MINING THOSE IMPORTANT HOTEL RELATIONSHIPS
When the market economy shifts strongly in the seller’s direction,
one very important tool remains in the buyer’s arsenal — hotel relationships.
Robert DeLuca points to “a great hotel partner in New York City” who is working hard to rebook a program held there this past February. The original booking, said the ConferenceDirect vice president/team director, was made in 2009 when rates were much lower than usual for that market. Even though attendance numbers this year were way up and the meeting was a huge success, food and beverage charges ate into the budget. In looking out to 2017, the hotel has offered a nominal annual increase over an already discounted room rate, as well as significant decreases in F&B pricing, which it is coupling with special menus that fit the group's budget.
Relationships play an increasingly important role for Brian Landers’ clients in scenarios like these. The contract for a large citywide in 2012 in Las Vegas was signed in 2005. If the escalator were applied, however, no attendee would have paid the room rate because there was so much availability in prices across the board. Instead, the ConferenceDirect vice president/team leader tapped his relationships within this hotel company and leveraged the amount of business ConferenceDirect placed to roll back room rate pricing for 22,000 room nights. This “rational pricing” saved the customer and attendees more than $1.7 million.
“It definitely helps to work with hotels where you have relationships,” Landers said. Indeed, some of his customers won’t book a property without an already strong relationship with the chain’s national salesperson “who will fight for us.”
Complicating the issue, noted DeLuca, is that certain hotel brands are more driven towards rate recovery — at unrealistic levels. “Those brands are less likely to get my clients’ business because we are looking at fair market value vs. their revenue goals,” he said. “Still, I believe we operate in one of the few, remaining relationship-driven businesses, and when Plan A fails, long-standing partnership become paramount in a successful contingency strategy.”
What to ask for. Understanding a property’s revenue set-up is essential to negotiating in this economic climate.
1. Make sure to quantify the value of the business you are bringing to a particular property and brand. Utilize the power of numbers and history, particularly if your organization made a big commitment to one brand.
2. Learn which hotel services the hotel “owns” and which it outsources. If a hotel owns its parking garage, ask for free or discounted parking; if it owns its Wi-Fi system, ask for complimentary Internet in guest rooms. Hotels that have service agreements with third-party partners may be able to waive their revenue portion, but not their partners’.
3. Seek out less costly concessions. Airport transfers represent hard dollars to hotels, compared to room upgrades.
4. Plan ahead now. If you know you will do a program in the next year or two, begin planning for everything you need now. For example, don’t even think about adding meeting space later on. If it’s even available, dollars will be attached.
5. Prepare for higher attrition levels. After some leniency the past few years, hotels are pushing attrition levels back up. Here’s where to best work your hotel relationships.
6. Compare apples and apples. An organization that is booking the same program as five or six years ago should compare that budget with programs booked pre-Great Recession.
7. Utilize on-property and national salespeople to strategize multi-year agreements that save the customer money. Negotiating these now — especially before year's end — will motivate your hotel sales partners to offer more value-added concessions as well as the best deal in room rate negotiations.
Options are out there. DeLuca pointed to one group that typically runs a program in a peak-season, warm-weather location where it has consistently received a fair package. Moving it to a northeastern city now will make it off-season in that destination, yet the negotiation has been contentious. Unable to finalize the same package, DeLuca is looking at a warm-weather city with better availability.
“Not every city has recovered fast, so some are open to dealing,” he noted. This is especially critical to many of his non-profit clients, whose budgets have been at “bare bones” for the past two years.
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