Negotiating In the New Century
meeting contract is the foundation
on which everything else is built.
Work with hotels on contracts that
balance precision and flexibility.
And watch your ego: Remember, a win/
lose situation, even if you "win,"
can be more hazardous in the long
run than a win/win agreement.
Know Your Value
No matter what the current trends,
your first step in negotiating is
to know what your conference is worth
to the property. Does it take place
during the off-season, shoulder season,
or in season? Will it fill a "hole"?
How do the days of the week fit in
with the hotel's traditional occupancy?
How much is your banquet business
worth? You usually start off in a
strong negotiating position, since
much of the insurance industry's business
is considered quality business. Just
ask an hotelier.
F&B Costs: Banquet prices
have skyrocketed over the past few
years. I understand that banquet F&B
is now the second-highest profit center
in many hotels, after guestrooms.
There was a time when we felt uneasy
discussing banquet food discounts
since the profit was only 19 to 21
percent. Well, that's not the case
today. Larger profits are built into
the menu pricing. And service charges
(which are not necessarily passed
along to the banquet servers) often
go straight to the bottom line. If
you know your anticipated expenditure
for F&B and how it affects the
catering department's revenue goals,
this is an area where you could help
your bottom line.
Service Fees: Some of you may
remember the days when the hotel sales
manager explained that high room rates
were the result of added "amenities."
Things like atrium lobbies, larger
guestrooms, complimentary newspapers,
in-room coffeemakers, fitness centers,
pools, and more. Now we are charged
a "service fee" for many
of these same amenities, but rates
continue to increase. This fee may
be something you can use as a trade-off
in order to gain other concessions.
Attrition: Planners make educated
estimates on what will be needed two
or three years out. Do we really know
what the economy will be like then?
Or what changes our industries will
go through? When negotiating this
part of a contract, expect the property
to accept some of the risk by reducing
your liability-5 to 10 percent slippage
is only a starting point!
Cancellation Policy: What are
the chances of canceling? With the
continuing trends of corporate mergers
and cost reduction, canceling is a
possibility--if a remote one. Look
closely at the hotel's cancellation
paragraph and don't take it lightly.
Be prepared to pay the price if you
cancel, but make sure the cancellation
penalty is based on a percentage of
the total room revenue so that you're
compensating the hotel only for its
lost profit.Remember that an event
is only as successful as the foundation
it rests on. Lay the groundwork with
a solid contract, and then you can
enjoy the more creative tasks we all
article appeared in the January/February
2001 issue of Insurance Conference