. Insider Tips on Successful Hotel Negotiations for Meetings | Northstar Meetings Group

Insider Tips on Successful Hotel Negotiations for Meetings

Experts from Experient and Omni Hotels & Resorts on how to strike an agreement that works foor both buyers and sellers.

Meetings Contract Negotiations

The interplay between meeting planner and hotel is a dance filled with intricate moves and variations. This relationship was explored in Northstar Meetings Group's recent webcast, "Building a Better Buyer/Seller Relationship". On the panel were Nancy Rosenbaum, regional vice president for third-party firm Experient, and Mary K. Guzman, director of national accounts for Omni Hotels & Resorts. Their insights will prove helpful to anyone engaged in group guest-room negotiations.

Given today's digital world, do either of you ever pick up the phone and actually talk to your counterpart?

Mary K Guzman
Mary K. Guzman, director of national accounts, Omni Hotels & Resorts

Guzman: We're seeing "no phone calls please" more and more on the [requests for proposal] that come through. So it's harder to differentiate yourself and try to have and maintain some of those relationships when everything is all online and all digital. It takes a more collaborative process and using some of our other tools and resources to develop relationships.
 
I've had some success by bringing in my global sales person, but I'm in a different scenario when representing a convention center hotel. I might have some resources that maybe smaller hotels don't have.
 
Rosenbaum: In this business, you constantly run into your business partners and peers again and again during the process, but there is less conversation at the RFP stage. Still, when the RFP comes through Cvent, you should always try to have that conversation, somehow, somewhere, on the phone.
 
I think some great advice for anyone coming into the industry is never to burn a bridge, because somewhere down the line you will cross paths with that person again. It still is a small industry in a lot of ways. Even if we're not agreeing on one term or another, we all have a job to do, and we shouldn't be beating each other up over contracts.

 

Why would planners ask for no phone contact? Does that work against the object of a mutual agreement?

Guzman: There are a couple of reasons. If planners are sending RFPs out to 20 cities and they have a deadline of 48 hours, they just don't have the time to talk with everyone. Also, some of the younger people coming into this end of the industry don't like talking on the phone. But it definitely works against the relationship and against uncovering some of the needs that might not be obvious by just reading the RFP.

Is it still a seller's market, or are things shifting back toward buyers? 

Guzman: I think it really depends on the type of hotel and maybe what city you're talking about. There are a lot of variables. From the perspective of a convention center or a hotel booking three, five, seven, even 10 years out, there will be more give-and-take. If we have a softer year, then we have more flexibility. Everything is cyclical, however, and I think we're slowly seeing the other side of that [buyer's] cycle come through a little bit in certain markets and at certain times of the year.
 
Rosenbaum: We might be relaxing a bit on the negotiations, but we still are in a full seller's market. The buyer feels it sometimes, and they say, "Why can't I get this? I've gone to this hotel for 10 years now, and all of a sudden I can't get my chef's amenities." Sometimes it takes telling the client, hey, that's a hard cost out of pocket, and we just can't do it this time.  
 
Some hotels have a very good understanding of the requests versus offerings and will ask the client, directly or through a third party, what do you really need here? A client who has completed good due diligence will come out with the exact concessions that they need. And from there, an open conversation ensues.
 
Both sides need to be very creative, ask the right questions and make sure that all of the needs of the client are being met while meeting the revenue manager's goals as well.
 
As a representative of a third party as large as Experient, I see a lot of contracts, and the best ones are created to stand the test of time, whether you are in a seller's or a buyer's market.

So has the typical buyer's list of concessions tightened up in recent years?

Rosenbaum: At one time clients got everything on their list -- like 30 things or more. I couldn't believe everything that hotels were giving. But this was six, seven years ago. Now, we're down to nine, 10 things.
 
Guzman: Again, that's looking at what is most important. Sometimes a hotel can be flexible in certain areas during one time frame and not in another. Hopefully, in the course of the conversation, everyone's needs will be met in terms of the total partnership for the single meeting.
 
Rosenbaum: Of course it helps to go into negotiations armed with facts about the destination and desired hotels. I like to go in knowing what the need dates are, what my spend is for my client.

I go in with a good grasp of what my meeting is worth. I recommend that if you haven't figured out your full F&B spend, if you're not examining those year-over-year revenue generators in the hotel and having those conversations with accounting, start doing that now.
 
Guzman: Data is running all of our lives, and sometimes a hotel will say, we need this group, so we can be flexible on these three concessions a lot more on these dates than we can over those dates. Again, it's trying to match the program with the needs on both sides.

What is happening with review dates in contracts? 

Guzman: I can tell you from our perspective of, say, a convention center hotel, we are booking the bigger conventions further out, and we always ask for a group's progressive history. And my work isn't over once we finish the contract. I have to continually monitor the group's annual pickup, and every year after their program make sure that I get the progressive history. And we're seeing more review dates in the contracts, so that if one city didn't pick up, do we have the flexibility to do a two-year-out with you and tweak the blocks? I think it's just good business to be monitoring that data constantly.
 
Rosenbaum: I like review dates -- it really helps both parties. So if you need to reduce the block, you can do so without penalty. I think that's a very creative, newer clause in the past few years. And it depends on how far out you've booked, of course; I think that dictates how many review dates you will want to have.
 
Guzman: Exactly. If we are booking out six, eight years, you know you have a review date every year, and then within that last year you might have two or three review dates.

How are attrition clauses changing? Are contracts asking for groups to fill 90 percent of the room block rather than the 80 to 85 percent of the past? 

Rosenbaum: Experient has a bit of a different perspective on this because many of our contracts are prenegotiated. We have hotel-partnership agreements with all the major brands, and so our contracts come with those concessions. If the hotel is available, then we're good.
 
But if they are pushing for 90 percent occupancy, it's very difficult, and we will go off the rails on that attrition. Obviously I see a lot of 80 percent, 85 percent, but there are some 90 percent rates out there. Super Bowl, of course, was a gigantic factor in Atlanta earlier this year. I tried to get into that city, and we had trouble. We did it at a 100 percent attrition rate. We had to prepay -- wire the money and the whole thing. It really depends on what's going on.

Some hotels are asking for daily attrition terms as opposed to cumulative. Each night is guaranteed a different number instead of a total over the terms of the contract. Have you seen that?

Rosenbaum: Yes, and I've seen pushback on that. I don't agree with it -- there is value in bringing business to a hotel. It should always be cumulative.
 
Guzman: We have started adding some 90 percent day-by-day rates over high-demand dates, especially for smaller groups that are coming in over a citywide.

Nancy, how successful are you at getting credit for rooms booked outside the block? And Mary, how do you handle requests for that credit? 

Nancy Rosenbaum
Nancy Rosenbaum, regional vice president, Experient

Rosenbaum: It really depends on the group, but it's usually difficult to get credit for rooms outside the block. Generally, I know that anything I can do prior to the date of arrival will save me in audit time. So I like to do some local checking of rates. I go to online travel agents like Kayak and Travelocity, and I look at what's happening in the city prior to arrival. I'll take note if I see a trend that the rates are very low. I'll even go on my headquarter hotel's website just to see what that rate is. And you can do that, you know -- six months out, you can take a temperature of what's going on.  
 
There have been times when hotels have graciously lowered my rate by even $100 because they had to, or the rooms would not get filled. On the flip side, if you've got demand, it really backs up the hotel's side of things. And I can see it for myself, because I'm going online and I can check what that hotel is doing. That's the beauty of the technology.
 
So anything you can do ahead of time helps to prevent awkward conversations afterward. And they can be very awkward, because you have to prove that there's credit on the room, that the group was coded correctly, all of that.
 
Guzman: We're seeing more and more contracts where we are giving credit for rooms outside of the block. Again, it's somewhat different from the standpoint of a convention center hotel, but at the end of the day, the guests are here for that conference, and the group should get credit for it most times, unless there's something nefarious going on.

Nancy, what do you do when you learn your blocked room rate is higher than the current public rate?

Rosenbaum: Well, I like to know how much we are talking about -- $30? If the rate is very high, I will first go online to verify what the hotel is charging. Then I will call my hotel salesperson. I tell them that this rate is very high, and here we are nine weeks out. This is going to displace us; what do you propose to do? That's why you should have weekly information sent from the hotel and look for anything rate-wise starting to trend.
 
My first line of defense is to give the property an opportunity to handle it, and don't just assume they're going to say no, because nine times out of 10, the property will work with me -- because I have a contract and I have a relationship. And if I'm doing multi-cities, I'm going to have multi-contracts. So I always say give the hotel a chance to work it out.

Do you have a clause in your contract saying the hotel can't advertise or book a lower rate that the one you agreed to? Mary, would you accept that clause?

Guzman: We see it routinely in contracts, and it usually states that you have a 24-hour window in order to address the rate discrepancy. Maybe it was on for one night and, for some reason, maybe it was on a pre- night, but the contract specifies no lower rates over your peak nights. So there could be some variability there.
 
Rosenbaum: It's standard amongst most contracts, I believe. But usually you have to call within a certain amount of time if you see something.

Are online travel agencies a factor for either of you? 

Rosenbaum: It's a big issue for us, because we know that hotels don't want to pay a double commission in some situations. But some of our groups aren't commissioned-based, and some are fee-based. So it depends on what the group is. But with these OTAs, Airbnb, Travelocity, Trivago -- what I struggle with sometimes lately is the consolidation of brands.
 
And at some of these agencies you're dealing with a revenue manager who is working with several different properties and managing that inventory according to their occupancy. And it gets tricky when a low rate pops up and then quickly closes out when a couple of customers get in there. I think it's tough to manage that. You have to be paying a lot of attention to what's going on.
 
Guzman: So far Airbnb hasn't been that big of a factor, but the potential goes up the more residential that comes into a downtown area. I recently read that some 50,000 apartments were opening within a 5-mile radius of downtown Dallas, so I think it will become more of a factor there and in the nearby suburbs. We had a smaller group in January that had a whole contingency from one office stay at different facilities, which unfortunately created an attrition situation for the planner. It had never happened to her before, so she was dumbfounded as to what to do about it. The same is happening in cities like Los Angeles, San Francisco and New York. They're seeing it first, but it's coming all over.

Has your approach to contracts evolved over time?

Rosenbaum: We train our Experient staff on hotel-to-hotel contract comparisons. It can be very difficult when you're juggling 20 contracts, and being educated on what each offers is important. Another thing that I train is conducting a complimentary contract review, where we take a past meeting, look at it and send it back to the client and note some things that maybe the contract did very well, other ways it was lacking, so we can improve it next time.
 
Guzman: One thing that we did as a company is we made a standard contract, so that it's the same document whether you're booking Atlanta, New York, Dallas or Chicago. It just makes things so much easier. And then there's a standard contract for big groups, a short contract for express groups, so you're not having to reinvent the wheel all the time.
 
Rosenbaum: I agree with that. I think the Omni contract is one of the best ones out there, and it does make it a lot easier, but if a client has their own contract, we always use theirs. Say we look at Mary's contract, and we'll note things like maybe the force majeure percentage is too high, and we might go back and discuss why it needs to be lower. But generally I think the cleaner, the easier the contract, the better. Some contracts are getting to be 25 pages long, and that's just too long.
 
Guzman: This kind of leads into the future of contracts. We deal with some of the high-tech companies where you don't ever even see a contract, but it's almost like a grid where we will fill in our information and then do a webcast based on all the information input and review it in real time before we come up with the final version. I believe that's the way of the future. Also, especially with the bigger associations, we're incorporating our contract into theirs, because from their perspective, they have to run it by legal, and they want to use their standard contract. And we're definitely flexible to do that.

What about response times to potential customers?

hotel-contract-negotiations

Rosenbaum: I've actually been slowing down the process a little bit because, when you're doing the RFP, sometimes it actually helps in the negotiation process. There is this pressure that we have to have responses within 24 or 72 hours. And sometimes we do. But I also have the mind-set that doing it right the first time can mean taking that extra couple of business days to really look at your inventory or talk to a catering director or anything that can answer some of those questions. I don't mind waiting for a hotel response if I'm going to get a better answer or a more thorough one.
 
Guzman: I agree with that. I find it especially hard to work on a program for 2027 and I get the RFP on a Monday, and I have to have the proposal done by Wednesday. It's just not doable and realistic.
 
Rosenbaum: This relates back to the start of our discussion. I think if you're going to need something tomorrow, you've got to pick up the phone and talk to the salesperson. It isn't necessary to rush so hard anymore, or always to rely on the technology.