Three Keys to Negotiating the Right Meeting Contract - Groups360

Three Keys to Negotiating the Right Meeting Contract

by | Apr 9, 2015 | Planners

There are lots of ways to approach negotiation. Some see it as a contest between two parties with a winner and a loser.

At Groups360, we look at negotiations differently. At its heart, negotiation is about positioning a contract in terms that are favorable to you, the event planner, and to the hotels where you want to host your next event. I look at them not as a contest but as an opportunity to build a relationship.

Let’s look at how to make that happen.

Right fit

It’s a seller’s market across the board. The market conditions we saw two years ago are completely different from what we are experiencing right now.

A tighter market means that hotel sales teams and revenue officers have less flexibility when negotiating contracts. The burden falls more on corporate event planners and other meeting professionals to make their events as attractive as possible to land their top choices of hotels.

Your first goal should be to create a sense that you are bringing a great piece of business that matches the hotel’s niche, goals and “pattern.” Our team has the expertise and the data to help you with all of these questions.

The contract process itself can also reveal insights about whether a hotel is the right fit for you. I always recommend that event planners read every word of every version of a contract. More than once, I’ve had clients burned by extra language inserted in contracts without their knowledge. If this happens to you, always ask for clarification about the change, especially if you don’t understand the new language and its implications for your group.

Right value

The meetings and events industry has an obsession with price. Groups360 believes this is the wrong approach — we should focus on value instead.

I mentioned the lack of flexibility that hotels have these days. It’s critical that meeting planners include ancillary spending for food and beverage, meeting space, audio/visual, and other aspects of an event, in addition to room nights as well as historic data about prior events so hotels can see the total value of the meeting. Without those details, your negotiation is reduced to room rates and what flexibility hotels have, if any.

Speaking of room rates, one of the biggest value mistakes I see is using room rates rather than room profit when setting the value for cancellation clauses. Room profit is a better indicator of value. I always recommend establishing cancellation clauses based on the room profit rather than the room rate.

Right terms

Let’s dive into a few nuts and bolts of contract terms and how you get those right as well.

I mentioned negotiating cancellation clauses based on room profit. Hotels also want to include F&B costs, but I recommend that clients exclude F&B costs from any cancellation clauses.

Some hotels will try to negotiate a clause that allows them to cancel your event. Make sure only you have the ability to cancel your meeting.

Attrition is the most contentious clause in any contract. Nobody wants to admit that the event will not go as planned. Your best bet is to negotiate an acceptable attrition rate — I recommend 20% — versus returning rooms to the hotel.

Lastly, make sure to include in your contract that a room audit will take place within 15 days after the meeting. There will be attendees who forget to book rooms in your room block. The audit will make sure your meeting receives credit for any rooms booked outside your block.

Want help with your next contract?

Groups360 meeting advisers are experts at contract negotiation. We’re available to make sure that the process goes smoothly and that the contract is truly the best value for everyone.