you can about your needs, both space wise and programmatically.
How many people do you expect? What is the arrival pattern? For dinner events, everyone may arrive closely together. For a conference, arrivals may happen over a longer period. This helps the hotel with staffing the front drive and at the reception desk, and insures great service to you and your attendees.
What types of meals do you plan on serving? You don’t need to know what you will serve, more the types of meals. Do you have a continental buffet style breakfast or sit down meal, banquet dinner, luncheon with speaker or box lunch. This will give the hotel a better picture of possible revenue associated with the event and may give you more negotiation room in other areas. Hotel may not charge you a ballroom rental if you meet a certain food and beverage minimum.
What type of audio visual equipment and IT services will you need (more on that later)?
Will you need sleeping rooms? How many room nights? How many rooms will you need on peak night? Will you need rooms before and after the event? Do you require regular rooms, suite upgrades, the Presidential Suite? What is the room price your attendees are comfortable paying?
Has this event been produced before? If so, give historical information on the event.
What is your proposal deadline? How long will it take you to decide? When is the expected contract signing date?
How would you like to receive proposals from the hotels? Do you prefer email, fax or mail? Many hotels now use a system for planners to go online and view proposals. If your email system throws out large sized emails you may want to share that too. Hotels love to include pictures and menus with proposals, at times making emails larger than 10MB. I always tell hotels to keep the info to what is asked in the proposal and not to include additional information. You can see pictures at the hotel’s website. Menus are another matter I discuss further down the planning process. As a planner I can be rather strict. If a hotel can’t follow simple RFP instructions I don’t trust them with my business.
What is your budget?
Be as honest as possible when talking money with the hotel. As a planner coming in after the RFPs have been sent out, I have had to deal with a few distressed clients who received “outrageous” hotel proposals, with room costs at hundreds more than their attendees could afford. Obviously something went wrong in the process.
If you know your attendees’ budget is $150 on average for a hotel room, you should not send your request for proposals to hotels whose rooms run significantly higher than that. It’s unlikely the property will be able to meet that expectation. Share a price range your attendees are comfortable with.
Same counts for F&B (Food and Beverage). If you know you have a $75 all-inclusive budget (includes meal, tax and service) for a dinner event, let the hotel know. Your sales person will be able to work with the banquet department on suggestions, and give you a much better proposal. Ok, maybe let them know you have $68 to give yourself a bit of a buffer. As a planner I have received significantly better proposals being open with the hotel about budget. It also saves time and energy.
Forget the menus.
Hotels love to send extensive menus alongside their proposals. To be blunt, as a planner, if you’ve seen one, you have seen them all. Many times these menus don’t meet my needs, budgets or seem downright boring. If you want great food at your event, let the hotel know your budget, style of food or theme you’re looking for, and let the Chef do his or her magic. The Chef can work with local and in-season ingredients keeping cost down, but still offer an amazing experience to your attendees.
Time to play poker!
There are many ways to save money for you and your attendees at your event.
Negotiate for complimentary use of a ballroom or meeting space if you meet a certain food and beverage minimum. Some hotels will include a rental fee for their facilities in the proposal. You can negotiate out of this fee most of the time. Some hotels don’t charge a fee.
Certain hotels may require you to use the in-house AV provider. Not doing so may result in the hotel charging you a fee to bring in an outside provider. Fees can be a flat fee, an electrical hook-up fee, a fee to cover technical support. These fees have started popping up more and more during a weak economy. You can successfully negotiate out of these fees! Do you think a hotel will risk losing an event over a $500 or $1,000 fee? Bringing in an outside AV provider will also save you on the service charge hotels add onto everything. It’s still important to get a handful of quotes from outside providers, and invite the hotel AV department to bid as well.
If you are using room nights, ask to receive a certain number of nights for free. 1 to 50 is pretty standard, but 1 to 40 can easily be negotiated. This means that if your attendees book a total of 50 room nights you get one room night free. Use these for staff, speakers, and volunteers working the event. If you conference hosts 350 attendees over a three night period, you may have as many as 1050 room nights, this gives you 21 room nights for free or enough rooms for seven for the duration of the conference.
The $150 a night guest room you advertise for your attendees can significantly increase in cost of if you add taxes, resort and parking fees. It’s not unheard of to see guestroom cost increase by one third. Resort fees are common place. Many hotels will waive or heavily discount resort fees for your event attendees when asked. Some hotels may charge as much as $35 a night, sometimes even more. Overnight parking fees can be waived also. Make sure you understand what you resort fee covers.
Attrition can be negotiated also. Some hotels will offer 10% attrition in their proposals. You can ask for a higher percentage. 20% is common, but we’ve seen much higher. Attrition is the allowance a hotel gives you to not sell a number of room nights without a penalty. For example: If you have contracted for 100 room nights and your attrition is 10%, then you must sell 90 room nights to avoid a penalty. If you were to sell only 80 room nights, as the organizer you would be responsible to pay for 10 room nights to meet the 90 contracted room nights.
When all is negotiated ask the hotel of your choice to prepare a contract. It is vitally important that you review the contract in detail upon receipt. What has been negotiated may not always translate from the sales person to the administrative person preparing the document. Review contact details, deadlines, and all other items that have been negotiated. Review cancellation and attrition in detail. Make sure all the right dates are listed and right amounts are included. If you discover an error (rarely do I not), reach out to your sales contact and have the correction made. Only sign when you are 100% satisfied with the document.
Unfortunately one can’t always foresee certain situations that may result in your event having fewer attendees than expected, or less hotel rooms reserved than contracted for. Once a contract has been signed, hotels are pretty strict in following them to the letter. Unless you can guarantee future business, rarely will a hotel change the terms of a contract. Avoid this by knowing your event and building in enough safeties to protect your agency.
Feel free to reach out if you have any questions about this post or want to share any of your experiences related to negotiating hotel contracts, good or bad. We may use them as an example in a future post. Drop us a note by clicking here.
About Al Wynant
Al has more than 24 years of international event and meeting planning experience. He has planned events for 20 to 125,000 in six countries on two continents. As CEO of EventInterface he now focuses on providing technology services to planners.