Contract, Rate and Space Negotiation
Tips to Help You Make the Most of Your Contract
- Be familiar with your group’s meeting space and sleeping room needs. Many hotels internal specifications do not include AV. They typically reflect a maximum use of the space. To avoid last minute surprises of packed meeting rooms that can not accommodate your group, refer to past room specifications for meetings where the space was set up as you wish and the room worked well.
- If you are still unsure, you can ask the hotel for a layout of the space you want. Most hotels will provide renderings that show staging, AV, and seats mapped out. This ensures the space fits your needs.
- Consider how many attendees you expect in advance of talking with the hotel.
Note, your sleeping rooms are typically 50-75% of your total attendance. Food and beverage guarantees are typically 75% of your attendance. Tracking your past sleeping room usage or food and beverage actuals (versus guarantees) against your total attendance can help you gauge your group’s personality. If you do not have these records, the hotels you have used in the past will typically provide them to you (including singles vs. doubles).
- Compare more than one hotel in a given area. This gives you better bargaining power. The local convention bureau can help you identify the hotels that best suit you, once you have your specs defined.
- Consider the type of property you are pursuing and the time of year. Warm destinations will be more expensive in the winter, but can be a great bargain in the summer.
- Select a hotel that you comfortably fit into. Choosing a hotel that fits your group’s meeting space and sleeping room needs will help ensure better contract bargaining and treatment on-site.
- Consider possible growth. Are you planning a major member recruitment plan, more aggressive marketing of the meeting, improved programming, a hot topic bound to attract members and non-members? All of these items could affect attendance.
- If you are confident of the hotel’s location, quality, and service; consider signing a contract for multiple meetings. For example, the fall of three consecutive years. This gives you much better bargaining power, and guarantees the best treatment on-site because you are repeat business. You also get to develop a better relationship with hotel staff, which can be a great bonus in difficult times. Another possibility, consider booking all your meetings with the same chain – again, more bargaining power.
- Know how much your members are willing to pay for a room. If attendees search for alternate hotels you may not meet your block. There can be significant penalties if you do not meet your block.
- Know roughly how much you will be bringing the hotel in food and beverage, sleeping rooms, and related activities (AV, bar, spa, etc). This is all factored into your rate and can work in your favor.
- Get a copy of the menu when you get the contract. This helps prevent the hotel from raising menu prices after you negotiate a better room rate. See the attached clauses for details.
- Find out if the hotel has exclusive contracts with vendors (AV, catering, exhibit decorating).
Tips for Making the Most of Your Contract
Consider the following requests in your negotiating process:
- A complimentary room policy: [typically] 1 per 50 applied for the duration of stay and based on peak night pick-up. Note, if the room block is 50 or less, consider request a 1 per 20 perk. This may be applied as a complimentary room (i.e., for a speaker) or as a credit to your account. If not, ask for comp room upgrades for VIPs.
- No room rental fees for any meeting space with food and beverage, including the exhibits.
- Meeting room names listed in the contract to ensure exclusive use. It is not enough for the hotel to say they will provide space for the meeting. Once you have selected the best space for your needs, negotiate the exact room in the contract.
- Menus to be confirmed as and addendum to the contract, prices guaranteed not to exceed 3% growth per year. If the hotel is booked in the same year as the meeting, lock in menu rates at the contract signing.
- Group rate to be the lowest group rate in house over the contracted dates. You do not want your attendees to find out another in-house group has a better rate. Exception: if you have a small group that is taking a minimal percentage of the hotel’s sleeping rooms, you may not be able to get a rate comparable to a large group.
- Group rate to be offered to attendees 2 days prior and 2 days post meeting, based on availability. Entire room block must be made available to attendees prior to cut-off date.
- Negotiate the hotel room cut-off date as low as possible. The industry standard is 30 days. You may be able to convince the hotel to go down to 21 days if your history proves attendees register late. Even after the cut-off date, the room rate should be honored based on availability.
- A complimentary Presidential Suite during the dates of the meeting. If the meeting is less than 100 people, you may only be able to negotiate a discounted rate on a suite for the President, or ask for the group rate to be applied to the suite. The argument? This room is used as additional meeting space for private meetings.
- One complimentary microphone per meeting room.
- Complimentary use of health spa facility.
Suggested Contract Verbiage
The first rule of contract negotiations: know what you most want to get going in. We may sacrifice some of our preferences in favor of getting the exact contract verbiage listed below. These clauses are designed to protect you and the hotel. They clearly spell out your expectations and your liability.
Remember, the hotel is in the business to make a profit and the art of negotiating is a two way street. The key is to know when to give in on an issue and when to stand firm.
- The Hotel shall promptly notify Group of any construction or remodeling to be performed in the Hotel prior to or over the meeting dates and Hotel warrants that an such occurrence shall not interfere in any way with _____’s use of the Hotel. Should construction or remodeling be determined by _____ in its sole but reasonable discretion to interface or pose possible interference with ____’s meeting. ____ will be considered to have cause to terminate this contract without liability with written notice to Hotel as long as such notice is given within 30 days of ____’s receipt of notice of unacceptable construction or remodeling.
- Should the Hotel give notice of property renovations to _____, ____ in its sole discretion, may agree to meet with and work with the Hotel’s renovators, designers or construction personnel to arrange a schedule to coordinate activities of ____, Hotel and such renovators, designers or construction personnel to minimize damages under this clause. Overbooking Hotel agrees that in the event it is unable to honor an attendee’s reservation, that it will consult immediately with ____’s representative prior to the arrival date and shall honor the instructions of ____’s representative concerning which attendees will not be accommodated. Hotel further agrees that for each night Hotel will locate such attendee to another hotel of like standard, pay for transportation to the Hotel, pay for that night’s lodging and pay group an equivalent amount, pay for two five minute phone calls by that attendee, pay for return transportation to Hotel and following day, and agrees to accommodate the attendee the following day in Hotel’s facility.
- Hotel will also provide VIP amenities and a note of apology to the attendee the following day. (Also referred to as a “walk clause.”) Mitigation For any room block reductions exceeding the reduction schedule, there will be a charge of _____’s lowest single rate times the excess rooms released on the first peak night. This charge will only apply to rooms that are not resold and to rooms that remain available for sale. Prior to the billing for the reduction payment, Hotel must submit to ____ a copy of the city ledger occupancy report documenting that the rooms were not resold and were available for sale.
- The Facility agrees that changes in the room block will not be made without prior discussion and written approval by _____. ____and the Facility agree to review the room block annually and will mutually agree in writing to any revisions. ____ retains the right to revise the room block by as much as 20% up to one year prior to the conference without penalty.
- Check in with the hotel 45 days out to evaluate your room pick-up. Check again 30 days out, and then every week thereafter. This lets you know how you are doing on your room block, whether you should begin marketing your meeting more aggressively, or whether you should begin looking for an overflow hotel.
- Release rooms back to the hotel if you do not need them. This applies to both sleeping and meeting space. You want to allow the hotel time to re-sell the space. There may be a penalty if you do not pick up your sleeping rooms and the hotel can not re-sell them. There should not be a penalty on meeting space unless you are also canceling food and beverage functions. In this case, consider adding a similar food and beverage event somewhere else. It is much better to pay the hotel for food and beverage your attendees will enjoy, than to pay a fee that benefits no one but the hotel.