Revealing room rate requirements might derail initial negotiations with hotels

Planners communicate the details of an upcoming meeting to prospective suppliers in a request for proposal, in order to solicit bids for the business. The details disclosed in the RFP could determine whether you receive a fair proposal or any response at all.

Suppliers generally are seeking business opportunities that will deliver maximum profits, which gives them license to disregard a piece of business if it is not financially interesting. Meeting sponsors are seeking suppliers who will provide the most suitable fit for the meeting, with cost-effectiveness being at or near the top of the “suitable” list. To bridge the gap, prepare an RFP that keeps all possibilities open.

Negotiation is a process executed in logical steps, not a one-time exchange. It is important to reveal only the pertinent information of the moment in order for the communication to continue.

Many planners put a desired room rate in their RFPs, and most hoteliers look for that figure when evaluating the potential business. But here are reasons not to disclose a rate range too early.

" Compare and contrast. Before rate becomes an issue, consider how seriously the bidding hotel is assessing your meeting. A quick response and a thorough, accurate proposal should make you more interested in working with that property. Also, by comparing the offers of similar properties in the area, you will have a better idea of what you should be paying.

" What’s included? A higher rate doesn’t necessarily reflect room rate alone. The quote might include full breakfast buffet, complimentary shuttle to area attractions and the airport, free local calls or free health club privileges. A rate with these extras might work out to lower total costs when compared with a hotel offering less expensive room rates and à la carte charges for amenities. If you had specified a rate on your RFP, you might have excluded the more expensive hotel before finding out the details.

" Moving money around. A hotel often is willing to adjust its bid if creative modification can satisfy both sides. Let’s say you need a hotel offering a room rate of no more than $150, including taxes, per night. If you had listed a rate cap of $150 in your RFP, then you likely would have excluded some very suitable sites. In this case, a deluxe hotel might be willing, upon subsequent discussion, to lower its rate from $190 to $150 because both sides agreed to put the $40 difference into the meeting-room charge, making the deal more appealing than one with a hotel that came in under the $150 limit but is charging a high rental fee for the meeting rooms.

" Push PR value. A hotel might decide to negotiate the rate once it learns that, say, a prominent VIP will be the featured speaker. The potential exposure the hotel would receive from having the VIP’s stay on its résumé might be worth a lower rate.

Share all revenue-generating information (number of room nights, and number and size of meeting rooms required) in your RFP in addition to the basics (dates, times, name of organization, contacts, final decision date).

Note, however, that sharing revenue-generating details differs from sharing your specific budget requirements (lodging rate range, overall spending maximum).

At the same time, hotels must be honest with you, and the decision to turn you away must be for business reasons. One way to get at the truth is to provide a checklist to each prospective hotel for noting why it rejected your business, e.g., the hotel is sold out or the meeting space is filled.Learning why a meeting is turned away can be helpful in future negotiations.

Oren Jaffe, CMP, is senior conference manager at Z-TECH Corp, a Northrop Grumman company in Rockvill, Md.