8 tips for negotiating the best deals when planning your next meeting
From the pages of In Business magazine.
The term “mission creep” is understood by any novice meeting planner who starts out with the task of negotiating room rates and soon realizes there is much more involved.
In truth, professional meeting planners negotiate many things with hoteliers, especially if the hotel also is the site of a meeting or conference, but that’s potentially advantageous in terms of the overall value that can be achieved. Whether it’s meeting or conference space, audio-visual needs, or the food-and-beverage spending, there are many balls to juggle and many opportunities to deliver value.
We spoke to a couple of “jugglers,” also known as meeting planners, in the person of Susan Kainz, a principal at Meeting Matters in Brookfield, and Carrie Jensen, event manager for the League of Wisconsin Municipalities in Madison. Both have years of experience in planning everything from small meetings and annual conferences, and our discussions produced these eight negotiating points.
1. Shift your strategy
When it comes to negotiating room rates, there are too many variables to rely on a set strategy. Your strategy is neither event dependent nor venue dependent; in fact, it varies from client to client and from hotel to hotel. The one constant is that even if you’re a corporate meeting planner, your boss is in reality your client. Before sending out requests for proposal to different hotels, a task that is usually done early in the process, you should identify his or her top five priorities for the forthcoming event.
In addition, any strategic approach should include probing the hotel’s flexibility on room rates, food-and-beverage spending, future considerations such as multiyear meetings, and every other aspect of negotiations. “If your top priority for the negotiation is just about getting a very good guest room rate, that strategy is totally different than if you are trying to make sure you don’t get hit with a cancellation fee or any other tangible or intangible term,” Kainz says. “Negotiations are really done on an individual basis, and hotels do vary, sometimes significantly, in terms of their flexibility. I won’t name any names but there is one hotel brand that has the mindset that if you want to do business with them, these are the [set] rates that you will accept. In that case there is very little wiggle room.”
Jensen agreed, noting that the best negotiation strategy is to be upfront with as much information on your program as possible. “Know the history of your group and be able to articulate that to your vendor,” she advises. “I think that it’s both event dependent and venue dependent. It isn’t one or the other. It is a combination of both.”
In the RFP, the hotel will want to know how many sleeping rooms you’re bringing in (i.e. how many total rooms are in your room block).
They also need to know how much meeting space you need and your projected food-and-beverage spending.
“Those are the key things,” Jensen notes. “The food-and-beverage spend and the room nights are their two main revenue-generating areas.”
2. Flock to early birds
Getting an early start increases your range of hotel choices and enhances the prospects for rate flexibility. If you have a smaller meeting, don’t assume you’re going to be shut out because while there are some hotels that won’t be able to accommodate you because you’re asking too far out and because there are advantages to landing the larger groups, the larger groups might not fill every room. Sometimes when a large group books a convention center and you have a smaller group, you might be able to get your group in early enough so that you get the last piece of it. That flexibility stems from the desire not to have any meeting space or hotel rooms go empty.
It also depends on the level of a hotel’s transient business — the everyday business traveler that comes and goes. Such hotels might be located near business parks and large employers like Epic that constantly house clients and bring in transient business travelers on a daily basis, so the key is doing your research on each hotel.
“Basically you just need to know if they can match your needs,” Jensen notes. “Are they a more transient business? What is their business like during the week? We [the League of Wisconsin Municipalities] actually tend to do a Wednesday-through-Friday business pattern, and a lot of hotels don’t have quite as much business during the week so they’re happy to pick that business up.”
3. Relationships rule
Even in negotiations, the planner should approach this not as an adversarial confrontation but as a partnership, because the more information provided to hotels, the better the initial terms are likely to be. Unless you build a good working relationship with your client and with the hotel industry, negotiations are not likely to progress to your satisfaction.
In addition, negotiations should never start on the first phone call or email to a hotelier. The first steps in building a relationship with hoteliers should be the subject of that initial contact. “You want to build a good relationship with the hotel because not only do you need them at the contracting phase of negotiations, but you need a good partner when it comes to the execution phase of the event itself,” Kainz notes. “If you’ve been having a good give-and-take with the hotel people and you’ve been open with your communications, then you know if something doesn’t go right on the execution side you have a partner that’s going to help you take care of clients.”
4. Markets matter
While room rates and room block commitments are the first thing clients look at, the local marketplace is no small consideration. That marketplace might be local entertainment, it might be other nearby hotels, and it might even be what’s happening at the chosen hotel, including the convention center facilities.
If your guests arrive on Saturday and do their opening session that same day, the hotel might have given you a good rate but it also might have booked a rock band, a loud rock band, to perform right next-door to your meeting room.
“When we look at the room rate, we need to understand all that went into that,” Kainz notes. “It’s not just about giving me $10 less than you’ve proposed in terms of the room rate. You have to know what’s happening with the hotel and whether it’s a good fit.”
The availability of local restaurants and entertainment options is another consideration in the rates. Hotels that are centrally located in large metropolitan areas can command a higher price for virtually everything because visitors have an expectation that these options will be available.
5. Don’t ignore intangibles
The tangible factors drive room and other rates the most, but intangible cost factors can bring potential savings, too. For example, what kind of cancellation clause does the hotel offer? What kind of attrition on the room rate does it offer? Does it charge a food-and-beverage minimum or a meeting room rental fee?
Much of the necessary tangible and intangible information can be obtained from sources such as Cvent.com, one of several Web-based events apps, and hotel sites like Hotels.com and TripAdvisor.com where meeting planners can glean very telling information from guest feedback. In addition, the local convention and visitors bureau, which exists to promote local destination tourism, is another helpful source of hotel information. In Dane County, that organization is the Greater Madison Convention and Visitors Bureau (visitmadison.com).
“There are a lot of things that you need to know in advance,” Kainz says, “and part of being a good planner is doing your homework upfront and getting information about that hotel before you even send out the request for proposal.”
6. Beware venue vengeance
It’s also important to be mindful of what the hotel can command in negotiations, especially as the economy changes in its favor. Just two years ago, Kainz says planners could enter negotiations with a long laundry list of needs and wants and the hotel would meet them more than halfway because the market was not as busy or the hotel was not as booked as it is now. In the past two years, a gradually improving economy has put the “planners market” in the rear view mirror and tipped the scales in favor of hoteliers. As a result, planners have encountered less availability and higher prices.
Jensen notes that meeting planners simply can’t assume a hotel wants to lock in your business because they also want to get the right price, especially with the recent shift in the balance of negotiating power. “The pendulum swings,” she says. “It goes back and forth in favor of meeting planners or hotel operators. Right now what I’m finding is that business is booming for hotels as the economy picks up and more people are doing meetings. In that environment, you can’t assume hotels just want to lock in your business regardless. They need to consider what space they can sell to other groups and maximize the space they have available.”
Kainz has seen prices rise 6 to 10% just over the past six to eight months. It’s actually gotten to the point where she has seen hotels assert the contractual right to cancel your business should they find a larger piece of business. Two years ago, planners would not have seen that so they were more likely to assume a hotel wanted to lock in their business for the next scheduled conference.
When the room rate goes up, planners must consider other ways to bring value to clients such as free Wi-Fi everywhere (even if they need additional bandwidth to accommodate an event app), a discounted parking rate (especially in pricey larger cities like Milwaukee and Chicago), an upgrade in the package for company VIPs, or perhaps a multiyear contract — anything that brings more value to the room rate.
“As a good planner you should know the value of that, and if you don’t know how much that normally costs, ask the hotel,” Kainz advises.
7. Have open objectives
While it’s a secondary consideration, the hotel will want to know about the objectives of your business or event. The more information the planner can provide to a hotelier, the better because the days of holding your cards close to the vest are long gone.
One of Kainz’s clients operates in the natural health industry and its priority is the food-and-beverage choices of its attendees. This client must have a very specific type of health-conscious menu cuisine, and when Kainz prepares an RFP for this client, it’s important to have that discussion upfront.
“Just be as honest as you can on both sides of the fence,” Kainz advises. “If the hotel comes back and says, ‘We really need to have this group in this particular meeting space and we can negotiate with you a better food-and-beverage minimum,’ then that’s something you need to look at.”
8. Size doesn’t always matter
At first glance, a small number of hotel rooms might seem to be a disadvantage in negotiations but it’s also an opportunity to show what your group’s advantage is. Perhaps you hold 20 meetings per year and the venue might have a chance to host some of those get-togethers. That should be considered a negotiation tool that can result in a win-win for both sides.
“A small number of guest rooms is not necessarily a negative,” Kainz notes. “It might very well fit into what else they have booked in the hotel at that time. They might also want to start a conversation with you. This particular meeting might be small but maybe you have a large conference in six months. The hotel would like to have an opportunity to potentially bid on that.”
While it’s advisable to put out an RFP early in the process, that doesn’t mean last minute, hastily arranged meetings are hopeless or put the meeting planner at a disadvantage. Sometimes the hotel might have a cancellation or a small block of meeting space and guest rooms left and they would prefer to be in a sold-out situation. In that case, a planner might be able to negotiate something that’s mutually beneficial.
If you don’t negotiate with hotels on a regular basis, consider collaborating with either your company’s legal department to review contract provisions or seek the services of a certified meeting planner. There are many terms in the negotiation process and in the hotel contract that senior management personnel would not be familiar with. Groups like Meeting Professionals International (mpiweb.org) have chapters in many cities, including Madison, and they are a potential resource.
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