Compression and demand loom for planners
Entering a new relationship can be nerve-racking. But entering a new relationship with a hotel usually comes with a detailed contract of agreements and stipulations.
Smart Meetings chatted with Cheryl M. Payne, CMP, CMM, strategic partner at INNOV8 Meetings + Events, to get her take on the current marketplace and its impact on meeting planners, and some helpful tips and tricks planners should be looking at when drafting up a contract with a hotel or venue.
State of the Market
Based on the current state of the market, Payne has seen a shift occur due to the events that transpired during Covid-19.
“All of the programs that were rebooked or canceled and rebooked during Covid over a 2.5-year period of time have shifted into the future years causing a significant demand and compression issue when contracting with hotels,” Payne said. “You’re still going to have difficulty when you’re trying to contract hotels because they’re all booked up, especially over the peak seasons, which are generally quarter one and quarter three.”
Payne advised that planners should expect a lot of compression and demand.
“It’s going to be difficult to contract with hotels or destinations that you want to be in for the foreseeable future. All the way out to at least 2025 right now, maybe even 2026, depending on your group size, or the destination, or the hotel that you want to be in.”
Organizations that are having issues booking hotels may want to consider all available options.
“Explore all possibilities and maybe explore destinations—second or third-tier cities that you never thought you would book. Because I can assure you that top tier cities, or top tier hotels even up and coming destinations are being booked,” Payne continued, “There are organizations that are snatching up those dates that are open in top tier hotels, or top tier cities. So, just be flexible and be willing to be flexible.”
Negotiate the Details
Prepare for pushback on all fronts, Payne advised.
“I am seeing more pushback than I’ve ever seen before,” said Payne. “Hotels want to make up for lost time, lost money. They want to maximize their revenue, whereas meeting planners and organizations want to maximize our savings and our value to our organizations.”
Payne referred to the average hotel profit margins to help planners to help them better negotiate their contracts.
The average hotel margins for sleeping rooms are 75%, F&B is 35%, hotel restaurant 25%, hotel spa and activities 15% and retail comes out to 15%. With this information, planners should:
- Use these averages when calculating damage in contracts for cost savings.
- Make sure you do your homework and ask the hotel what their profit margins are.
- Know your full spending in each of the categories when submitting your RFP.
One thing Payne is seeing hotels include within the agreements is internet for both the meeting space and the guest rooms. However, Payne recommends including internet requirements in your contract with the hotel.
“This is an item that you should negotiate in advance of signing a contract. If you have specific requirements for internet. I would suggest putting that in your RFP,” Payne continued, “I would also suggest asking for a flat rate for your Internet fees so that you know exactly what is going to be paid and what internet usage you’re going to get.”
Payne also suggested including a performance clause for internet use so the internet connection doesn’t drop mid-session.
Don’t Forget the Fees
Fees stack up. Planners should ask the hotel for all possible fees and surcharges including:
- Gratuities for housekeeping and bellman
- Resort or destination fees
- Meeting room rental
- Special meeting room set-up fees
- Meeting room set-up fees
- Use of meeting room electricity
- Hotel audit fee
- Payment fees (i.e. credit cards)
- Early check-in fees
“Be sure to address all hotel fees and surcharges prior to signing a contract and address all of your hotel fees and surcharges in the contract so that everybody is on the same page,” said Payne.
F&B Cost-saving Tips
Payne offered some helpful F&B cost savings tips for planners including:
- Sliding scale discount based on spend
- Locally sustainable food options
- Drinks charged at consumption
- Reduced staff meal pricing
- Compare pricing for plated vs. buffet and pray pass vs. station
- Use free hotel water stations vs. bottled water
- Look for sponsorship opportunities for your meals and breaks.
AV Cost-saving Tips
- Minimum 10% discount
- Negotiate use of your own screen/projector
- Negotiate pricing upfront with hotel
- Get AV bids from other companies
- Negotiate basic and additional Wi-Fi
- Find out if there are other groups in house for potential partnering and piggybacking on AV setups
Check Your Bill
At the end of the day, make sure your bill reflects what you agreed upon.
“Make sure that you’re charged correctly. Get everything in writing. Have a very clear and concise master account clause in your contract that ensures that the hotel needs to follow, and make sure that your charges and fees are addressed clearly, and that there are approval methods in your master account clause in the contract.”