A former hotel sales exec shares insights from the other side of the table
In the 1980 comedy film Caddyshack, Carl Spackler, the greenskeeper at Bushwood Country Club, is trying to exterminate gophers invading the golf course.
The scene opens with Carl fashioning a sculpture of the gopher’s friend, the squirrel, out of plastic explosive C4. Turning to the camera, Carl says, “My enemy is an animal. And in order to conquer him, I have to think like an animal and, whenever possible, to look like one. I gotta get inside this dude’s pelt and crawl around for a few days.”
Meeting managers need to do the same: Think like a hotelier and see things from the hotel side.
How Do They Operate?
From the hotel perspective, a key to negotiating is the fact that hotels sell a perishable commodity—guest rooms. If the sales manager loses a sale and a room goes empty, the hotel will never recoup that revenue.
Hotels can make up to 80 percent profit on sleeping rooms, while catering makes only a 40 percent profit. The highest profits come from the casino, golf, and spa. Meeting groups not only fill guest rooms and eat catered meals, they also use these amenities. With this in mind, the priority in a hotel is to maximize the number of group rooms occupied by managing the three assets they sell and control: space, dates, and rates
Space, Dates, and Rates
Hotel salespeople are trained to allow the planner to choose any two of these three during negotiations, and the hotel manager can quote on the third. Planners should think about which two are their priorities, and which they can negotiate.
1. Space—Typically, corporate hotels such as Marriott, Hyatt, or Hilton are built with meeting space based on 100 square feet of space for every room they commit for a group. For a 500-room hotel with 100 rooms per night of transient demand, the maximum group commitment would be 400 rooms, so a modern corporate hotel should have 40,000 square feet of hard-wall meeting space.
The problem occurs when a group wants to book a smaller number of rooms and a disproportionate amount of meeting space, because that prevents the hotel from booking a better piece of business that uses less space. If you can reduce the amount of meeting space you need to get to the 100 square feet per room ratio, you can negotiate a better package.You can do this by using the same rooms for meetings and meals, not holding space past 5 p.m., and using your general-session room as an exhibit area or breakout.
Since the group room block will taper up and down with the flow of the group, the amount of meeting space used should rise and fall as well. Depending on the market, hotels plan on $100 to $250 per person in daily catering. If your group is heavy on meeting space, a good catering spend can offset that. Also, ask your sales manager if there are any citywide conventions on your preferred dates, because citywides host their events at the convention center, freeing up the hotel meeting space.
2. Dates—Always ask your sales manager about the hotel’s peak and valley time periods. Peaks and valleys work on both a seasonal basis and on a weekly basis. If you can be flexible with the season you’d like to meet and with the days of the week that you prefer, you will get the best rates.
Generally, in most corporate and convention markets, spring and fall are the highest-demand times and have the highest rates. Summer and winter are typically slower, with better deals. Ask if any groups have canceled or reduced their blocks and if you can book into the released space.
Day patterns are critical to hotels. Planners may prefer a Tuesday arrival, but then the hotel would not be able to fill the Sunday or Monday prior. Hotels prefer a Sunday-to-Wednesday or a Wednesday-to-Saturday pattern, so if your group can work with those patterns, you have added leverage in your negotiations.
A strategy taught to hotel sales managers is: “It’s not what you book, it’s what you move.” To get the best deal, be flexible on your dates.
3. Rates—Before you begin negotiations, look up the hotels online. Also check the discount travel sites and the travel-review Web sites like TripAdvisor.com. Target a 15 percent to 20 percent discount from the rates you see.
During negotiations, hotel sales managers may lead with a first quote, move to a fall-back quote, then a “lose it” rate, so always ask if the quoted rate is the best they can offer. Be sure to discuss all the other revenue streams your group will generate, as well as the price points you are hearing from competing hotels.
The best strategy is to call competitive hotels in the area and shop one bid against the other. Be sure to tell each of them they are being shopped for a competitive bid, so sales managers speak with their sales directors to get the best rate.
Last but Not Least: Concessions
Concessions are dictated by group size, dates, catering needs, and whether or not there is additional demand over the dates you are booking.
Most hotels will extend one complimentary room for every 50 occupied, but why not ask for one per 40 or one per 35? Also ask for a suite for your VIPs or hospitality suite. If the hotel views your group as an attractive one, complimentary rooms and upgrades are not just negotiated, they are an expected courtesy.
Ask the hotel to sponsor an arrival reception. Unlike room rates, where a discount comes directly from the hotel’s bottom line, events sponsored by the hotel are charged against the sales department budget at cost, so hotels can extend these (within reason) without hurting the bottom line.
Tom Pasha is president of CONTACT Planning Inc. , a national meeting planning and site selection company based in Orlando. His background includes management and director positions in sales and catering for Hyatt, Marriott, and independent hotels and resorts nationwide. He also presents planning and management seminars to Fortune 100 companies, hotels, and CVBs
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