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Incentive Primer: How to Negotiate with Hotels
October 08, 2007
By Amy Colliton
The destination perfect, the hotel amazing, the meeting dates available and the room rates acceptable: What more could you ask?
Much more. In today's complex hotel contract world, there are many issues to consider when selecting and booking a hotel. Selecting a destination and identifying a hotel is simply the first step in the process. The next steps include negotiating rates, concessions and liability clauses, and preparing a thorough hotel addendum, which covers many valuable protection clauses.
Negotiating is not about winning or losing. It is about making sure that the contract you secure meets your needs, provides benefits and is fair. When negotiating a contract, first be fully aware of what is most important to this particular meeting. The objectives of the meeting will help flesh out priorities. The goal is to ensure the most favorable terms possible and limit liability.
The hotel industry is booming, according to one important measure of the health of hotels, revenue per available room (RevPAR). The last few years have seen the largest increase since 1984. Without sophisticated measurements, one can see from daily encounters that hotel room rates are on the rise and contracts aren't as easy to negotiate down. What does this mean to you? Hotel rooms are in higher demand, more people are traveling, meetings are under way and revenue managers have a comfortable view.
Now let's add to this the regulations introduced with Sarbanes-Oxley. Companies are increasingly forced to look at the cost of their meetings and quantify the value obtained from these meetings. Incentives and business meetings are essential tools for motivating, educating and marketing. But today, companies are looking for ways to cut costs without sacrificing the benefits received from them. How can we help mitigate the situation? Luckily, a little bit of flexibility and creativity can go a long way.
Consider History
Show your value to a hotel so that its managers want to win your business. Spell it out in your group résumé by providing background information on your company and a profile of the attendees. Include average amounts spent by attendees at the property, if applicable. For example, "Group attendance will include over 100 C-level executives. Our group has a history of staying on-site and spending an average of $225 per person at hotel venues, including restaurants, spa and golf." Including these details will leave no doubt in the hotel manager's mind of the value you bring to their property, and they will be more willing to work within your budget.
Maintain Flexibility
Hotels calculate your worth based on a room-space ratio. If your group falls short in this evaluation, consider using hotels that have holes in their calendar. A hotel looking to grow its group business or that recognizes your flexibility to help them is more willing to provide value-added services to your group.
Know Your Hot Buttons
Approach the hotel with a priority list, ranging from your must-haves to the items you are willing to forgo. If your group doesn't consist of any VIPs but you expect to go through large quantities of bottled water, make your sales representative aware that five upgraded rooms are not a priority; however, you would like to receive bottled water for a rate of $3.50 rather than $5.00. Prioritizing accordingly will help you keep the savings where it's most efficient.
Keep It Honest
Be up-front during negotiations. If hotels know clearly where you are willing to give and the items you refuse to budge on, they are more likely to accommodate what is most important to you. As long as everybody plays by the rules established up front, all parties will feel that it is a win-win situation. Developing these relationships where honesty is a predominant factor leads to healthier partnerships down the road.
My top 10 negotiating points are:
• Guest Room Rates
• Attrition Allotments
• Cancellation Clauses
• Cut-off Dates
• VIP Requirements
• Upgrades/Suites
• Parking, AV, Amenities, etc.
• Non-Compete Clauses
• Construction Clauses
• Walk Policies
Amy Colliton is vice president of sales and marketing for Global Partners Ltd., a full-service meeting and event planning company in New York. Contact her at (212) 545-8066, or by e-mail, amyc@globalpartnersltd.com
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