A lively and constructive give-and-take filled the meeting room during the opening session of the Financial & Insurance Conference Planners Northeast Region 2010 Summer Meeting, held July 25–27 at the Hyatt Regency Newport Hotel & Spa in Newport, R.I. Interacting with a panel of experienced planners and hospitality partners, attendees explored the often conflicting desires on both sides of the contract equation.
The goal of the panel discussion, explained session moderator Jennifer Squeglia, CMP, independent contractor, Boston Private Wealth Management Group, was to help each side better understand the other. To that end, panelists offered their “wishes” for the negotiation process, and the wish lists got lots of feedback. Here’s a recap.
Planner Wish No. 1
“I wish hotels felt it was best to be forthcoming when they turn business away due to issues of pattern, rooms-to-space ratios, etc., instead of just saying, “Space is not available.”
If a hotel salesperson explained the situation, said panelist Donna Wikstrand, CMP, vice president, Conference Hotels Unlimited, it might lead to finding a way for the business to be booked. Perhaps some breakout sessions could be moved into a section of the general session room in order to use less of the hotel’s meeting space, or maybe the pattern could be changed.
Sounds good in theory. However, a hotel salesperson got a laugh from the audience when she asked the planners in attendance, “Can you handle the truth?” Lindsay Maloni, conference and event planner, MetLife, said yes: “I would rather hear the truth, because then I can go back to our clients and explain, and maybe we can change [an aspect of the meeting].”
Another hotelier said it comes down to relationships. “In some cases, I’d be comfortable [giving a full explanation]. With other clients, our relationship is not there yet.” And hoteliers would like some honesty from planners, too, said one. “Are you looking at an entire region or are you set on our property?” Knowing whether the property is on a short list or in a big pool of possibilities can affect how the hotel responds to a request as well.
Planner Wish No. 2
“I wish hotels understood the negative impact on a planner’s credibility that results from an attendee calling or going online and finding room rates that are considerably lower than the negotiated group rate.”
This puts us and our boss in an uncomfortable position, a planner explained, suggesting that perhaps a hotel could agree not to put up clearance-sale prices during the 30-day period in which most of the planner’s attendees are going to be registering and booking their pre- and post-meeting accommodations.
A hotelier pointed out that the negotiated group rate is not just a rate, it’s a guarantee of availability. Highly discounted rates that an attendee might find online may be for a few rooms only, and not the best rooms in the hotel. Sharing that information with attendees could boost a planner’s credibility, he suggested. Another hotelier suggested sharing the concern with your convention services manager. “The CSM is the one sitting in the weekly meetings with the revenue manager,” she said, “and the CSM is your advocate on property once the sale is made.”
Planner Wish No. 3
“I wish hoteliers realized I based my decision to meet at their hotel based on the specific space that was shown to me that would be perfect to meet my objectives. Now they are unwilling to confirm that specific space in the contract.”
The concern here is that if you’re banking on the meeting room with floor-to-ceiling windows overlooking the harbor, you need that in writing. Wikstrand suggests including a clause that says the hotel cannot reassign your space without written permission from both parties.
Planner Wish No. 4
“I wish hotels understood that they can’t have their cake and eat it, too. When we have a resell clause, and they resell the rooms, we should not be held financially responsible.”
One planner recounted an experience releasing a significant room block at an airport hotel five days before the meeting was to have taken place. Because it’s an airport hotel, with a high likelihood of reselling the rooms, her resell clause will have saved her a lot of money. (The cancellation is so recent that all the numbers haven’t yet been crunched.)
A hotelier in attendance asked about a situation where the hotel does in fact resell the rooms, but at a much lower rate. Shouldn’t the planner be held responsible in that case? One solution is to write a resale clause that is based on the hotel recovering lost profit rather than reselling a particular number of rooms. Even so, said another hotelier, some hotels might not agree to a resell clause because the dropped rooms might mean that the hotel could have booked a better piece of business originally.
Planner Wish No. 5
“I wish hotels understood that bilateral terms, reciprocity, and mutuality are critical to produce a fair contract.”
Everyone has to read all the terms and conditions of contracts. It’s arduous. The process could be cut down, one planner suggested, if hotel boilerplate contracts included reciprocal clauses (such as hold harmless and force majeure clauses) from the beginning.
Planner Wish No. 6
“I wish hotels understood the sensitivity of booking a direct competitor within the financial services or insurance industry.”
Planners agreed that the burden is on them to provide a list of the top 3 or 5 competitors that should not be booked at the same time, or the original client has the ability to walk away without financial penalty. Hotels, meanwhile, need to be sure that information is shared among all salespeople booking business for the hotel.
Hotelier Wish No. 1
“I wish meeting planners would better inform their clients on the benefits of booking a pattern that fits both the client’s needs and the hotel’s needs.”
Resort hotels, one attendee pointed out, depend on booking two groups a week. “If you book a Tuesday to Friday pattern, you’ve ruined a Thursday to Sunday pattern,” she said. City hotels, on the other hand, want to book business travelers Monday through Thursday.
A planner pointed out that something like this often comes down to “selling ourselves as experts to our senior executives. So many of them are used to doing things one way and they don’t want to leave their comfort zone.” Another planner said she could shift patterns for 90 percent of her internal clients. For the CEO, though, “I have to do everything in my power to make it work.”
Hotelier Wish No. 2
“I wish clients had a better understanding of how concessions affect the hotel’s bottom line.”
The standard today is one free room for every 50 booked. One hotelier said that planners often ask for more than this, which can affect the average daily rate that a hotel must maintain. “Don’t ask for so many concessions that profit is affected and therefore service levels may be affected,” she warned. “There are hotels that would rather go with heads in beds, while there are others that want to maintain rate integrity, and will go with 50 percent occupancy in order to maintain the rate but then have to cut staff to keep up the profitability.” A salesperson at a seasonally popular property pointed out that there are some times of year when he is more concerned with “heads in beds” because he wants to be able to keep his best staff employed 40 hours a week so they don’t defect to competitors.
A planner suggested asking if the hotel owns its own parking or audiovisual equipment. If they do, you can negotiate concessions in those areas because their profit margins are higher. A hotelier suggested customizing a concession list to the specific hotel where you’re sending your RFP. Otherwise, he said, “I might not have the opportunity to go back to you and demonstrate what I can do for you” just because of one or two standard concessions that his hotel would not be able to offer.
Hotelier Wish No. 3
“Holding space without a commitment is difficult. I wish meeting planners would keep me better informed as to where they are in the process, and manage their clients to keep to promised timelines.”
One hotelier said he sometimes holds space for two or three months and is not even sure if he’s made the short list. “I believe if a hotelier is calling to check in, it’s rude not to call back, even if you don’t have an answer yet,” commented one planner.
Hotelier Wish No. 4
“I wish clients had a better understanding of how short-term versus long-term booking affects negotiation. It’s supply and demand.”
You might assume you’d get the best rate booking two years out, said one hotelier. But it always depends. “If it’s New York and it’s United Nations week, I don’t care if you call six years out,” you’re going to pay a premium because of the high demand for hotel rooms in that week. One national salesperson said she suggests to the hotels in her chain that they “look at three-year history. Does the rate make sense? Think about the business strategically and find a rate that is profitable but that the planner can live with.”
Hotelier Wish No. 5
“I wish planners understood that attrition is not a penalty. Allowing 10 percent to 20 percent flexibility is fair as we try to manage inventory.”
Although one hotelier reported experiencing clients that threatened not to return to the property if they were charged attrition (even though it had been agreed to in the contract), attendees in general said they understood the need for attrition clauses.
Hotelier Wish No. 6
“I wish planners had a better understanding of how standardized contracts and addendums affect a hotel’s ability to bid on business.”
One hotelier’s cautionary tale along these lines involved taking the better part of a year to draft a standard contract between her hotel chain and a corporate client, but in the end, many hotels felt that the terms and concessions were so onerous they’ve been declining to bid on the company’s business. “Clients want standardized contracts,” she said, “but those contracts can eliminate the ability to negotiate further.”
Panelists included: Nancy Farmer, CMP, senior conference planning specialist, The Hanover Insurance Group; Lisa Kaplan, key account director, finance and insurance markets, InterContinental Hotel Group; Randy Rovelto, sales manager, Hyatt Regency Newport; and Donna Wikstrand, CMP, vice president, Conference Hotels Unlimited. The panel session was moderated by Jennifer Squeglia, CMP, independent contractor, Boston Private Wealth Management Group.