January 2005 Article                      

Getting the Most from Your Hotel Contracts
Advice from Dee Kirby, vice president of sales, Krisam Group.

The room rate is not the most important consideration in hotel negotiations anymore, Dee Kirby, vice president of sales for the Krisam Group, explains. It is the soft dollars where you can now save the most she says. Hotels are expecting a 3 % increase in occupancy and a 3 to 4% increase in rates for 2005. So as their picture improves, it will be harder to find space. As a result, Dee advises meeting planners to negotiate in areas other than the room rate.

In order to do that, she says planners must know what they can negotiate and how rates are set. “When a hotel representative tells you they will take your RFP to their morning revenue and sales meeting and get back to you,” Dee explains, they are beginning a process where nearly every manager in the hotel is involved. It is a collaborative effort involving food and beverage, other sales managers, the revenue manager, and more.

Your rate is determined by:

• What other groups in house are paying
• Season
• Group history
• Lead time 
• Patterns
• How much you will spend on food and beverage
• Potential incremental revenue…such as golf and spa fees
• Transient demand

Soft dollars can produce overall program savings, as much as the room rate negotiation in some cases. Negotiate soft dollars as aggressively as you do the room rate, Dee recommends.

What you can negotiate:

• Room rates and upgrades. Your hotel sales representative is instructed to keep the average daily room rate as high as possible. Very rarely will you get the best rate first time. Always go back and ask for a better rate or more upgrades to Jr. Suites & Suites.
• Comp rooms. 1/50 rooms consumed is the normal group complimentary policy. Always try to have the complimentary rooms calculated on a cumulative basis versus per night basis. 
• Staff rooms. Ask for 50% off. 
• Food and beverage. Ask for 15% off, you may get 10%, but you’ll save lots of dollars
• AV. Ask for 15% off. You are sure to get 10%
• Internet charges. They can be as high as $10 a day. Negotiate them to be waived.
• Resort fees. Negotiate the resort fee as part of the room rate you were quoted. And not an additional cost. 
• If you bring in your own AV and the hotel adds a surcharge, mark it out.
• If the resort has its own DMC but your are using an outside source, mark out the DMC surcharge.
• Negotiate lower costs for holding shipments and boxes. Check with the local FedEx office. They will set up an area in the hotel at no charge, if you use their services exclusively for all shipments for your program. 

Timing:

• Resorts & major cities: Chances are you’ll get better rates Sunday through Wednesday.
• Suburban & airport properties: Thursday through Sunday offers the chance of better rates. 

“If you have flexibility in dates, always ask for any Hot dates or need times the hotel has around your dates,” Dee advises, “This is a great way of saving money.”

Get something for your attrition penalties:

What if, in spite of your best efforts, you will have attrition in either rooms or F&B? Make the most of it, Dee advises. Use the money you are paying for the empty rooms, or empty seats, in another way.

• If you have any guests doubling up, put them in singles.
• Upgrade your rooms.
• Upgrade your food and beverage.
• Add a coffee break. 

Who knows, these extras may pay off in better attendance next time.

Words or phrases you should never allow in a contract:

“Spell it out, ” Dee insists. Don’t allow vague language in your contracts. Hotel people move around, always get it in writing and in specifics. “When you see the following, cross them out and put in something real there,” she urges.

• Ample. (What is “ample” time for set-up?)
• Reasonable. (By whose judgment?)
• To be assigned. (If the hotel will not put in writing the specific function rooms or area you’ll have for your events, walk away, Dee says.)
• Appropriate. (What is “appropriate” security?)

Attrition savings:

• Be sure to count Internet and agency booked rooms outside of the block for your group. 
• Be sure that walks, comps, corporate rates, cancellations, no shows, early departures, late reservations, and pre & post rooms are counted in your group block.
• While on site, check the guest list daily to make sure rooms booked out of your block are credited.
• Try to negotiate that your excess rooms will be the first rooms to be resold.
• Negotiate that you pay for the profit on the unused rooms, rather than the entire rate.
• Add a provision in your contract that you may reduce your room block by 20% without penalty 21 days out from the start of the meeting. This can be effective on short term meetings only. 

Other contract cautions and advice:

• Always have a no-walk policy in your contract. Hotels overbook, just as airlines do. You don’t want your VIPs sent to another site.
• Negotiate comp rooms for pre-conference meetings that might be needed before your meeting takes place. Put this in writing in the contract.
• The contract is not valid until both parties have signed and dated every change. It is really important to get your signed contract back. Make sure that your contract does not have a clause which states that the contract is not valid until the deposit is received.
• Negotiate a date by which you want your contract back. Most hotels and companies now must go through their legal departments. Make the date one that is reasonable to both you & the hotel.
• The more history of your group you can give a hotel the better. Some resorts blind cut groups (reduce rooms reserved by 10 to 15% without notification). If your history is good, there is less of a chance. 
• If you have some especially difficult questions to negotiate over the phone, consider role playing with a fellow planner in your office first. This really helps the phone conversation go better. Examples might include asking for some contract leniency if you have to cancel a meeting or can’t get your rooming list in on time.
• If the bellmen, headwaiter, concierge and conference service manager have done a good job, do tip them. Front line employees prefer money to gifts. But a letter of praise about them to the general manager is always most appreciated. It could lead to a raise, employee of the month, and a good evaluation.

Dee Kirby entered the hotel/event planning business in a round about way. She has a degree in nursing but took a sharp career turn more than 20 years ago when she became part of the meeting planning industry in Florida. Since then she has worked with many hotels, including the Drake in Chicago and the Stouffer’s chain, before joining Krisam 12 years ago. 

Dee believes Krisam’s representatives take a more personal interest in their clients helping with everything from drafting the contract to after-the-event billing. Members of the Krisam Group work very closely with Dee and other sales representatives to provide good value to Krisam’s customers.

If you have a specific question about hotel contracts, please send it to newsletter@theeventinsider.com and Dee will answer it in an upcoming issue.