By Jule Uddfolk, CMP, President, Meeting Management Solutions inc.
Most associations book their large meetings well in advance to assure they can get the room blocks and meeting space they need in destinations that are desirable for their meeting. It is not unusual for associations to book these meetings three to four years out. However, with the down turn of the economy and uncertainty as to when it will rebound, many associations are hesitant to move forward at this time with booking their out-year meetings. Will they get lower hotel rates if they wait? What will their future attendance look like? If attendance plunges, would they be stuck with a large hotel room block that they cannot fill? These are valid concerns, but on the other hand, there is a risk in waiting. The economic pendulum is sure to swing back, but nobody knows when. If associations place the booking of their out-year meetings on hold, they may not be able to find the availability they need in the destinations they desire.
At this time, hotels and meeting venues are offering some spectacular discounts and promotions. Now is a great time to negotiate, as once the recovery begins, hotels will be more reluctant to offer generous discounts and incentives. However, the special promotions being offered are generally only valid through 2010 or 2011. Most associations already have their large meetings booked for those years. Meeting venues are hesitant to offer special deals for years beyond that, as they are hoping the hotel market will have recovered by then. (Many hotels learned a lesson after giving deep discounts after 911, only to find that the bottom did not drop out of the market as much as they thought it would.) But then, some hotels simply want to get meetings on the books, regardless of the year. So, it is important to push for bargains now, even for distant future meetings. Do this before the hotels sense recovery, making them less likely to give deals. If you put it on the back burner, you may have waited too long and lost out on recession time opportunities.
In addition to all that one does in a normal, healthy economy to negotiate strong contracts that cover all aspects of the meeting, here are some specific items for you to consider in this down economy. These can help make out-year contracts drafted in recession times more palatable and safe to sign, giving you more confidence to move forward.
- Put language in your contract saying that a guest room rate review will take place one year prior to the main meeting arrival date to ensure the rate is appropriate for the current market conditions, and that the rate cannot be increased to anything higher than the contracted rate. (This gives you a basis for negotiating the room rate down should the market continue to decline.)
- Negotiate for either no attrition penalty on your group guest room block, or if that is not possible, a very generous percentage of slippage. Hotels generally allow 10-20% slippage on group blocks. Ask for a higher percentage, perhaps 30%, and to have the slippage based on the post-meeting, final room pick-up (versus a set pre-meeting date). This will give you more cushioning should your attendance be lower than expected. And be sure to put in language to assure that any of your attendees registered in the hotel but not in your group block will get transferred into your block (regardless of the rate they are paying) to be counted towards your attrition agreement and any 1 per 50 comps you may receive.
- Be sure that the hotel does not undercut your group rates. To assure that the hotel does not directly offer individual rates for your meeting dates that are lower than your group rate, be sure you state in your contract that the hotel will automatically extend any lower individual rates to your group and your group’s attendees and guests. And do monitor this by checking the hotel’s website and calling their reservation phone line, as it is surprising how often group rates are undercut. Planners need to be diligent in this area.
- Write into the meeting cancellation policy the ability for your organization to rebook the meeting within two years of the contracted meeting dates if the program is cancelled. Limit the cancellation penalty to a low fee, which will be refundable to your organization when you re-book the meeting. Even better, if working with a large chain or single brand of hotels, try to extend this re-booking policy to any property within their chain/brand to give you better flexibility on the location in which you re-book the meeting.
- Now is the time to ask for your full list of concessions (items such as earned complimentary room nights, complimentary room upgrades and room amenities, VIP airport transportation, complimentary in-room internet access, etc.). As the hotels are now very competitive, they may be willing to be more generous with concessions.
- Ask the hotel for an across the board discount on your group master account. Some hotels have been offering special promotions of 5-7% off the master bill charges. In this way, your discount could apply to any and all items that you charge to your master account – food and beverage, audio/visual, VIP and staff guest rooms, room amenities, etc.
- Consider the value of being brand loyal, booking multiple meetings with the same brand or chain of hotel. In this situation you can develop a relationship with the brand, driving your business to them in return for flexibility and cooperation when it’s needed.
- To drive attendance, focus your negotiations on getting the best guest room rate possible for your attendees, even if it means not getting what you prefer in other areas of the contract. An affordable room rate could make or break their decision to attend your meeting.
The meetings market is certainly cyclical. Through the years as the economy fluctuated, the hoteliers and planners have taken their turns at having the upper hand in negotiations. During these down times it is critical that the two parties work together to create contracts that work so that meetings will get booked. But it is important to remember the value of good industry relationships and to be fair and not appear to gouge, as what goes around comes around. Shop hard and negotiate well, while at the same time forging strong industry relationships that will endure through economic ups and down.