Long-term contracts can save time and money
As expectations for extravagant meetings balloon and budgets shrink, event professionals need to wring every drop of value they can out of their resources. One of the biggest expenses is always venue, so we asked the experts for their secrets to make every penny count when partnering with properties. No surprise, just about everything is open to negotiation if you know how to ask.
Long-term contracts—think three, five or even 10 years—can save you money, especially if you book during a hotel or resort’s slower times. How much in savings? “A three-year contract can mean a 10 percent savings,” says John Berglund, CEO of Mira Smart Conferencing, a management software firm in Clayton, Missouri.
At first blush, the idea of signing on the dotted line for multiple years seems daunting. What if you’re not happy with your choice? What if a better idea comes along? Not to worry. With a careful eye to the details, a multiyear contract can be your friend. Just insert a clause in the contract that allows you to end the relationship under these three circumstances.
- Material breach: If the venue doesn’t live up to its contractual commitments
- Force majeure: Fire, flood or other disaster beyond the control of the provider
- Discretionary: Stipulate that you need to be able to terminate with at least 30 days’ notice; often this is couched as within 30 days after the conclusion of your most recent meeting. It’s also expected that you pay any charges or fees incurred prior to the termination. It’s best practice to specifically reserve the right to cancel if the hotel or resort changes ownership, brand or star rating.
For your protection, include a requirement in the contract that calls for a standard on-site inspection leading up to each date. That way if something changes at the property, you can have it addressed or, worst-case scenario, call it off.
In return for signing a multiyear deal, you should be able to lock in the room rate (or small yearly increase), plus value-added items such as room upgrades for your executives and yourself, little or no attrition costs, F&B price breaks and free internet or audiovisual support.
Don’t be afraid to get creative in your requests, knowing that a hotel’s main goals are to predict business and increase occupancy rate. Remember: The larger the sleeping room block, the greater your leverage to win concessions.
The benefits are not limited to cost savings. “There is a great deal of time and effort that goes into the first year,” Berglund says. On both sides, the second time around and beyond should be easier, and the relationships already formed can be built upon.
The Disappearing Fee Trick
One emerging negotiating point is the applicability of new fees. It turns out that what started in Vegas didn’t stay in Vegas. The resort fee—a daily charge tacked onto a hotel or resort room rate for services guests may or may not want—began there about eight years ago. More recently, “urban fees” at nonresorts for everything from internet service to “free drinks” have started to pop up, followed by early/late check in, baggage storage or administrative fees to restock the minibar. Last year, the U.S. hotel market collected an estimated $2.7 billion for all manner of fees and surcharges, according to Bjorn Hanson, clinical professor at New York University Preston Robert Tisch Center for Hospitality and Tourism.
These are not set in stone. In fact, Lauren Wolfe, a lawyer who publishes the website killresortfees.com, suggests addressing these items during negotiations so that attendees aren’t surprised by a charge they didn’t expect. “Even if a hotel has no resort or urban fees currently, I would put it in writing in the contract, so that there is no potential issue in the future,” she says.
Jeff Kear, co-founder of Planning Pod, an event management and facility management software platform, suggests a line in the contract that essentially says, “The vendor is required to disclose all fees and charges when negotiating room rates, minimum requirements and amenities for meetings.” That way, your guests are not contractually bound to pay such fees and can simply charge them back if they are assessed without written approval.
The Bottom Line
Never, ever accept the hotel’s first offer, say the experts. By negotiating for things that add value or save time, planners can forge partnerships that help everyone reach their goals.