Negotiating the Perfect Multiyear Contract

Long-term contracts—three, five or even ten years—can save you money, especially if you book during a hotel or resort’s slower times. “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. Here’s what to focus on.

Plan B: Bailing Out Early

Make certain the contract allows you to end the relationship under three circumstances:

Material breach: if the venue simply does not live up to its contractual commitments;

Force majeure: fire, flood or other disaster beyond the control of the provider;

Discretionary: 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.

Other Considerations

Site inspections: for your own protection, require a standard on-site inspection leading up to each meeting date.

Concessions: what can you expect in return for signing a multiyear deal? You 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 more leverage you have to win concessions.

Negotiating: never, ever accept the hotel’s first offer, experts agree. You know from experience that hotels always leave wiggle room to negotiate down. Remember that high traffic times mean less flexibility on pricing.

The benefits are not limited to cost savings. “There is a great deal of time and effort that goes into the first year,” says Berglund. On both sides, the second time around and beyond should be easier, and the relationships already formed can be leveraged. “After year one, that hard work really starts to pay off.”

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