negotiation part 1: the art of the deal: strategic hotel ......negotiation part 1: the art of the...
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Negotiation Part 1: The Art of the Deal: Strategic Hotel & Contract
Negotiations Presented by
Robyn Mietkiewicz, CMP, CMMDirector, Global Meeting Management
Meeting Sites Resource
Moderated by
Tyler DavidsonChief Content Director
Meetings Focus
Wednesday, March 11, 2015
Today’s Webinar is worth the following credit toward the CMP
application through the CIC: Strategic Planning, 1 hour. To receive this
credit for attending simply visit:
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Housekeeping
Thank you to our Webinar Sponsors:
One live attendee today will win a
prize!
March Prize Package• Complimentary 1 night stay in a deluxe room at the Quail
Lodge Resort & Golf Club!
• Continental breakfast buffet
• High-speed internet access
• Free parking
Today’s Speaker:
Robyn Mietkiewicz, CMP, CMMDirector, Global Meeting Management
Meeting Sites Resource
rmietkiewicz@meetingsites.net
www.meetingsites.net
@MSR_Global
Learning Objectives
Understand industry trends that impact value-based negotiations
Know how to track and leverage meeting spend data for
measurable results
Review how hoteliers value your meetings based on revenue
management criteria
Examine essential hotel contract components and risk mitigation
measures
Strategic Hotel & Contract Negotiations, Part 1
Robyn Mietkiewicz, CMP, CMM
Director, Global Meeting Management
Meeting Sites Resource
714.582.6133
rmietkiewicz@meetingsites.net
Breaking Barriers
@MSR_Global Meeting Sites Resource
Industry Trends
• Continued increases in meeting demand, average daily rate & RevPAR
• Meeting budgets remain flat / more ancillary hotel fees
• Hoteliers remain focused on Hotel Revenue Management criteria to
evaluate RFPs
• Planners focus on Strategic Meetings Management (SMM) / value
reporting
• Hotel contract risk mitigation becomes an important SMM metric
ROI Trends That Reshape
Our Thinking
49% of planners feeling pressure to enhance meeting results,
measurable metrics and ROI
73% of corporate and association planners are tasked to demonstrate
cost savings
What Senior Management Thinks
Over 50% of CEO’s feel their organization is not getting maximum ROI
from their meetings and events
Over 40% of CFO’s are not satisfied with their company’s travel /
meetings spend management
Recent Surveys
Feedback from Meeting Managers
• Increased hotel and meeting support costs
• Hotel contract terms / added hotel fees &
surcharges
• Meeting value reporting to senior management and
stakeholders
Hotelier & Buyer Dynamics
Enhancing the Art of The Deal
Meeting Planner Survey Challenges
Hotelier & Buyer Dynamics
Enhancing the Art of The Deal
Hotelier Survey Challenges
• Incomplete RFPs / no history & spend data
• Understate room block and F&B revenues
• Unrealistic expectations for meeting space,
concessions and contract terms
Planner Survey – Stakeholder
Expectations
• Reduce budgets / cost savings
• Improved planner productivity
• Contract risk reduction / cost containment
• Achieve stakeholders objectives
• Enhanced attendee communications / learning
• Achieving stated stakeholder goals and objectives
• Meeting content / production delivery
• On-site meeting management / logistics
• Meeting policy / compliance
Factors that Influence Hotel Pricing &
Availability
• Sleeping Room Block / Revenue – biggest profit center at 77% gross profit
• Peak Night Pattern / Flexibility – all hotels focus on pattern selling, by
market segment
• Group Food & Beverage / Revenue – second biggest profit center at 38%
gross profit
• Room To Space Ratio – hotels use meeting space to sell total group rooms
inventory
• Ancillary Spending – projected revenue for business center, AV, production,
Internet, golf / spa, sponsored events / ICW revenue, etc.
• Meeting History – 3 to 4 years
• Season / demand over your date(s)
• Other groups in-house / their revenue contributions
Hotel and Contract Negotiation
Strategy
•Assure risk reduction and cost containment measures
•Enhance added meeting value and measurable cost savings
•Make mutual obligations and responsibilities perfectly clear
•Have an easy path and process for dispute resolution
•Achieve open and honest communications and negotiations
Key Risk Reduction /
Cost Containment Components Recap
Key Performance Clauses
Sleeping Room Attrition
Sample Hotel Contract Language
The ABC Corp may release 10% of their contracted room block 45 days prior to the
meeting and 5% 30 days prior to the meeting. In the event of attrition damages due
to the hotel, this will be based on the average room rates over ABC Corp’s meeting
dates. These liquidated damages are due to the hotel 30 days after the meeting
dates.
Attrition Clause Recommendations
• Instead of “use it or lose it” sliding scale attrition, guarantee 80% of the room
block, i.e. 250 contracted rooms x 80% = 200 rooms
• Add mitigated damages / resell clause assuring audit process / credit group
• Damages due are based on profit, not revenue, i.e. $200 x 75% = $150
Meeting Cancellation
Sample Hotel Contract Language
ABC Corp is contracting 250 rooms and cancellation damages will
apply as follows:
• From contract signing until 6 months out, damages are 50% on
sleeping room revenues and 25% of F&B revenues
• 3 – 6 months out, damages are 65% on sleeping room revenues and
40% F&B revenues
• Under 90 days, damages are 95% on sleeping room revenues and
70% F&B revenues
These liquidated damages are due to the hotel 30 days after the
meeting dates.
Key Risk Reduction /
Cost Containment Components Recap
Key Performance Clauses
Key Risk Reduction /
Cost Containment Components Recap
Key Performance Clauses
Cancellation Clause Recommendations
• All sliding scale damages based on profit, not revenue, i.e.
calculate total contracted room block x room rate x 75%
• Calculate sliding scale damages with specific dates at each
cancellation option pattern
• Add mitigated damages / resell clause to assure audit process /
credit group
• In the event of damages, apply a portion to a future meeting
Group Food & Beverage
Sample Hotel Contract Language
ABC Corp’s guaranteed F&B amount is $85,000 plus applicable taxes and service
charge. For the opening reception and dinner at the hotel’s pool area, there will be a
$3,500 event set up fee. All event support services, including lighting, centerpieces
and décor, will be provided exclusively by the hotel.
F&B Clause Recommendations
• Verify F&B spend from last year’s meeting
• Calculate estimated F&B based on meeting agenda, number of attendees and
average menu prices
• All F&B guarantees to include a 20% allowable attrition
• F&B guarantee does not include tax & service charge / add to budget
• Based on both sleeping room and F&B guarantee, waive any event set up fees
• Other than food and beverage services, ABC Corp has the option to utilize their
own outside supplier with no fee to the hotel
• 45 days out, assess your attendance / budget and finalize F&B spend
Key Risk Reduction /
Cost Containment Components Recap
Key Performance Clauses
Key Risk Reduction /
Cost Containment Components Recap
Sleeping Room Rates
• Rate integrity process
Value Added Concessions
• Prioritize for each meeting
Published Rate Clause
• No lower group rates via
website after contract signing
Hotel Fees & Surcharges
• Eliminate or reduce
No Early Departure Fees
• Covered by Attrition
Resell / Audit
• Resell / credit
accountability, percentage
of damages applied to
future meeting
Key Performance Clauses
Key Risk Reduction /
Cost Containment Components Recap
Relocation
• Accountability when attendees
“walked”
Construction / Remodeling
• No construction or renovations over
meeting dates that impact meeting,
image, logistics, guest experience
Unauthorized Changes
• Hotel not to change or alter
contracted room block, meeting
space, services without written
approval
Meeting & Event Space
• Complimentary / no sliding scale
fees
Force Majeure
• Termination without damages
Breach By Hotel
• Failure to provide services as
agreed render Hotel liable for direct
& indirect damages
Legal Department Language
• Indemnification, insurance, dispute
resolution / arbitration, bankruptcy,
successors & assigns, etc.
Dispute resolution
In event of non-performance, conduct detailed hotel audit
Cross-reference customer’s master attendee list against hotel's in-house
registered guests
• Remove any rooms out of service or under renovation
• Capture any pre & post attendee room nights
• Assess other groups in house and their room block obligation
• Assure resold rooms credits assigned to customer account
• Verify percentage of damages can be assigned to a future meeting / track
credits
Hotel Fees & Surcharges
The Goal Is To Eliminate Or Reduce Ancillary Fees
• In-room internet fee
• Fitness Center
• Receive or send fax / mail
• Meeting room set up / rental
• Accept / store / deliver meeting
materials
• Hotel / Resort fee
• A/V service charge
• Valet & self-parking
• Special event fees
• Early arrival & departure fees
• Additional Master Account set
up / administration fee
• Automatic bellman / maid
gratuities
• Outside vendor fees
• Room rate energy surcharge
Hotel Contract Addendum vs. Custom
Hotel Contract
• Generally, planner contract addendums include concession and
select performance clauses
• Often, planner contract addendums are attached to the hotel’s
contract and have conflicting performance clause language and
damages formulas
• When using addendums, have this included in the hotel’s contract
and approve any amendments to the specific clause language
Create a Custom Master Hotel Contract Template /
Amend For Each Meeting
Include:
All hotel contract components and clauses
Value added concessions (must have vs. nice to have)
Hotel fees and surcharges (eliminate or reduce)
Performance clauses (do the math and calculate on profit, not
revenue)
Legal department liability language (indemnification, insurance,
successors and assigns, dispute resolution / arbitration, etc.)
Generate a cost savings / risk reduction report for each meeting (from
countersigned contract)
Cost Savings
Metrics to Measure Success
Cost Savings Report By Meeting
Sleeping Room Rates Internet Comp / Discounts
Concessions Hotel Fees & SurchargesEliminate or reduce
F&B Comp / Discounts Preferred Suppliers
AV Production / Hotel Support Services
Master Account Discounts (for larger meetings)
Cost Savings Report Tips
• From countersigned contract, calculate savings report, by category
• Transparent metrics & be prepared to defend your math
• Update cost savings report after meeting fulfills
• Consolidate savings reports by quarter and / or annually
• It’s not about the largest savings, but the most accurate amount
Contact Risk Mitigation Report Tips
• From countersigned contract and negotiations plan, create a report for
each meeting
• Include all performance clause highlights, including cost containment
components
• Risk mitigation includes the “what if’s” and on initial report does not
require a savings amount
• Include all company legal and liability language
Plan and Think Before You Ink
• All hotel contracts are negotiable (plan and prioritize before you negotiate)
• A thorough and well designed contract is essential for a successful meeting
• Stay away from vague phrases such as ample, reasonable, to be assigned,
appropriate, etc.
• All meeting and event space to be assigned by day (if a hotel will not assign
specific space, they are not considered a candidate)
• There is no contract until both parties have signed the document
• Written changes on the contract with date and initials represent a
counteroffer
• Discuss areas of dispute and counter offers in an open and honest manner
• Negotiate an option date to sign and return the contract
• In the event of changes to the meeting dates, room block, suites, meeting
space or hotel services, create a hotel contract addendum, detailing changes
and secure mutual signatures.
Strategic Meeting Management Program (SMM)
Meets
Hotel Revenue Management (HRM)
• SMM delivers measurable value to meeting stakeholders - (Planners)
• Hotel Revenue Management maximizes revenues / profitability - (Hoteliers)
• Must assess total revenues / account value / variables over meeting dates-
(Planners & Hoteliers)
• Emphasis on overall goals and objectives and determine flexibility points -
(Planners & Hoteliers)
• Success requires open, honest communications at all stages of
negotiations - (Planners & Hoteliers)
• Determine walk away position for both sides - (Planners & Hoteliers)
Six Steps To Value-Based Negotiations
1. Utilize a strategic RFP / Assess your leverage for each
meeting
2. Evaluate all revenue contributions by category
3. Create a custom hotel contract / modify for each meeting
4. Focus on negotiating added meeting value / cost savings
and contract risk reduction
5. Track meeting history & spend, by category / individual
hotel & chain
6. From your countersigned contract, create a cost savings /
risk reduction report
Complimentary Planning Resource:
Hotel Contract Negotiations Top 10 Tips
Robyn Mietkiewicz, CMP, CMM
Director, Global Meeting Management
Meeting Sites Resource
714.582.6133
rmietkiewicz@meetingsites.net
www.meetingsites.net
One live attendee today will win a
prize!
March Prize Package• Complimentary 1 night stay in a deluxe room at the Quail
Lodge Resort & Golf Club!
• Continental breakfast buffet
• High-speed internet access
• Free parking
Robyn Mietkiewicz, CMP, CMM
Director, Global Meeting Management
Services
Meeting Sites Resourcermietkiewicz@meetingsites.net
Tyler Davidson
Chief Content Director
Meetings Focustyler.davidson@meetingsfocus.com
Questions?
Our TAKE 10 feature, offered either on our website or via our Webinar Wrap
e-newsletters, provides answers to some of the key questions we just did not
have time to get to during today’s webinar. Look for an email coming soon!
Upcoming Events
• Negotiations Part 2: Leveraging Meeting Spend/Custom Hotel
Contracts - presented by: Robyn Mietkiewicz
Wednesday, March 25th at 1pm Eastern
• The Mobility Effect – presented by: Kevin Long
Wednesday, April 1st at 1pm Eastern
On Demand - Also available for you to view at any time.
Visit (www.meetingsfocus.com/webinars) today learn more, register and
Watch Now!
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Negotiation Part 1: The Art of the Deal:
Strategic Hotel & Contract Negotiations
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