Most meeting professionals know how much their meetings cost. But do you know how much your meeting contracts cost? Do you how many hidden expenses are buried in "standard clauses" waiting to break the budget? While identifying those hidden costs won't necessarily eliminate them, at least you will be able to plan for them, and at best you can negotiate them out altogether.
So what are these hidden costs? Some aren't so very hidden. These include cancellation fees, slippage charges, and attrition clauses. Everyone understands that such charges will be incurred if certain events do or don't take place, but the amount of those charges and the method of calculation often is obscure. A calculation for damages based on a hotel's "recouping its lost income" is a hidden charge because the group can't determine the amount of damages on its own. Cancellation, slippage, and attrition clauses should be calculated by an explicit, understandable formula. Then these charges can more easily be negotiated.
For example, one hotel recently proposed a food and beverage slippage fee of 100 percent of each per-person plate charge. The hotel said that this was its "lost profit." But there is not a $24 per-person profit on a $24 per-person meal. By knowing the formula, the group was able to negotiate a smaller slippage fee.
What Does Basic Get You? Most hotel contracts state there will be no charge for a basic meeting room setup. But what does "basic" mean? Unless the contract spells it out, those are hidden costs. The same goes for other equipment rental fees, security, clean-up/trash removal, storage, special electrical or telecommunications needs, etc. These costs can be enormous, and usually the hotel contract fails to address these charges at all, putting the group at the hotel's mercy. This is especially true when the group has agreed that certain services will be provided exclusively by the hotel or its exclusive contractors. In such cases, costs may be not only hidden, they may be entirely removed from competitive market forces.
Other examples of hidden costs include service charges or gratuities, taxes, labor costs linked to a requirement to use only local union personnel, permit fees, and minimum guarantees. Even known expenses, such as deposits, can also include hidden costs. If a group is required to prepay a portion of the estimated master account, there is a cost associated with acquiring those funds or redirecting them from other activities, and, of course, with the time-value of money.
ADA Compliance: Be Careful The Americans with Disabilities Act--another distinct area of potential hidden costs--is worth special focus. The ADA requires that places of public accommodation be reasonably accessible to persons with disabilities. There are two areas to consider: physical accessibility (e.g., barriers), and auxiliary aids (e.g., braille and interpreters). Both the group and the meeting facility are jointly and severally liable under ADA rules. Thus, unless that liability is shifted by contract, a group could be held liable for the cost of physical barrier access at a meeting facility, such as ramps or wider doors. An exception to that general rule might apply when the physical barrier is created by the group itself. If, say, a group has a stage erected for speakers but it is not accessible, the group likely should be responsible for the costs of a ramp.
Similarly, with the costs for auxiliary aids, it is unlikely that responsibility can be passed on to the facility, nor should it. The meeting sponsor generally is in a better position to determine the need for translators, etc. Even so, these costs are hidden if the planner does not know who will supply these services and how much they will cost.