I love this question! It is a very common one, especially from first-time clients that I’ve worked with. I think that is partially because it is an obvious cost that impacts an event’s bottom line and it is one that many properties are often willing to waive. However, since hotels (and other meeting venues) are in business to make money, the real question to my mind is – under what circumstances would they give me free meeting space? If I can answer that question, then I just might get free space for my client’s event…
To figure this out, I start with something called the Rooms-to-Space Ratio (sometimes called Space-to-Rooms Ratio). Simply put, this is a comparison of the percentage of guest rooms in the hotel that a group will use, compared to the percentage of meeting space that the group needs. For example, if you are using 50 rooms in a hotel that has 500 total guest rooms, then you are using 10% of the guest rooms. Similarly, if you are using a ballroom that is 5,000 square feet in size and the hotel has 20,000 square feet of meeting space, then you are using 25% of the available space.
A good rule of thumb is that if your guest room percentage is equal to or higher than your meeting space percentage, the hotel will be willing to give you the space for free (or sharply discounted). The greater the difference is in favor of guest rooms, the more willing the hotel will be to give you the space for free. Now, there are some key modifiers to the ratio (such as the contracted rate for the guest rooms, when you want to use the space, and which specific rooms you want to use) but examining the basic percentages is a good place to start.
What happens if the group has a poor Rooms-to-Space Ratio (lots of space and few guest rooms)? Now you have to pull out the big guns – and your group history. Show the hotel that the value of your business is high enough and they’ll negotiate with you on the space rental fees. Your group history can give you the documentation you need to make your argument stick. Remember what I said about them being in business to make money? I know of groups who use a lot of meeting space and fill relatively few guest rooms – but they get good discounts on room rental because their planner could show (from their group history) that attendees who did stay in the hotel would spend a lot of money in, for example, the bar and the restaurant. Hotels are willing to take a loss in one area (space rental) to gain a larger profit in another (outlets). Incidentally, this is also why many properties do not charge a room rental if you are doing a lunch or a dinner in the room. The money they make by catering the event more than offsets the money they “lose” by not charging a rental fee.
OK, so what if the group has a poor Rooms-to-Space Ratio and a small economic impact for the hotel (or no group history)? Here is where you might have to get creative – and flexible with your dates. Can you meet during slow periods at the hotel? This could be a certain day (or days) of the week or certain times of the year. When demand for space is low or nonexistent, a hotel is much more willing to let you have the space for free simply to get some business into the property, even if it is not as profitable as they might like. After all, if the hotel has no events, then those profit centers produce no income at all. Another option to consider is to look for gaps you can fill in the hotel’s schedule. Perhaps they have a group that is using a lot of guest rooms but little meeting space. If that is the case, your large meeting space needs and small guest room requirements might fit perfectly – and they’d be willing to comp the space as an incentive for you to book with them.
I have frequently heard in industry trainings that “everything is negotiable”. That is true – to a point. There are limits but you can always ask... However, if I know what the other side is able and likely to do, then that does give me a slight edge in negotiating. At the very least, it allows me to understand the constraints that my opposite numbers in sales have to work within, as well as allowing me to demonstrate knowledge that reveals me to be a good partner for them to work with (at least, I hope that’s how they see it). I have also found that knowing what is possible and being realistic about the things I ask for when negotiating with hotels has led to more successful contracts (i.e. getting more of what I want) than starting out asking for the sun and the moon.
~ Karl Baur, CMP • Project Director, RDL enterprises