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Hotel Negotiation

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Hotel Negotiation

  1. 1. Successful Contract Negotiations By Marie Tamayo
  2. 2. What Is a Negotiator? A negotiator is someone who specializes in mediating agreements between two or more parties. The goal of a negotiator is to reach an agreement which will be mutually beneficial for all parties. Although he or she may represent a specific party, this does not mean that the negotiator is only interested in achieving this partys interests and goals.
  3. 3. What Is a Negotiator? A good negotiator recognizes that a mutual agreement will be beneficial in the long term. He or she can use a variety of techniques, relying heavily on knowledge of the industry, tools, established relationships. etc. A good negotiators balances the needs and desires of their clients with the reasonable expectations of the other side.
  4. 4. Hotel Contract NegotiationGood news!!! You dont have to go to a negotiation seminar to sharpen upyour ability to negotiate.We all negotiate in our personal and professional lives. We negotiate whenwe go to a garage sale, or when we want to do something different at work, orwhen we are dealing with members of the public. .Sometimes its easy to negotiate, but other times, when we are notnegotiator at heart or have a great deal at stake…. or we are upset, the taskcan be intimidating or difficult. Following are some tips that can help us be
  5. 5. Hotel Contract NegotiationDont be afraid to ask for what you want. Successful negotiators are assertive andchallenge everything – they know that everything is negotiable.State Your Needs : The other hotel needs to know what you need. It is important tostate not only what you need but why you need it.Be assertive not aggressive: Note that there is a difference between being assertiveand being aggressive. You are assertive when you take care of your own interests whilemaintaining respect for the interests of others. When you see to your own interestswith a lack of regard for other peoples interests, you are aggressive. Being assertive isa quality of a good negotiator.
  6. 6. Hotel Contract NegotiationBe quiet and listen. Negotiators are detectives. They ask probing questions and then listenThe other negotiator will tell you everything you need to know – all you have to do is listen.Do your homework. This is what detectives do. Gather as much pertinent informationprior to your negotiation. What are their needs? What pressures do they feel? Whatoptions do they have? Doing your homework is vital to successful negotiation. You cant make accurate decisions without understanding the other sides situation. The more information you have about the people with whom you are negotiating, the stronger you will be.
  7. 7. Hotel Contract Negotiation Always be willing to walk away… and came back later. In other words, never negotiate without options. If you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself, "I will walk if I cant conclude a deal that is satisfactory," the other side can tell that you mean business. Your resolve will force them to make concessions. Dont be in a hurry. Being patient is very difficult for Americans. We want to get it over with. Anyone who has negotiated in Asia, South America, or the Middle East will Tell you that people in those cultures look at time differently than we do in North America and Europe. They know that if you rush, you are more likely to make mistakes and settle for less.
  8. 8. Hotel Contract Negotiation Show the other hotel how their needs will be met. Successful negotiators always lookat the situation from the other sides perspective. Instead of trying to win thenegotiation, seek to understand the other negotiator (hotel) and show them ways tofeel satisfied.Trying to win at all costs does not workIf you "win" there must be a loser, and that can create more difficulty down theroad. The best perspective in negotiation is to try to find a solution where bothparties "win". Try not to view negotiation as a contest that must be won.
  9. 9. Hotel Contract NegotiationFocusing on Personalities, not Issues : Particularly with people we dont like much, wehave a tendency to get off track by focusing on how difficult or obnoxious the personseems. Once this happens, effective negotiation is impossible. It is important to stick tothe issues, and put aside our degree of like or dislike for the individual. Prepare Options Beforehand: Before entering into a negotiating session, prepare someoptions that you can suggest if your preferred solution is not acceptable. Anticipate whythe other party may resist your suggestion, and be prepared to counter with analternative.Ultimately you need to know what you are negotiating for in order to be successful at it… Step 1 – Visit the site
  10. 10. Step 2 -Request For Proposal (RFP) When writing anThe RFP is a request for a quote for service RFP, think about it as the first step  identifies the goals and objectives to negotiating a  provides a profile of the group contract  provides historical data Use Facility Negotiation check list. Forms PackageConsider what you need vs. what you want Pg. 41 Needs are non-negotiable (See sample of Wants can become the basis for negotiations RFP)
  11. 11. Hotel RFP What It Should Include:  Group profile (who/what the event is about)  Preferred event dates (pattern and any flexibility)  Number of attendees (if possible, include attendee profile)  Meeting space requirements (i.e. setup of each room, # of people, accessibility)  Preliminary schedule of events  Estimated food/beverage functions  Room block pattern (days/number of rooms per night)  Concessions (i.e. suites required, parking passes, etc.)  Specify if you plan to use your own a/v supplier  Conference history (past locations, actualized room pick up, food/beverage spend)  Date when proposals are due  Decision date
  12. 12. The Contract
  13. 13. The Contract Parts of Facility Contract (see Samples): Preamble Event Details Sleeping Rooms Function Space Food and beverage Outside Vendors Function Space Concessions Billing arrangements Termination Cancellation and Attrition Indemnification Insurance Dispute Resolution Miscellaneous Provisions Final Section
  14. 14. The Contract 1. Preamble: Is a statement at the beginning of a contract that identifies the partners involved with names and addresses: The intent Background Information Offer of acceptance Window of time. Etc. Recital information such as “whereas” Clauses 2. Event Details Section Include Facts about the event such as: Event Name Event Type Move-in and Move-out dates Early Arrival and departure Requirements Sponsors and facility obligations under the Americans with Disabilities act (ADA) 3. Sleeping Rooms Section: Types of rooms Numbers of rooms reserved Reservation Confirmation Complementary Rooms Cut-off Dates Guarantees Deposits Check-in/Check-out Rates Taxes Early departure fees Other Charges
  15. 15. The Contract Function Space: Should include • Basic terms • Conditions of Facility Clause Basic Terms Specify: Function Space Requirements Room rental fees Set up charges Convention Services Facility-Provided equipment Details on union contracted facilities Clause to disclose other events booked
  16. 16. The Contract Function Space - Should include: • Basic terms • Conditions of Facility Clause Conditions of Facility Clause Protects a group from physical deterioration of the premises between the time the event is contracted to the time it is held. Should address the facilities obligation if it is undergoing construction, remodelations, etc.
  17. 17. The Contract Food and beverage: Number of meal functions Guarantee date to confirm function space Expected attendance Menu and beverage Confirmation dates Gratuities details, taxes, additional fees and regulations. Attrition clause: Indicates the consequences if the event does not meet its commitment or falls bellow number projected consumption. Outside Vendors: Details the facilities exclusive services allowable and what conditions are involved to have outside vendors work at the facility.
  18. 18. The Contract Concessions: There are 2 types of concessions • Merchandise: food or refreshments sold on site (Concession stands) Hotel may allow client to set up its own concession stands If income will be shared • Contractual Agreement: One party provides something of value to the other party in exchange for something else. i.e. Hotel might offer free parking, free one day spa, etc. (SEE PAGE 132 /Students Success Guide)
  19. 19. The Contract Billing arrangements and terms: • Method of payment • Master account, third party billing etc. • Deposits • Terms • Format of billing Termination: Details termination clauses for non-performance of the contracts without any liability, and requires procedures that must be followed to terminate. Force Majeure or Act of God: Limits liability for contractual non-performance due to an event that cannot be controlled or avoided by any party. Cancellation and Attrition: Cancelation Clause – One party cancels the contract and does not provide the services outlined. Can include liquidated damages clause that estipulate the amount of damages. Attrition Clause – details the minimum requirement that have to be met by the event sponsor. Attendance, sleeping rooms, food and beverage. Slippage is usually between 10% to 20%
  20. 20. The ContractIndemnification:• One party agrees to protect the other party from liability as a result of a lawsuit from a thirdparty. Each party indemnifies the other from liability and they are equally protected.• Some State laws outline indemnification- Insurance will provide the appropriate protectionNote: To avoid litigation costs or damages, add the language that “both parties holdharmless, indemnify and defend” one another.Insurance:Outline insurance policies each party must have established:Event cancelation • General liabilityCertificate of insurance should be exchanged • Umbrella policiesIf Additions existing policies are required. • Fire liabilityIndependent Contractor Liability • ExhibitsValuable Papers and records • On-site OfficeWorkers compensation • Non-appearance• Event cancelation
  21. 21. The Contract Dispute Resolution: Outlines the right and remedies of each party. Where and how will the dispute be resolved State laws that apply in the interpretation of the contract Alternative Dispute Resolution (ADR) stipulates the procedures to be used when resolving the conflict. Arbitration: Non- court procedure using 1 or more neutral third parties Mediation: Neutral third party meets with opposing side to find a solution Miscellaneous Provisions: Includes additional provisions: Special Parking request VIPs Shuttles, transportation Final Section: Notices state who and how notices are to be delivered Assignment addresses who can assume the responsibilities the contract. Attachments are identified and clearly incorporated. Authority of signatures states who can sign the contract. Signature block (Use venue Contract Check List – Forms Package Pg. 38)
  22. 22. The ProcessStep 3:Receive the contractReview, amend, etc.Link to Contract Double TreeStep 4:Receive BEO’s Banquet Event OrderLink to BEO (Pg. 136)Industry AcronymsLink (Page 139)
  23. 23. Women are the best negotiators
  24. 24. When it comes to hotel contracts, everything is negotiable, from amenities to food and beverage. Here is what experienced corporate event managers have learned about to negotiate the best deal.Modified and adapted by Marie Tamayo
  25. 25. Develop Your Own ContractThe ideal starting point for contract negotiations is to writeyour own version of the hotel contract.Even if a hotel doesn’t accept your contract, the process ofwriting it will help you get familiar, learn and ultimately clarifyclauses in the contract. It will become a guide line of whatyou want included in the hotel’s contract. Whilenegotiating, you can also add clauses from your own contractto the hotel’s standard contract.Writing your own contract allows you to protect yourselfagainst problems you’ve had at other events and to providefor the specific needs of your attendees.
  26. 26. Get Everything in WritingIf the hotel doesn’t accept the contract, you may sendthe hotel a prioritized list of items you wants included inthe hotel’s contract.These items should not surprise the hotel. By thecontract- negotiation phase, the hotel should know yourbasic needs for the event, based on your request forproposal (RFP) and subsequent conversations.As you’re establishing your relationship, you shouldtalk about your wish list the whole time.Do not rely on the fact that you talked about it. Put itin the contract.
  27. 27. Read Every WordRead every word of your hotel contract, but read it three timesKeep an eye out for hidden fees as you read the contract.During negotiations, ask the hotel about each of its chargesAlways try to negotiate away any charges that do not apply toyour guests.Hotels often add a maid-gratuity charge to the cost of the roomwithout telling the occupant or the event planner. Make sure thisis clear on the room rate section of the contract.There are new policies and practices in the industry, such asearly-checkout fees, extended-stay fees, etc. . Ask the hotel fora copy of its registration policies, including a breakdown ofcharges for rooms, food and beverage, and other fees.
  28. 28. Negotiate For AmenitiesYou can negotiate for specific amenities to beincluded in a contract for free or at discounted rates.Free parking, free local calls, no charge for 800numbers, Internet service, access to the healthclub, complimentary shipping and receiving, roomupgrades, airport transfers, and the use of hotel propsand décor.You can also ask the hotel to exclude some of theseamenities in return for lower rates or discounted fees.Providing the hotel with historical information aboutyour attendees can help you negotiate amenitiesaway.
  29. 29. Specify PenaltiesMost hotel contracts include specific penalties if YOU fail tocomply with the terms of the contract, but many do notinclude penalties if the HOTEL cancels your event or failsto meet other terms in the contract.Consider “no competitors” clause in a hotel contract ifnecessary.Included penalties to protect your client if the hotel breachesthe contract.Last minute changes cost money ….Concessions
  30. 30. Sell Your Event to the HotelIf a hotel recognizes the value of your business, it will be morewilling to negotiate in your favor. To help the hotel recognize thisvalue you have to know what your meeting is about and what it willbring to the facility.Emphasize the aspects of your event that will bring thehotel revenue. For example, a typical hotel makes a 70- percent profit margin on sleeping rooms 20-percent profit margin on food 70-percent profit margin on beverageOther hotel assets, such as meeting rooms, do not providethe hotel significant revenue. In fact, if you don’t usethem, they’re likely to sit empty during your event. Becauseof this, free meeting space may be easy to negotiate.
  31. 31. Partner with the HotelMake small adjustments to your meeting in the hotel’sfavor, such as booking your event over non-peak days likeMonday, Tuesday, and Wednesday, or booking multiyearcontracts. These concessions may give you more leverageduring negotiations.• Keep the needs of your sales manager in mind• Be flexible with the hotel – They will be flexible with you• Be fair – They will appreciate it
  32. 32. LeverageLeverage multiple meetings at same location. One of the moreeffective strategies to saving money is to hold the bulk of yourevents throughout the year at the same property. Hotel salesmanagers are looking to achieve certain revenue numbers thatthey are likely to show more flexibility to a client who theyknow will return throughout the year vs. a one time client.Leverage total number of guest rooms for the event. Hotelsales managers will show flexibility on meeting room spacecosts and even catering expenses if they know that an event willincorporate a block of rooms. Guest rooms offer a greater profitmargin than any other event service.Leverage additional discounts on guest rooms. Sales managerswill also discount guest rooms or provide their clients with thelowest rate at that time. Event planners should compare theprices that sales managers provide against any corporatecontract already established with that hotel -- especially if its achain -- to secure the best price.
  33. 33. Do no negotiate against yourselfNever negotiate against yourself• Once you make an offer, wait for a response beforemaking another offer. By waiting, you avoid thepossibility of rejecting your own offer and makingfurther concessions in a revised offer.• If you dont wait, it encourages the other side to holdoff its response in hopes of getting a better offer, andyou lose the opportunity to learn from the other sides Do not negotiateresponse. against yourself
  34. 34. Ask QuestionsThroughout the contract negotiation process, ask open-ended questions about the contract terms and how the hoteloperates.Can you tell me more about your check-in and check-outpoliciesAsk about in-room amenities: Do the rooms have arefrigerator that’s usable for more than a mini-bar?” Inspect the rooms personally. Ask Questions Ask if the hotel uses union labor. If so, make sure you knowthe hotel’s labor policies so you don’t run into extra fees.Ask who are their recommended vendors.
  35. 35. “The best negotiating tool is a smile” marie@planaheadevents-cgmiami.com Tel- 786-238-9110

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