Is a better economic climate coming? Will attendees be in a better economic position to travel to meetings? How quickly will hotel rates climb? With all these questions swirling, here are some thoughts.
Group Business Remains Attractive
With the volatility of the corporate market, nonprofit group meeting business remains attractive to hotels. Groups that are in a position tofor future meetings will find tremendous values in cities of all tier levels. Nonetheless, groups should remain prepared to “sell” the value of their business to the hotels in order to get the best deal. This includes using a request for proposal document to explain the group's mission and purpose and the group's history and meeting expenditures, in addition to the group's needs in terms of rooms, function space, and concessions.
Groups should also remember one basic rule of: If you don't ask, you don't get. Groups should examine their expenditures from recent meetings and ask for concessions from hotels that will eliminate or reduce costs. Such concessions can include discounts on food and beverage and waivers of Internet and other on-site charges. To get groups to spend more at their meetings, many hotels are offering a rebate equal to a percentage of the total master account expenditure. The bottom line? Groups should share their cost concerns with hotel salespeople and ask for their assistance in cutting meeting costs.
Rates: Difficult to Determine
I often say that trying to determine if a rate being offered by a hotel is a “good rate” is like trying to hang onto a greased pig. Given that rates depend on so many variables, it remains difficult to make such a determination. Yet, in order to be enforceable, must include a confirmed rate (or, for future contracts, a current-year rate with a cap on annual increases). So what should groups be doing to keep hold of that pig?
I recommend negotiating a confirmed rate that meets your group's needs and then including a rate “caveat” statement that the hotel will not offer any lower rates over the same dates (excluding airline crew and corporate rates), and if this occurs, the hotel will, at the group's option, stop offering such rates or offer them to the group's attendees as well. Such a clause is really the best way to ensure that the group will be in a good position to promote its conference. Note that this clause only applies to the hotel offering the lower rates — not to an Internet wholesaler (such as Priceline or Hotwire) offering such rates, as it is impossible for the hotel to control promotion of resold rooms .
Fees: What If Stormy Skies Are Headed Your Way?
Attrition fees continue to be a source of anxiety and frustration for groups. While the group should do its best to select a room block that reflects its history and future projections, changes may occur after the contract is signed that might cause the group to incur attrition fees. So how should groups approach these stormy skies?
First, the group should assess its room needs and develop a room block that accurately reflects such needs — and perhaps even less than its needs, just to be safe. As I frequently remind our clients, it's always better to shop for more rooms than it is to pay attrition fees.
Next, the group should determine what it can offer to the hotel as an incentive to revise the room block. Such offerings can include increasing food and beverage expenditures, reducing function space, and booking another meeting at the hotel.
After this internal evaluation, the group should contact its hotel salesperson and discuss how to avoid attrition fees that certainly would damage both the group and the hotel. Many hotels are receptive to such discussions, provided that the group expresses its commitment to filling the room block and makes an offering back to the hotel as noted above. When such agreements are reached, it is important to ensure that they are included in an addendum to the contract that is signed by both parties. Note that the group should include the hotel'ssales office and the city's convention and visitor's bureau in communications, making it possible for them to provide assistance.
If the hotel is not willing to make adjustments to the contract, the group should do its best to fill its room block and collect information on-site at the meeting as to where attendees stayed during the meeting, so that it is prepared to compare this information with the hotel's room utilization count. It is imperative with any attrition situation that the group receives the appropriate information and documentation from the hotel so that it can verify its own room block pickup as well as the number of rooms available for sale by the hotel and the number of rooms sold by the hotel.
With the possibility of a storm approaching, groups must monitor their radar and have discussions early on with hotels regarding the need to adjust the contract.
The ‘Tax Man’ Cometh?
One trend that we've seen developing and that we expect to see more frequently is the push by cities, counties, and states to revise revenue codes so that attrition fees will be subject to both sales tax and occupancy/lodging tax. This development is unlikely to come as a surprise, because governmental entities are seeking new ways of generating revenue in these tough economic times.
If the hotel claims that the attrition fees are subject to tax, the group should ask for a copy of the applicable revenue code(s) so its lawyer may verify such assessment. If the attrition fees are taxable, the group might consider using this as a way to lower the base amount on which the fees are calculated.
Barbara Dunn is a lawyer and partner with Howe & Hutton Ltd., a law firm that specializes in representing groups in the meetings, travel, and hospitality industry. She can be contacted at firstname.lastname@example.org.