by Michael J. Shapiro and Sarah J.F. Braley | May 01, 2016
"It is all about availability these days," says Amanda Armstrong, CMP, director of corporate travel and meetings for Enterprise Holdings in San Diego, parent company of Enterprise, National and Alamo car-rental brands. "The suppressed demand from the recession has surfaced full force, and hotels are generally booked. It takes away negotiating power -- there are always other meetings that will compete for the space."
Indeed, hoteliers are riding a wave of record demand, forecast by analysts to last at least through 2017, and as a result, meeting professionals are faced with formidable challenges at the negotiating table. M&C asked planners to share their biggest points of contention in these negotiations, and how they're ultimately working together with properties to ease the pain.

Associations on the ropes
In these flush times, hoteliers can afford to be picky about business, leaving association planners at a particular disadvantage. "When you're in the association world, you're used to your business being treated as 'base' business," notes Martin Balogh, associate executive director of the meetings and travel group at the Chicago-based American Bar Association. Associations typically pay less for room rate and food and beverage, while using a disproportionate amount of venue space.

"What happens in a strong market is that many hotels take less base business. What had been our strength all of a sudden becomes less so; hotels that might normally put in a 30 percent base of association business are feeling confident and may drop that to 20 percent. So there are fewer opportunities for us to place our business in this market. They're saying no to me and waiting for a better piece of corporate business."

For Balogh and his peers, that means having to be far more flexible than usual -- not just with dates, but with meeting space and related logistics.

"We might not get the amount of breakout space we need because hotels want to have extra space available for short-term corporate business," says Balogh. "We now spend an awful lot of time working with our clients to adjust not just the dates but the number of breakout rooms, room setups and so forth. If in the past, hotels spent most of their time negotiating rates for sleeping rooms, they are now spending as much time on how to get the highest return on their meeting space."

A sea of fees
Based on responses from many planners, today's negotiation pain points most commonly take the form of new and rather innovative fees. For instance, a large meetings hotel in downtown San Francisco now has a sliding scale of charges if groups don't send in program details at least 30 days in advance.

When she first noticed this, Beth Cooper-Zobott had to laugh. "It was funny to me," says the director of conference services for Chicago's Equity Residential. "The salesperson in her emails and descriptions never mentioned any of these fees, but she sent me a link to their website. Underneath 'meetings' was the mother lode. I have never seen anything like this."

At the hotel, if program details come in 21 days in advance of the first scheduled event, a $250 fee would be applied; 14 days in advance of the first scheduled event runs $500. A similar scale is laid out for delinquent signed banquet event orders: 11 days in advance of the first scheduled event, $250; nine days in advance, $500; seven days in advance, $750.

"My husband and I actually have stayed at that hotel -- that's what made me think of the property when I was considering booking my group in San Francisco," says Cooper-Zobott. "It was very off-putting for me, very nickel and dimey. They weren't even embarrassed. We didn't end up booking there, and the fees were part of the reason. We wound up at another property nearby."

Other fee gripes include the need to pay for basic electricity to plug in a phone or laptop, extra room-rental fees just to store an unwanted table from a suite, and advertising-space fees to rig signage -- on top of the rigging fees. And there are the increasingly common resort fees, "often levied by properties one didn't previously consider to be a resort," says Martin Balogh of the ABA.

But however indignant planners might be when hit with such unexpected charges, the fact that the fees are mounting shouldn't be surprising. Hotel fees and surcharges were forecast to add up to a record $2.47 billion last year, according to Bjorn Hanson, clinical professor at the Tisch Center for Hospitality and Tourism at New York University, in his annual trend report. That total has steadily increased since fees were first introduced in 1997.  

The fees levied specifically on meetings, notes Hanson, have become so common that fewer planners have the luxury of walking away from hotels that charge them. Now, planners need to carefully evaluate and compare what various fees will mean to their bottom line, says Hanson: "Hotel A will have charges a, b and c, and Hotel B will have charges d, e and f. One hotel might charge a little bit more for something and a little bit less for something else."

Surprise deposits
Another planner concern regards deposit requirements, which often are not discussed until the point of contract. "It's been coming up quite often lately," says Denver-based Deborah Borak, CMM, vice president of global accounts and team director for Conference-Direct. "Some are requiring the meeting to be fully paid before arrival, or at least 75 percent of it. There is no mention of a deposit in the RFP response, but when we go to contract, it is listed in there, and the hotels don't want to budge. Oftentimes the deposit is due when the contract is signed -- and it can be a large amount."

For some clients, adds Borak, this is a major concern. "This is particularly difficult for an association that needs to get registration funds in to pay for the meeting, which might be a year or two away," she says.

Less severe but likewise irksome, says Borak, is the request by hotels for a small deposit of $250 or $500 with the contract, "to show good faith." She says that "sometimes it can require the organization to do a purchase order or a check request, and it's a nuisance since it is such a small amount."