The New Risk Managers

Given the detail-oriented nature of the job, meeting and corporate event planning probably should be left to professionals, but often a staffer with a modicum of experience is left with the task of sending invites, arranging for food and drink, and designing a program for guests. Some master it very quickly, others require a little more training, and some even grow to love it, but from the outside, event planning always looks easier than it really is.

With Madison becoming more of a destination, and the economy still forcing some to plan events closer to home, IB set out to get the nitty gritty details of meeting and event planning. We talked to area experts about the basics of negotiating hotel rooms, estimating food and beverage costs, attracting speakers, and providing security. The common denominators are understanding your meeting, knowing your demographics, capturing your data on events, and using this body of knowledge to manage risk.

While you are managing risk, don’t forget home cooking. Whenever meeting planners design an event, the local convention and visitors bureau serves as a partner, and they are happy to accommodate a local twist.

"Meeting and convention planners seem to always want some local flavor of the area," said Jeff Holcomb, senior convention sales manager for the Greater Madison Convention and Visitor’s Bureau. "They want something that reflects the flavor of Madison."

The Hotel Negotiate

When negotiating hotel rates, a number of factors come into play, but, the majority of costs will come in sleeping rooms, food and beverage, and increasingly, audio visual, which is ramping up to be 20 to 25% of planning budgets. "As technology increases, our customers are expecting access and so our costs in that area are growing fast," said Janet Sperstad, program director for the meeting and event management degree program at Madison College (formerly MATC). "We really need to watch that carefully and make sure we evaluate what we’re using, and how we’re using it, and what we’re offering."

In terms of negotiating favorable hotel rates, don’t expect to be in a position to dictate your best terms. Meeting planners must keep in mind that most of the revenue for a hotel comes through its sleeping rooms. They are in the business of providing beds, "so we have to be careful as planners that we really consider what we can offer them in terms of total business value," Sperstad noted. "To just expect a hotel to give us a bottom line price on sleeping rooms isn’t realistic or a great place to start negotiations."

Hotels are going to require meeting planners, or "MPs," to report something very specific — the number of hotels rooms they need on certain dates. "What we have to think about as planners is, ‘Well, if I have somebody who comes in a couple of days early, will that be considered part of my room block, and can I add that in?"

"So it’s about really making sure we look at the full days people might be coming in, and really understanding the behavior of your participants on their arrival and departure, and make sure you get credit for all of those sleeping rooms."

When meeting planners contract with a hotel, they contract for a "room block," so the hotel will require planners to guarantee a certain number of hotel rooms. If you need 100 rooms over three nights, it’s 300 room nights, and hotels might require groups to guarantee up to 90%, or 270 of those rooms. A planner’s bottom line is ensuring that 270 rooms are used after the rooms are booked; otherwise the hotel will charge for the difference between what is actually consumed or booked, and that 270. If the group takes 250 rooms, it will be charged for 20 room nights.

"You can see where we really dwindle away the amount of risk that we have as planners," Sperstad said. "That’s just the quantity and the amount we have to consider."

To get the best possible rate for both attendees and the organization, Sperstad always recommends contacting the local Convention and Visitors Bureau, and asking a couple of simple questions: what is the occupancy rate for these dates in your city? What is the average daily rate in your city over these dates, historically? That way, she gets an idea of whether the city is really full, and the price range that normally gets pulled out of its hotels at this time.

"So I go in knowing the price limit that I should be considering," she explained. "You don’t ask about specific hotels, but you ask about the average over the city. That reminds you that hotels are in the supply-and-demand industry, and they only have so many sleeping rooms. Like any supply-and-demand scenario, the less supply, the higher the demand, and the higher the price. It gives me a really good educated baseline to know how much I can negotiate, what I can’t, and what should I be asking for?"

Given the supply-and-demand factor, when it comes to driving a hard bargain on hotel rates, you have to pick your spots. If you’re in a shorter season or an off-season, there might be room to deal. The same is true when you make a large, multi-event commitment. "I had an event for 8,000 people, and I booked thousands and thousands of sleeping rooms, and I was able to negotiate lower rates because of the volume," Sperstad said. "We had an annual contract and did other meetings that we booked, so consider the volume of what you bring."

Simply demanding a lower rate without any chips to negotiate with will expose you as an amateur. When planners look at hotel rates, they first have to calculate their total business value, not just that meeting, not just those sleeping rooms, but for the total cost of rooms, of food and beverage, and audio visual. Other factors that come into play are whether you have additional meetings that you could book to increase the volume of your buy. "That will give you better rates, and they will know they are dealing with an educated buyer," Sperstad said.

"A deal killer that is really not recommended is to say, ‘Oh, well, we have other meetings we could bring,’ and you don’t get specific. That does not help. Hotels are going to respond with, ‘Well, should we consider other contracts for multiple years?’ When you actually bring that to the table, then you really increase your negotiating power."

The type of meeting and the type of hotel and its high-volume patterns and location also influence rates. A resort is going to be looking for their prime times, the weekends, so you might find a really great price point on Monday or Tuesday, whereas a downtown property might be a little softer on the weekends. In addition, you might not need a lot of sleeping room space, but require more meeting rooms.

"Coming into Madison with a football game on Saturday, these hotel rooms are full, but the meeting rooms are empty, so knowing when Homecoming is, knowing what else is happening in that city. That is really where partnering and having a relationship with the local CVB, and asking them a lot of questions, really helps educate somebody, which obviously helps you get better rates. Then if you really know your baseline and rates are sitting at $129, and you get proposals back for $159, I certainly would not accept that. It would be like, ‘Wait a minute here, what’s happening? The average daily rate is at $129 historically, so what’s happening?’"

Meeting planners, distant and local, may do the heavy lifting, but they have a partner in the Greater Madison Convention and Visitors Bureau. The local CVB facilitates finding the block of hotel rooms that planners need, and its sales managers assist by researching the combinations of hotels that will free the necessary facilities for the event.

In turn, the hotels provide what they are willing to charge, including a price range for the rooms. The actual negotiating is between the hotel and the meeting planner.

"Typically, the meeting planner contacts CVB first, and what they do is say, "Hey, we’re interested in your destination and we’d like to know what hotels and conference centers are available, and what their packages are,’" said Jeff Holcomb (GMCVB). "So we put together information and send it out to hotels and convention centers, and we collect their proposals and we package it and send it to the meeting planner, and they can see it’s a one-stop shop for them."

Holcomb offers contrary advice in negotiating rates, especially in a weak economy. In this environment, meeting planners might be interested in probing for bargains. "As far as what meeting planners try to accomplish, we see some of the trends now. They are looking for historically low rates, no meeting room rental, and they often times like to try to compare hotels and rate the competition so they get a better price."

Not only does the CVB get proposals from every hotel for the convention and conference centers, it keeps a calendar of events so that outside meeting planners don’t have a scheduling conflict that an individual hotel may not know about. "Meeting planners outside of Madison may be looking at the first week of October, and not be aware that World Dairy Expo is coming to town and there may not be a hotel available," Holcomb noted.

Food and Beverage

The best thing planners can do in saving money on food and beverage is estimate how much attendees will consume, and there are a number of different formulas that planners use to help determine how much to order.

Madison College uses a grid broken down by morning and afternoon break coffee, tea, and soda for all male, all female, and 50/50 mixed. For the morning break of an all-male event, the approximate number of regular coffee drinks needed can be derived by multiplying attendance by 60%. For decaf, it’s 20% of attendance; for tea, 10% of attendance; for soda, 25% of attendance.

Beverages are not a trivial concern because coffee is expensive per gallon and planners must be careful to order enough. If you run out of coffee, especially in the morning, "people really get upset, or in the afternoon when they want their soda," Sperstad noted. "As the young generation comes through as professionals, they are interested in having more soda than coffee."

The same "order-enough-but-not-too much" edict applies to food, including food served during a reception. A couple of numbers to consider: if you have a two-hour reception before dinner, which is very common, it’s recommended that you plan on about six to eight pieces of food per person, per hour — whether it’s cheese, crackers, mushrooms, or meatballs. "That way, everyone will get a little something, and if you have a heavy eater, they will certainly get a fair amount. If you have a light eater, they can take just a few pieces."

Heavy and light drinkers also compensate for one another. The rule of thumb for alcohol depends largely on whether it’s a cash bar or a hosted bar, but in either case, it’s a delicate balancing act. "If it’s a hosted bar, we really want to make sure to order the proper quantities and that we know what will be expected so we can budget for it, and cut it off if it’s really just over consumption," Sperstad said. "But again, you don’t want to have the bar sell out if it’s a hosted bar."

In the open-bar model, she recommends two to three drinks per person, per hour. That way, if somebody puts down a drink and forgets where, they can simply turn around and get a new one.

If it’s a cash bar, people typically drink one to one-and-a-half drinks per hour. That provides a good estimate of quantity and how how much to budget.

Different kinds of drinks — beer, wine, hard liquor — also factor into the calculation, and it comes down to knowing your attendees’ preferences. But the key is the quantity of drinks.

"Start to tell your bartenders, for the first hour, make sure you can service 300 people, for example," Sperstad advised. "We’re going to be looking at 600 drinks for the first two hours. Give me beer, wine, and alcohol."

Planners also can reduce the amount of alcohol served. In a bar, a standard "pour" of alcohol is 1-1/2 ounces, and that can be reduced to one ounce to make sure people don’t over consume, and to shave costs.

For group meals, planners need to get a firmer and firmer idea of the number of people attending at different intervals as the event approaches. When ordering any type of group meal — breakfast, lunch, and dinner — caterers will require a final guarantee, anywhere from 24 to 48 to 72 hours, before the meal. A full week before, planners will have to provide an estimate, and that estimate is to give the caterers time to make their food orders and plan their meals. So the most important task in estimating your food budget is to know precisely what your guaranteed numbers are going to be, and that figure can be honed by providing incentives (VIP seating or entertainment) for early-bird RSVPs.

"The best thing to do is really manage the numbers of your attendees," Sperstad said. "Know who is coming, and how many. Hotels will give us a 3% to 5% ‘overage,’ so they will prepare 3% to 5% over our final guarantee, which means they will give us the exact same meal at up to 5% over what we just guaranteed. If you start to exceed that amount, they might charge you additional and not guarantee the same meal."

Speakers Bureau

Whether you’re seeking an industry expert or a popular celebrity, or someone in between, it takes some sort of package to secure someone with the gift of gab.

With a celebrity or a national speaker, most planners work with national speakers bureaus. There is no cost to using bureaus, they have already vetted the speakers, and they will work to customize content, make sure speakers show up on time, and that their power points offer value. Citing the National Speakers Association, Sperstad called speakers bureaus "a good safety net for us."

That net comes in handy when factoring costs. The bureaus often will let you know whether or not the fee includes the incidentals of travel and lodging. Sometimes they will package it all, sometimes not, but know that national or celebrity speakers are expensive. Their pricetag could be as high as $300,000, depending on who it is, and their level of expertise. Former presidents command millions but, again, supply and demand dictates here.

Just like the hotel volume principle, if you can talk about a multi-event contract with a speaker, the more willing to negotiate they will be. With the one-time only request, they are unlikely to trim their rate by much.

Then there are logistical questions pertaining to matters of convenience. Are they local? Is it easy for them to dip in and go back to their work? Can they also speak to another group in the area?

"A lot of meeting planners start with an overall budget and goal for what they want that speaker to accomplish, and they go from there," Holcomb said. "It can be from nothing, where they get somebody from the industry who will come for just travel expenses, or it could be a celebrity."

Many organizations seek subject matter experts from the industry or field, and that simply involves contacting that individual and negotiating a rate.

Madison meeting planners have a built in advantage — the varied intellectual firepower at UW-Madison. World Dairy Expo relies on the UW-Madison’s College of Agricultural and Life Sciences (CALS) to help bring value to its educational seminars. Mark Clarke, general manager of World Dairy Expo, said he looks more to academia for speakers who are neutral as far as not trying to push a company or product, a definite turn off to attendees who are there to learn about how to improve their farm operations.

The agriculture industry has a pretty tight network, which makes it easy to identify the key players. "Our advantage is that we have prestigious speakers at the University, so there are lots of times we don’t have to pay as high a cost compared to someone from Penn State or something like that," Clarke said. "It really depends on the speaker."

World Dairy Expo, which bills itself as the world leader in the dairy cattle show business, is willing to pay for top speakers, but there are limits. Most speakers are "very upfront" about their fee, while industry experts might just want the cost of a trip, hotel, and a few meals covered because they are honored to speak at the expo. Those are the kinds of built-in advantages that meeting planners should be willing to exploit.

"If someone has a realistic fee, we’ll honor their fee," Clarke said. "In our business, we’re not looking at $50,000, $60,000, $80,000 speakers. If their fee is out of our range, we’re also up-front and tell them our budget only has x-number of dollars and we take a pass on it. To be speaker at expo, a lot of them view it as a career-building stepping stone. Most are willing to work with us."

In Their Sites

If you’re looking outside of Madison for your next event, and even if you’re staying closer to home, site visits are the first crucial assignments in event planning. Before even visiting a potential host city, the Internet serves as an invaluable research tool in checking out prospective destinations and the hotel and conference center venues.

This homework assignment comes before establishing a site itinerary.

"The site visit, to really get the best results you need, do your homework beforehand," Sperstad advised. "So really go online, pull down the venues’ layout, the quantities of what they have to offer, and how much will fit in what room."

On the site visit, Sperstad recommends visiting no more than three to five hotels in a single day. Even that is a pretty intense pace because planners will want to walk through the hotel with a checklist and look at what is needed in the meeting rooms, what kind of sleeping rooms they have, and what level of concierge is offered?

Advance work will include identifying the key staff, most likely the hotel manager, that you will want to talk to during the visit. Who are the audio-visual people you must see? Do you want to talk to the convention services manager? Just doing a walk-through isn’t always the best thing, and showing up unannounced doesn’t really give you a chance to obtain the information you need.

Sperstad likes to show up early, sit in the lobby, and just observe. What kind of venue is it? Who comes there? How are the reservations handled when they come in? "Do your homework and come in with a checklist that will help you have the best experience, and provide documentation for what you are doing and show your boss," she said. "When you get back to office, it really serves as your memory bank. I will often come to the site with a camera to take pictures just to help me remember, and hotels don’t mind as long as you’re not interrupting another meeting."

When told that three daily hotel visits sounds reasonable, five sounds very ambitious, Sperstad said she has flown to another city the night before, and started at 8 a.m. the next morning. Sometimes, she’s had to do more than five and she admits it was a horrible experience in which she didn’t take enough time at each individual hotel to figuring out which one was the best fit.

She also noted that the local CVB works with her in advance, a role Holcomb confirmed because bureaus take on the role of communicator, facilitator, and tackler of hot-button concerns. In working with the local convention bureau, planners should be prepared to field a lot of pointed questions so that CVBs can get a sense of their goals.

"The site visits are linked to the CVB," Holcomb said, "because planners often send us their specs. We put together preliminary information, but in order to make a decision, they need to come and see Madison, see the hotels and see the convention centers."

For site visits, the GMCVB creates a schedule, including the arranging of air transportation, plans visits to hotels and to convention centers, conducts driving and walking tours of the area, and takes planners out to local attractions. An established trend is for planners to get some local flavor of the area the are visiting, so if they want to have an offsite activity during their event, the CVB will take them to places like the Aldo Leopold Nature Center or the Madison Children’s Museum to show them where they might have off-site activities.

According to Holcomb, site visits have become much more focused because meeting planners, like everyone else, are more concerned about time and budgets. "Often, meeting planners know exactly what they want to see, they keep their site visits relatively short, and they want them tailored to them specifically," Holcomb said. "In the past, planners would put ‘familiarization trips’ together with three or four or six or 10 planners at the same time for more of a general, almost vacation-like site visit. They were more interested in building relationships because eventually you might have a meeting.

"Today, there is no time for that. They normally schedule site visits only when they are seriously considering your destination."

Associations and meeting planners typically select a destination based on strength of local members. They may have a person from the local university on their board or committee who is interested in bringing a conference to Madison. During the site visit, the GMCVB will spend a lot of time linking meeting planners and association leaders with local association membership.

Diane Morgenthaler, director of marketing for the GMCVB, noted that planners also lean on local convention bureaus during the event.

"We don’t stop with contracting for a convention coming to town," she noted. "We also have a convention and event services team that really works on an ongoing basis in advance of the conference to ensure that all services a meeting planner needs are aligned, whether it’s additional catering or transportation or something special for a VIP meeting, or preparing and distributing signage for welcoming their visitors to town."

MPI Toolbox

An open source document is being developed by Meeting Planners International as a tool for planners. A collaboration of different organizations within the industry, it will contain a complete body of meeting and business event competency standards, and it’s global in scope. "What it means to us as industry is that we will be able to have a portable set of knowledge so that when we go into South Africa or Germany, or they come here, they will have a much more common level of knowledge," Sperstad said. "I would recommend that people really consider how they are matching up in their knowledge and skills with what the industry is saying to the professional planner."

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