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."
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.
How to Dodge Extra Fees
In a conversation about new fees on M&C's
Meetings Industry Forum, Veronica Scrimshaw, director of corporate communications for NPAworldwide in Grand Rapids, Mich., noted she is seeing upcharges for "more than #X special dietary requests" from multiple hotels.
"I have not responded to the upcharges for special meals," she says. "So far, we have always been within the 'free' window. For example, at our Global Conference in Washington, D.C., this year, I had 16 special meal requests out of about 160 guests. We were able to handle them based on menu selections without having to order special individual meals."
If you are faced with a fee for special meals, and said meals were provided due to medical reasons, Tracy Stuckrath of Thrive! Events in Atlanta suggests quoting from the Americans With Disabilities Act to possibly get such charges waived.
Beth Cooper-Zobott, director of conferences for Chicago's Equity Residential, believes such fees are particularly difficult for inexperienced planners who don't know what to expect. "It really hurts people for whom it's their first rodeo," she says. For her part, the process of selecting hotels includes a spreadsheet with room rates, other charges and any additional fees, for a total cost beyond just room rates for an accurate comparison.
If you see any strange fees cropping up in the sourcing process, redline it out, if you can. And walk away if you can't make a dent in the issue. "Everything is negotiable, but pick your issues carefully," says Jonathan T. Howe Esq., founding partner and president of hospitality law firm Howe & Hutton. "If it's a crazy fee, absolutely negotiate."
Stuckrath agrees: "Question everything. It's a sellers' market. They're taking every opportunity they can to raise prices." —
S.B.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.
A surge in service charges
At one time a relatively steady 21 percent, service charges have been rising, note planners. "Now everyone is charging 23-24 percent," says Cooper-Zobott. "Chicago's total occupancy tax goes up to 17.4 percent as of May 1, and now I'm getting meeting-room charges on top of F&B minimums. I'm really surprised at how expensive it's getting."
It isn't simply the rising charge but also how it's being applied. "How are properties justifying a service charge and tax on room rental?" asked a planner on SPiN, the Senior Planners Industry Network. "I was told it was non-negotiable, and that made me laugh."
"Service charge on what?" asked another planner on the network. "An empty room? Or now are we paying for the air conditioning or labor to set chairs and tables?"
Technology Aid
For many planners, says Mike Mason, CEO of hotel sourcing and booking tool Zentila, the biggest negotiation pain point is simply being able to keep track of the myriad details being hashed out for multiple hotels across multiple meetings.
"Especially today, with the difficulty in finding availability, let alone negotiating the deal, it is more and more important to be able to understand and be able to track and manage negotiations," Mason notes. "This is because, typically, when there's less availability, you have to source more hotels. How do you keep track?"
To that end, Zentila recently released Negotiation Tracker, a new feature in its platform that tracks and saves all negotiation details, from the point of issuing the electronic RFP up through the contracting stage. Planners can produce and share reports showing negotiated savings and changing costs throughout the process. When new costs crop up, they are clearly visible in graph form.
Electronically tracking negotiation details has long been a goal for Mason, who spent many years in hotel sales. "Any way that you can manage, understand and be able to see those changes in the negotiation process, and not have to sit there and try to track via spreadsheet or email folder, will ultimately get you to a far better deal," he says. — Michael J. Shapiro
Fighting against fees
When it comes to negotiating away fees, results vary. "With occupancy the highest it's been since 1984 for U.S. hotels, the balance of power definitely resides with the hotels," notes Bjorn Hanson. But, he adds, as always, planners should be aware of what makes their business most attractive to a property.
"There are groups that are very desirable," Hanson says, "because of timing, spending attributes, or perhaps there are attendees who arrive early and stay late, filling rooms on what otherwise might be low-occupancy nights." Demonstrating that one's group spends a significant amount on food and beverage, retail or spa might also help to provide solid negotiation leverage.
Thinking long-term
"Just like when planners capitalized on the buyer's market, hotels are capitalizing on the seller's market," says Shawna Suckow, CMP, founder and chairperson of SPiN. "It feels like we're powerless to fight these charges in some situations because another group is standing in line for the meeting space." But, she adds, there is hope. "It's important for both sides to remember that all markets are cyclical, and some day the market will change again."
Amanda Armstrong of Enterprise Holdings agrees and underscores the value of business relationships: "We are booking with long-term hotel partners that remember us, and who remember specifically that we did not cancel in 2008-2009," when many others did. "That helps in the procurement process, and our long-term partners tend to make only minimal changes to contract clauses in existing templates."
If some aspect of the contract is particularly distasteful, be open with your hotel representative, advises Michael Massari, senior vice president with Caesars Entertainment. "As a facility owner, we have the obligation to make the most money out of our facility as we possibly can," he says candidly, "but that's in the short run and the long run. When the business cycle ebbs and flows, you can't just say I'm only interested in the short run, of maximizing profits today. You have to think about the customers who have been with you through multiple business cycles.
"And you want your customers to be with you through multiple business cycles," adds Massari. "Ultimately, I need to understand what my customers really need and want, and they need to understand what I really need and want. I've done this from the '80s to now, in the '10s. I've never not been able to close the gap as long as we were open and honest with each other through the negotiation process."