When it comes to overseas negotiations, facilities and contracts, failing to understand differences can lead to costly--and embarrassing--mistakes.
The rules of negotiating depend on the cultural orientation of the person you are working with. Similarly, don't expect facilities overseas to be duplicates of their American counterparts. The term conference center in Europe, for example, most often means a purpose-built facility for meetings only, with no hotel accommodations and no trade show space to speak of. Here are some basic pointers in several key areas.
Tackling Negotiations
The cut-and-dried American approach to negotiations does not often work in other countries. Building a relationship is usually far more important outside the U.S., so expect to spend time getting to know the person you will be dealing with.
In few countries is it proper to expect to be quickly on a first-name basis with your negotiating partner. It is better to be too formal than too casual.
Many veterans advise working with a local contact during the negotiation process and through the actual meeting. A destination management company, a professional congress organizer, or a sister organization based in the host country can be a valuable asset in successfully navigating business relationships in the host country. Working with the regional offices of international hotel chains can also often save a planner time and money in phone calls and faxes, and help minimize cultural misunderstandings.
Insist on dealing with the person in charge. In many countries, only this top person — a general manager or managing director, for instance — is empowered to make decisions.
When meeting outside the U.S., expect to pay substantial non-refundable deposits, although it may be possible to negotiate a letter of credit in lieu of paying a lot of cash up front.
Be prepared to pay for meeting room rental; meeting space is at a premium in most countries and food and beverage revenues account for a much higher percentage of profits in many hotels around the world. It does, however, pay to have a very good handle on your group's REVPAR (revenue per available room), showing the scope of your group's expenditures during your meeting.
Don't leave the negotiating table without exploring the following legal questions: What will be the official language for purposes of interpreting the contract? What currency will be used for payment and when is payment expected? Will disputes be settled by international arbitration? And finally, who has the authority to make changes in the contract?
Considering Contracts
Overseas convention center contracts, say industry veterans, can be quite complicated and may not offer the kinds of protection a planner in the U.S. would take for granted. For example, you may not find “Acts of God” clauses that offer you any real protection from flooding, hurricanes, etc.
Overseas hotel contracts, on the other hand, may be one-page letters of agreement, a much more casual document than Americans are used to. Your best strategy is to push the basics in writing: rates, space, dates, and costs — especially those hidden meeting room costs such as setup charges.
Be aware of the phrase “subject to standard terms and conditions.” You need to get a copy of the document that details those standard terms and conditions. Another term to look out for: “incorporated by reference”. Don't accept that phrase until you see what it means.
Unless you negotiate an attrition clause in the contract, you will be expected to pay for all the meals and room that you book.
There should also be a contingency clause in your contract. For instance, if you're holding a meeting that involves three hotels and a convention center, the clause should state that if the center space is not available, then you can cancel out of your hotel obligations.
Make sure your organization's insurance policy is enforceable in the host country. It's a good idea to have your policy reviewed by a competent broker to make sure it covers your international event.
If you are meeting in a country that levies value-added tax, make sure the contract spells out that your supplier will split out the amounts that are for VAT on all your invoices. (See sidebar on VAT, page 43.)
Facility Differences
Convention centers in Europe are used primarily for meetings, and they may be conference centers. Trade fair facilities are exhibit facilities with little or no meeting space to speak of.
In the US, convention bureaus often sell and sometimes control bookings for convention centers. Overseas centers typically can be booked directly, although bureaus will often have an important role in coordination.
Food and beverage within Asian and European facilities is usually similar to restaurant quality. And if labor unions are in place, they act more like staff, without the complex labor jurisdictions of many U.S. facilities.
Convention centers outside the U.S. are generally not subsidized by the government, so expect to pay more for their rental and services. Some planners advise budgeting $500 to $1,000 more per delegate and creating a contingency fund that is 15 to 20 percent of your overall budget.
Pricing structures at international convention centers differ significantly from that of U.S. facilities. Some charges that you might expect to be bundled into the basic rental charge, such as staffing fees for personnel who handle registration or coat check, could show up as line item charges. Every facility is different, so be sure to ask detailed questions about what is included in the basic rental fee.
American five-star standards of hotel rating do not apply overseas. And the classification of hotel standards by stars varies from country to country. Hotel rooms, especially in older European hotels, tend to be smaller than Americans are used to. Your best strategy is to give your group a heads up so they won't be surprised by the differences.
Mega-downtown hotels and resorts are not common in Europe and many parts of Asia. So a group of 300 people often has to be split up among three hotels. For anything but small incentive groups, it may be difficult to get all rooms of an equal quality level, particularly in venues such as castles or estates.
Historically, there have been fewer nonsmoking and universal access rooms outside the U.S., but more of these special rooms are now available.
There is often no convention services department in overseas hotels, and in such cases, it is the food and beverage manager who coordinates the details with the meeting organizer.
