"Since 2008, I feel like many companies have been hesitant to sign multi-meeting contracts” with hotel groups, says Danielle Cattani-Post, CMP, meeting planning services manager for McKinsey & Company in New York City.
While it’s understandable for some organizations to not want to get locked into a deal on whether and where they’ll hold specific meetings in the future, it can make good sense to sign a multi-meeting deal with one hotel company.
For instance, a multi-meeting deal can save time, effort and money if the meetings buyer likes the service and operating style of a particular chain; the chain has properties in all the destinations the buyer wants; and the buyer is reasonably sure the meetings included in the deal will go on as planned in the next few years even if there’s an economic hiccup.
Preparation Is Key
Before approaching a chain about a volume meetings agreement, a planner should do their research. First, what is the relationship between a hotel group and its individual properties? Does the company own all or most of its properties, or does it simply manage them for others who own them?
Lisa Sommer Devlin, president of the Academy of Hospitality Industry Attorneys and principal at Devlin Law Firm P.C. in Phoenix, notes, “If you approach a chain that owns a lot of its properties, that is your best bet.” Conversely, she says when a chain manages most of its properties on behalf of various owners, “You can still arrange a deal across several properties, but you’ll have to get the chain’s global sales office on your side to navigate among those different owners and help you get concessions and better pricing for each meeting.”
To reap maximum benefit from a volume agreement, a planner must also strategize which meetings to include in the package. By presenting revenue performance for each meeting being offered to the hotel group, a planner has a solid starting point for negotiating the desired elements and prices, with the global sales contact acting as a facilitator to get those meetings placed at the desired properties.
“Smart planners insist on detailed post-event reports from host properties to see what their group fulfilled and the total revenue the meeting brought,” Sommer Devlin says. “This is planners’ currency in future negotiations, where they can say, ‘Here is what this meeting will bring, so what can I get in return?’” at that meeting, or for a meeting to be held at another property in the chain.
In addition, a planner should assess and present each meeting in the portfolio based not only on its revenue, but also its flexibility. This creates additional negotiating leverage to get the desired elements and rates for all meetings in the volume agreement.
“If you can say to global sales, ‘We want to book our annual meeting at property X; give us what we want there and we’ll give one of your properties our board meeting during a need period,’ they’ll work hard to make it happen,” Sommer Devlin advises. Being able to shift the dates even one week can make a big difference for a property, and thus in the negotiating climate as well.
The Fine Print
As meetings included in a volume agreement come to fruition, there can sometimes be situations where the buyer is not satisfied with the performance of a particular property that hosted one of those meetings. In light of this possibility, Sommer Devlin suggests that specific clauses be placed into contracts detailing the types of remedies that can be pursued by the meetings buyer.
“I have seen contracts of multiyear deals where if the group is not satisfied after the first year, it can opt out of future years,” she says. “But if there is nothing in the contract and this year’s meeting was in one city and next year’s is in another, you’ll have to go to the global sales office and say, ‘We did not get the experience we wanted, and we want some form of compensation.’” The global office might be able to secure a discount on the bill for the completed meeting, but there likely won’t be any concession granted for the next meeting if the two host properties have different owners.
One other thing to think about: “If your organization has a shake-up or the economy tanks and you want to back out of the deal, it will be costly,” Sommer Devlin warns. Not only would the meetings buyer probably have to pay a penalty for the cancelled meetings, but the buyer might have to pay an additional amount for the meetings already completed, as those rates were predicated on the other meetings taking place within the hotel group. If the group drafted the contract, carefully read the entire document before signing to see if your organization agrees with all penalty clauses.
Tips for Negotiating a Volume Agreement:
- Know revenue performance for each meeting being offered to the chain.
- Ask for detailed post-event reports to see what your group fulfilled and the total revenue the meeting brought.
- Assess and present each meeting in your portfolio based on revenue and flexibility.
- Consider clauses in the contract detailing remedies if you are not satisfied with the performance of a particular property.
- Make sure you agree with all penalty clauses.