Going the Distance 11-1-2000

Meetings & Conventions - Reaching Out - November 2000 Current Issue
November 2000

Going the Distance

What you need to know before planning a meeting overseas

By Terence Baker

David Lindsay remembers the shock of finding out that the hefty 25 percent value-added tax on his Budapest hotel expenses was not reclaimable. Barbara A’Hearn cites a luncheon served by a Shanghai hotel’s meticulous wait staff that lasted a schedule-shattering three hours. And Patricia Fisch still bristles at being charged extra to use a hotel’s meeting room, a practice she finds all too standard in Europe.

As these and other meeting professionals can attest, organizing an overseas function means dealing with suppliers whose business habits often differ considerably from common American practices. Essential to meeting the challenge, experts agree, is to be flexible, resourceful and diplomatic. And it’s wise to start the process early up to 18 months in advance of the target date to allow for complications.

What to expect
“The world has truly gotten smaller,” says Jerry Kallman Sr., managing director of Waldwick, N.J.-based Kallman Global Consulting, a firm that specializes in helping companies organize meetings overseas. “Today, dealing with a hotel thousands of miles away is like dealing with someone around the corner. And suppliers in other countries make it clear that they want your business. Most foreign hotels don’t play the same hardball ours do in our tight market.”

It might not be American-style hardball, but negotiating with a hotel overseas has its own set of rules, in a game that begins when planners are deciding which facility to book. “It’s common for a foreign city’s hotels and PCOs [professional congress organizers] to share information with each other,” notes David Lindsay, director of planning and program development for the Atlanta-based International Gas Turbine Institute. “Once you make inquiries, the word gets out. In that way, suppliers can put up a united front in the deals they offer.”

A smart strategy, says Lindsay, is to “look at your search as a competition between cities, rather than between hotels in a city. Unless you have your heart set on Paris, don’t lock yourself into one city at the outset, or you might reduce your negotiating power.”

To help in the search, experts recommend a resource so obvious it’s often overlooked: tourism offices. Such agencies are storehouses of valuable information, often with branches in the United States.

“We have a specific meetings and incentives department,” notes Annette Choynacki, deputy director of the Belgian Tourist Office in New York City. “We can provide details on various cities, recommend hotels, convention centers and places to eat. We can suggest DMCs and PCOs with access to certain properties no one else has.”

Whatever final destination is chosen, you will likely have to book more than one property. “You will not have the same selection of large venues that we have in America,” says Carole Whittemore, program director for the Boston Consulting Group. “In Europe, it’s hard to find a hotel that can provide you with more than 200 rooms at once.”

Even after suitable rooms have been found, planners often face a new hurdle: “Many overseas hotels and conference centers estimate the basic fees in advance and expect you to pay up front,” says Lindsay. “They will negotiate what monies get returned to you later if a service is not delivered as agreed.”

Such arrangements are one reason why it helps to understand the myriad functions of a PCO, a local facilitator who can serve as the go-between in locating properties, negotiating deals, hiring support staff and more.

“PCOs make sure that both sides get the services they need,” notes Elba Holguin, sales manager at Marketing Challenges International, a New York City-based planning firm. Holguin and other professionals consider these overseas agents a crucial partner in the planning process. PCOs know their terrain, they have relationships with local suppliers and can bargain for reasonable rates, and they can cut through the red tape.

PCOs also can be active helpers with real-time event logistics. “Whenever I can, I use a PCO to handle all pickups and returns to airports,” says Patricia Fisch, president of International Destinations Inc., a Washington, D.C.-based travel-marketing firm. “This can save me up to 50 percent over taxi fares.”

When it comes to fees, “Up to 20 percent of your total costs can be generated by a PCO,” notes Kallman. “For example, when a PCO representative we work with in Munich recruits hosts and data-entry people for a function, he adds a 15 percent fee to that particular expense. Some agents charge a flat fee, others a day rate.” The easiest way to locate a PCO, Kallman says, is through a stateside tourism bureau; many countries have U.S.-based PCOs.

Put it on paper
Not surprisingly, if a planner represents a large, reasonably prestigious group with a good history of meeting its quota, and if that person deals with a well-known chain that has a U.S. counterpart, the resulting contract will likely contain familiar elements. The rest of us are apt to encounter at least a few conditions and terms that will serve to remind: We’re not in Kansas anymore.

“Once you’re outside the United States, arrangements tend to be more ad hoc,” notes Karen Peterson, a meeting planner and exhibit manager for Orlando-based Tupperware Corp. “That’s why you really need to put everything in writing.” For example, because she often books far in advance, Peterson routinely asks for a clause stating she can withdraw from a contract if a hotel begins intrusive renovations that will coincide with the event.

“Never accept a hotel representative’s verbal assurances, such as, ‘Don’t worry, we’ll charge you the same rate for any extra days you spend with us,’” says Fisch. “By the time you arrive, that person could well be working somewhere else. Get all terms written into your original agreement.”

“The details can be excruciating, but they can eliminate unhappy surprises later on,” says Barbara A’Hearn, assistant vice president at Ft. Wayne, Ind.-based CVC Communications, a firm that organizes meetings and trade shows. “If you simply agree to a ‘luncheon,’ it can turn into a full afternoon’s affair. Food service is much slower in Europe and Asia than in the United States. I’ve learned to specify a ‘one-and-a-half-hour luncheon’ on a contract. Similarly, you might want to spell out things like ‘buffet-style’ or what exactly is considered a ‘snack’ at a midafternoon break.”

Planners also should be wary of clauses that hold them to vague “standard terms and conditions” without elaboration. “You literally need to ask, ‘Are there any penalties I should know about that are not written into the contract?’” advises Jerry Kallman. “Some European venues, for example, assume you know that you have to pay for a nurse to stand by during an exhibition.”

Then there’s a perennial bone of contention, whether foreign or domestic: “Attrition clauses vary from hotel to hotel and country to country,” notes David Lindsay. “What you will often find overseas is that once you reach the last cutoff date, you are fully responsible for your quota, whereas in the U.S. you usually have more leeway you might have to meet, say, only 90 percent of the quota. You should make it clear to your members that the ultimate responsibility for no-shows must lie with them.”

To attract more business, the governments of Austria, the Netherlands and Switzerland use guarantees to minimize the risk to incoming groups. Austria, for example, guarantees up to 30 percent of an event’s expected earnings against such factors as low turnout (for further details, contact the Austrian National Tourist Office; 212-575-7723).

Arbitration clauses will generally require that any disputes be resolved in the destination country. “You might have some flexibility on terms if you’re dealing with a major chain with branches in the U.S.,” says Lindsay.

Make sure all contracts are in both the supplier’s language and in English, so you’ll have a proper paper trail for any possible disputes.

Consider currency
While planners might balk at paying hotels before the event takes place, the earlier you pay, the earlier you lock in rates as a hedge against monetary fluctuations. Experts say the Euro will increasingly make negotiations and paperwork easier as all of Europe gets more solidly behind the single currency.

Value-added tax is another consideration. “The VAT is added to room rates and food functions,” notes Jerry Kallman. “The rate varies. In Germany it is 16 percent; in France, 17.5 percent. Sometimes you can reclaim part of it, for which you’ll need to provide original receipts to the IRS.” The local U.S. embassy can offer advice. Also, several firms based in the United States specialize in handling VAT reclaim.

Make a deal
“Just like in the U.S., when you’re dealing overseas you can negotiate room rates and the date ahead of your meeting by which you have to pick up your commitment,” says Peter W. Nathan, a principal in The Compass Group International, a Westport, Conn.-based exhibition industry consulting firm. “You can also haggle over costs such as a hotel’s audiovisual equipment.”

One midsize city making a serious effort to promote itself internationally is Mobile, Ala., population 203,000. Brenda Scott, president and CEO of the Mobile Convention and Visitors Corp., says, “We are as sophisticated as larger cities, but we have to try harder.” This credo is manifested in Mobile’s ongoing training program, one that involves not only tourism professionals but informing the community about visitors’ cultural roots via local news outlets.

Nathan adds that one often overlooked strategy in negotiations is to offer the designation of a venue as the official headquarters hotel. “This comes up because you often have to use more than one hotel,” he notes. “Headquarters status means you’ll be booking more rooms with that hotel, and it gives the venue a perception of being more important and hoteliers enjoy that.”

“I can usually get a deal on various catering functions,” says Jerry Kallman. “I’ve negotiated for complimentary hospitality suites for the organizing staff that included a buffet breakfast, for example. Sometimes you can negotiate things like airport pickups for VIPs.

While it’s true that many overseas hotels, smaller and more pressed for space as they are, charge extra for the use of their meeting rooms, even here there might be some room to bargain. “I can stretch a hotel to the limit, as I often need 350 rooms and lots of breakout space,” notes Carole Whittemore. “By booking so many rooms, I get my meeting space thrown in for free.”

Diplomacy works
“Americans have a reputation for being arrogant and rude,” notes Barbara A’Hearn. “Often a deal can hinge on the manners of the negotiator. If a supplier is conscientious about getting you quotes or other information, you should be scrupulous about meeting your deadlines for giving feedback. And simple courtesies the basic ‘please’ and ‘thank you,’ a friendly tone of voice can go a long way. It can make a supplier that much more amenable to negotiating in your favor.”

THREE WAYS TO SAVE MONEY

Barbara A’Hearn, assistant vice president at CVC Communications, a firm that organizes meetings and trade shows, recommends the following steps as ways to keep your bottom line from going over the top.

cents Purchase items such as gifts, awards and special apparel in the destination country. You’ll save on shipping costs and import taxes, as well as avoid problems going through customs. “But ask to be sent a sample of whatever you’re buying,” A’Hearn says, “so you’ll know exactly what you’re getting.” In all cases, ask a country’s tourism board, PCO, convention center or hotel to find the right suppliers.

Try to do as much of your printing as is possible in the destination country. “Paper becomes very heavy in bulk,” warns A’Hearn, “and large amounts of materials will cost a fortune to ship.” Be aware, however, that standard page sizes can vary in Europe and beyond. If you expect to fill American binders or custom packet folders with what you have printed overseas, find out in advance what size paper will be used.

To guard against unfavorable fluctuations in currency, start a bank account in the country in which you are doing business, and pay as many expenses as you can out of that account. “This will also save you on charges for transfers of funds,” A’Hearn notes.

M.C.

FOR MORE INFORMATION

The following organizations and associations offer advice and materials that can be helpful in planning an overseas event.

Asconet International Secretariat Symporg SA (European association of professional congress organizers)
Avenue Krieg 7 CH-1208
Geneva, Switzerland
(41) 22-346-4101
Fax: (41) 22 346-41 42
www.asco.net

International Association of Convention & Visitor Bureaus 2000 L St., N.W., Suite 702
Washington, D.C. 20036
(202) 296-7888
Fax: (202) 296-7889
www.iacvb.org

International Association of Exhibition Management 5001 LBJ Freeway, Suite 350 Dallas, Texas 75244
(972) 458-8002
Fax: (972) 458-8119
www.iaem.org

International Congress & Convention Association 5128 Newport Ave.
Bethesda, Md. 20816
(301) 951-8040
Fax: (301) 986-5250
www.icca.nl/america

Meeting Professionals International 4455 LBJ Freeway, Suite 1200
Dallas, Texas 75244
(972) 702-3000
Fax: (972) 702-3070
www.mpiweb.org/home.htm