When negotiating with hotels, Tracy Stuckrath (pictured) of Thrive! Meetings & Events tries to contain F&B costs by sharing menus with other groups.
These are heady times for the hotel industry. In the United States, revenue per available room and occupancy rates increased year-over-year for 61 consecutive months, and average daily rate has risen for 59 straight months, according to STR Inc. The increases will continue through 2016, the lodging-data provider predicts. In other words, it's a seller's market, and hoteliers have a decided edge when negotiating with meeting planners.
While about two-thirds of planners say they are generally satisfied with the process of selecting a hotel and negotiating a contract (see our latest M&C Research survey), it's also true that in a seller's market, many are finding it harder to get the rates and concessions they've become accustomed to in recent years.
That's where creative negotiations come into play. And rate is just one piece of the deal.
"When negotiating a hotel contract, you definitely need to think about all the parts and how they play into your overall budget," says Tracy Stuckrath, CSEP, CMM, CHC, president of Thrive! Meetings & Events in Atlanta. "If the room rates are not going lower, you have to look at F&B, which is probably one of the top three expenses with any meeting -- A/V and rooms being the other two."
Following are more suggestions to take to the negotiating table.
1. Learn how to sell your business.
In theory, cancellation and attrition might be a bit more negotiable, says Elizabeth Zielinski, CMM, a Fairfax, Va.-based planner with 20 years' experience in the corporate, association and independent arenas. "In a seller's market, the rooms should become easier to re-sell," she notes. "In practice however, that doesn't really happen. Salespeople don't have to make the contract more conducive to the buyer, so they don't."
Her advice: "Know the value of your business, be as flexible as possible and prepare for the fact that your deals will not be as financially attractive as they have been in the past.
"Hotel salespeople spend all of their time learning how to sell to planners," Zielinski adds, "but planners only spend a part of their time learning how to present their business to a host facility. It's worthwhile in a seller's market to learn what might make your business more attractive, and make any changes possible to increase that attractiveness."
2. Leverage your longtime, loyal contacts and properties.
Take advantage of the buying power you have accumulated through the years, says Louise Felsher, CMP, CMM, a Pacifica, Calif.-based event producer who specializes in strategic global event marketing. "I call it relationship equity," she says. "Even the supply-and-demand playing field by arguing the value of your historic -- and potentially future -- spend, especially if you were holding meetings during the economic downturn. You were there for them, and they need to be there for you now with a reasonable, affordable rate."
3. Rethink your must-haves.
Offer to give up on perks that you can work around. "Do you need to have so many suites?" asks Felsher. "Is the free gym and Internet critical when attendees can charge back this cost?" If the hotel's space is booked solid before and after your event, she suggests, offer to ease up on the amount of time you need to load in and out, to give the property more selling options. Just make sure that you don't run into overtime with your production team, which would negate the savings.
4. Be flexible with your date and patterns.
"If you chose to wait less than a year out to find a venue for a rather large-size program, then you really are limited in options," says Cindy Y. Lo, owner and event strategist for Red Velvet Events in Austin, Texas. "Let's say you have 500 attendees or more, and it's multiday, you are already limited by the number of venues that can accommodate this group size. And, when you add in last-minute notice, you're competing against other confirmed programs. That's where the flexibility card has to come back in. I always recommend that as soon as you have a date range, start seeking venue and hotel room availability to get the best possible rates."
5. Sign multiyear deals.
If your group uses the same destination year after year, consider committing for more than one event. "Hotels love repeat business and confirmed contracts that far in advance," says Lo. "The upside as a meeting planner: You already know the space and know what worked and didn't work the year before."
6. Ask if the hotel can match a better offer.
In their responses to RFPs, "hotels are coming in with such a high rate," says Judith R. Johnson, CMP, president emeritus of Rx Worldwide Meetings Inc. in Plano, Texas. "Then when they lose the business, they tell us they would have matched other bids." Lesson: It can't hurt to ask.
7. Pare down addendums.
"Planners ask for too much in their contract addendums," says Johnson, "and hotels cross off too much." Streamline the process by limiting these to absolute essentials your group will require.
8. Ask for extras to help offset the room rate.
"It doesn't cost you anything," notes Tina Lynn Mercardo, CEM, associate vice president, events and expositions, for the Craft & Hobby Association in Elmwood Park, N.J., "and even if you get a no, you haven't really lost anything."
When Mercardo recently negotiated a multiyear contract with a new venue, she asked if they could host a welcome reception the first year. "This was not something they typically did, but we pushed and tied it to local restaurants that sponsored tables, offered samples and then booked dinner reservations. It ended up so popular and successful that the venue holds these welcome receptions for other events."
9. Arm yourself with your Wi-Fi needs when going into a negotiation.
In general, the profit margin on Wi-Fi is very high, so if your business is worth much to the hotel, they will have room to negotiate. "If there's history on the meeting, how much bandwidth did you use last year?" asks James Spellos, CMP, president of Meeting U in New York City and a speaker on all things tech. "What did they use when breaking that down on a daily and by-location basis? And how many IP requests were made, meaning how many times did a device reach out to the web? Those are the pieces of information that any IT report would have and that both sides can use as basis for estimating the needs for the next meeting."
10. Custom-build your menus.
Tracy Stuckrath of Thrive! Meetings & Events recommends letting the hotel know during the negotiating process that you have a limited budget and would like to design an affordable menu. The chef will be able to suggest items that aren't too costly or labor-intensive. "When you do this," she adds, "be sure to note any dietary restrictions that needed to be included in the menu in advance. By addressing them up front, you reduce the need to create separate plates, and you avoid wasting money and food that would otherwise go uneaten."
11. Work the food angle to offset high rates.
Find out what other groups will be meeting at your hotel during your event, and work with the hotel to see if you can share menus, suggests Tracy Stuckrath. Ordering in bulk will help reduce costs for both groups as well as eliminate any extra kitchen staff needed to produce separate menus for two events.
12. Group events together.
Instead of hosting three different "special" lunch meetings or dinners for specific groups (e.g., C-level attendees, committees) during the same meeting, incorporate the groups together at assigned tables for the same meal. This will save money when negotiating and have the added benefit of bringing all of your event stakeholders together to talk and network.