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It is often said that everything is negotiable in hotel contracts. While that is not 100% true, there is still quite a lot that can be negotiated beyond the guest room rates, rental rates, and food and beverage prices. So how do you go about getting what you want and/or need for your event? Negotiation, of course, and that’s where knowing what you can reasonably negotiate in your contracts can make a difference. Let’s take a look at some common approaches…
There are some that believe that, if you want the moon (so to speak), you should ask for the sun and the moon – knowing that your request will be rejected and a counter offer will be put forth. The idea here is that, by asking for more than you need, you will get what you need as well as, possibly, something extra on top of that.
Others take the position that you should only ask for what you really need when putting out an RFP to hotels. This allows you to easily weed out those who cannot provide your basic needs while still giving you some choices among respondents. Anything they offer above and beyond the basics are considered a bonus.
I, and many others, tend to take a middle road of sorts. I outline the absolute minimum requirements for the event in the RFP. [Read this post for an outline of what that should include…] Once those are listed, I then will often add another layer or two of special requests. The first layer consists of the items that are desirable to get as part of the package. By themselves, none of these items are deal-breakers, but they can help make a bid more attractive to my client by providing certain perks that are of value to them. The second layer is made up of the client’s “wish list” items. These are things that will really take a proposal “over the top” but that we really don’t expect to get. This way, I ensure the event’s basic needs are met, without the hotels having to guess what those items are, and gain a few additional extras in the process that I know the client would like to have, without having the hotels offer items that are worthless to the client (and thinking those are deal-clinching incentives).
So, what do I ask for? What do I negotiate on? Well, that depends on the client and, if there are items that I absolutely must have, I am sure to include them in the RFP. Knowing what to ask for means that you, as the group’s planner, need to really know what the group requires, what would be of value to them, and what their ideal, pie in the sky, response would include. The better you can picture those three lists, the more productive your negotiations can be. Although there are those who view negotiations as “how much can I get from the hotel”, I prefer to view the process as one in which I am searching for the intersection of desires that maximizes what my client wants with what the hotel wants (yes, they want something, too – and it’s not always money!). If I can identify what the hotel wants, and can give it to them, then I can get more of what my client wants in return.
Every property is different and that will shape my approach. One may be able to negotiate on room rates but not on space rental, while another may be able to waive rental fees but cannot alter their food prices or guest room rates. As the planner negotiating on behalf of my group, it is up to me to find those areas that the hotel can negotiate on and work with them. Remember, if you cannot find an acceptable intersection of needs, you can always walk away – as can the hotel.
How do I know where the hotel can bargain? Some of it comes down to experience but, ultimately, if you don’t know where they have room to negotiate, ask them. Their goal is to book your business, which means they have an incentive to find a workable middle ground, too, and many sales reps understand that an informed opposite in negotiations can help them make it work for both parties.
While “everything” may be negotiable, I have found that being realistic about what I ask for and expect to receive in return for what I have to offer at the bargaining table is an excellent way to begin – and leads to a successful contract/partnership more often than not… And, a final thought here, if I can make the negotiations work for both sides (my client and the hotel), they are each happier with the results and my value to both of them goes up, too.
~ Karl Baur, CMP • Project Director, RDL enterprises
Showing posts with label contracts. Show all posts
Showing posts with label contracts. Show all posts
Wednesday, September 14, 2011
Wednesday, February 2, 2011
What information should I include in my RFPs?
Easy answer: Everything.
Realistic answer: Everything that matters.
OK, I realize that the “realistic” answer isn’t much better than the “easy” answer so let’s see if we can narrow down what that really means. And, since a successful event has to begin somewhere, let’s begin with the basics.
To start, you need to make sure you include basic information, such as your contact information (phone, email, address, etc), the deadline for submission of proposals, and when/how a decision will be made. But that is not all that is needed…
When I create a Request for Proposals (RFP), I am looking for a useful “snapshot” of my conference that a hotel sales manager can use to determine if they are able and willing to compete for my business. It needs to include information about what I need, any limits I have on those needs, and when and how proposals are due. Here are the key areas I cover for all of my groups:
Dates – When I want to hold the meeting. This could be a range (any weekday in October), a pattern (a Mon-Tues in October), or specific dates (October 23-26). If you have flexibility on dates or if there are dates you absolutely must avoid, be sure to include that information in your RFP too.
Guest Rooms – Simply put, how many guest rooms over how many nights do I think I will fill with my group. Usually, this is listed as X number of rooms for Tuesday night, Y number of rooms for Wednesday night, etc.
Rates – How much I am willing to pay for various items, such as guest room rates, meeting room rental, or food and beverage functions. In most cases, this is an upper limit (i.e. I can pay no more than a certain rate for guest rooms, or I cannot pay for space rental, etc.) but it can also simply be a way to share what I would like to pay for guest rooms, space, etc. I also use it as an opportunity to let the venue know if I can negotiate on rates or not and how much room I have to do that.
Space – An outline of the space requirements for the group: how many rooms, when they will be used, what types of room sets, and how many people will be in attendance for each event. Include everything you think you will need, but be realistic about your requirements. That especially applies to your estimated counts. If your group history shows that typical attendance for your meeting is 200 people, don’t look to hold space for 500 without some kind of solid reasoning (i.e. wishful thinking is not a good basis for this estimate).
F&B –A listing of each food and beverage function planned and the estimated number of people in attendance for each function. As with Space requests, ask for what you think you’ll need but be realistic about it.
AV – Indicate how much and what kind of Audio-Visual equipment my meeting will use (whether rented or brought) because this impacts the size of rooms needed for the group, as well as possibly representing another source of income for the venue (if they have an in-house AV department). It also helps paint a picture of what the group looks like for the sales rep.
Other Key Decision Points – If you have special requests that will “make or break” a venue’s chances of winning your business, be sure to include those items in the RFP – and this goes for any service or item that will affect your final decision. For example, if you need free high-speed internet access in your guest rooms, ask for it. If you can only book with a hotel that is a union property, state that in your RFP. That way, you will not waste your time, or theirs, by getting bids that you know up front you cannot accept. Similarly, if parking or shuttle rates are important, be sure to ask bidders to include that information in their proposal as well.
Group History – As we’ve discussed previously, having a solid group history helps show that your space and F&B requests (as well as all of the other items on our RFP) are reasonable and realistic for the group. I typically include a minimum of 3-5 instances of the meeting in the RFP, assuming the group has met at least that many times. For each “instance”, I will provide the date and location of the meeting (city and venue) on the RFP. With a typical large conference, this means I am sharing at least 3-5 years of history. For smaller groups that might meet 3-4 times each year, I usually only list the previous year or two to show that it is not just a “one-off” event and that there is a solid basis for my numbers. Believe it or not, hotels do look at your group history – especially for larger groups.
With each area, I will delve into more detail about the group’s needs as appropriate. Where I take each of the areas above depends greatly on the group I am working with and what they need. To go into those finer points here would take up way too much space so I will instead take the time in future posts to look at some of these RFP areas in greater detail. In the meantime, I hope this has given you enough to start thinking about your RFPs and what information you choose to include in them.
~ Karl Baur, CMP • Project Director, RDL enterprises
Realistic answer: Everything that matters.
OK, I realize that the “realistic” answer isn’t much better than the “easy” answer so let’s see if we can narrow down what that really means. And, since a successful event has to begin somewhere, let’s begin with the basics.
To start, you need to make sure you include basic information, such as your contact information (phone, email, address, etc), the deadline for submission of proposals, and when/how a decision will be made. But that is not all that is needed…
When I create a Request for Proposals (RFP), I am looking for a useful “snapshot” of my conference that a hotel sales manager can use to determine if they are able and willing to compete for my business. It needs to include information about what I need, any limits I have on those needs, and when and how proposals are due. Here are the key areas I cover for all of my groups:
Dates – When I want to hold the meeting. This could be a range (any weekday in October), a pattern (a Mon-Tues in October), or specific dates (October 23-26). If you have flexibility on dates or if there are dates you absolutely must avoid, be sure to include that information in your RFP too.
Guest Rooms – Simply put, how many guest rooms over how many nights do I think I will fill with my group. Usually, this is listed as X number of rooms for Tuesday night, Y number of rooms for Wednesday night, etc.
Rates – How much I am willing to pay for various items, such as guest room rates, meeting room rental, or food and beverage functions. In most cases, this is an upper limit (i.e. I can pay no more than a certain rate for guest rooms, or I cannot pay for space rental, etc.) but it can also simply be a way to share what I would like to pay for guest rooms, space, etc. I also use it as an opportunity to let the venue know if I can negotiate on rates or not and how much room I have to do that.
Space – An outline of the space requirements for the group: how many rooms, when they will be used, what types of room sets, and how many people will be in attendance for each event. Include everything you think you will need, but be realistic about your requirements. That especially applies to your estimated counts. If your group history shows that typical attendance for your meeting is 200 people, don’t look to hold space for 500 without some kind of solid reasoning (i.e. wishful thinking is not a good basis for this estimate).
F&B –A listing of each food and beverage function planned and the estimated number of people in attendance for each function. As with Space requests, ask for what you think you’ll need but be realistic about it.
AV – Indicate how much and what kind of Audio-Visual equipment my meeting will use (whether rented or brought) because this impacts the size of rooms needed for the group, as well as possibly representing another source of income for the venue (if they have an in-house AV department). It also helps paint a picture of what the group looks like for the sales rep.
Other Key Decision Points – If you have special requests that will “make or break” a venue’s chances of winning your business, be sure to include those items in the RFP – and this goes for any service or item that will affect your final decision. For example, if you need free high-speed internet access in your guest rooms, ask for it. If you can only book with a hotel that is a union property, state that in your RFP. That way, you will not waste your time, or theirs, by getting bids that you know up front you cannot accept. Similarly, if parking or shuttle rates are important, be sure to ask bidders to include that information in their proposal as well.
Group History – As we’ve discussed previously, having a solid group history helps show that your space and F&B requests (as well as all of the other items on our RFP) are reasonable and realistic for the group. I typically include a minimum of 3-5 instances of the meeting in the RFP, assuming the group has met at least that many times. For each “instance”, I will provide the date and location of the meeting (city and venue) on the RFP. With a typical large conference, this means I am sharing at least 3-5 years of history. For smaller groups that might meet 3-4 times each year, I usually only list the previous year or two to show that it is not just a “one-off” event and that there is a solid basis for my numbers. Believe it or not, hotels do look at your group history – especially for larger groups.
With each area, I will delve into more detail about the group’s needs as appropriate. Where I take each of the areas above depends greatly on the group I am working with and what they need. To go into those finer points here would take up way too much space so I will instead take the time in future posts to look at some of these RFP areas in greater detail. In the meantime, I hope this has given you enough to start thinking about your RFPs and what information you choose to include in them.
~ Karl Baur, CMP • Project Director, RDL enterprises
Wednesday, January 12, 2011
What is a Force Majeure Clause?
If you’ve done many contracts for meetings or conferences, you are probably familiar with the Force Majeure section (sometimes called “impossibility” or “acts of God” clauses) of hotel contracts. It's purpose is to protect the parties involved in case something catastrophic happens that makes it impossible for them to fulfill the terms of the contract and, if you are not familiar with it, you should be.
A basic clause may run something like this: “The performance of this agreement is subject to termination without liability upon the occurrence of any circumstance beyond the control of either party to the extent that such circumstance makes it illegal or impossible to provide or use the hotel facilities.”
The clause will usually go on to include examples of what qualifies for exercising the clause (disaster, war, civil disorder, government action, etc.) and what does not (such as strikes involving agents of the side seeking protection of the clause). An action date is typically included as well – the party seeking protection must notify the other party of their intent to use this clause within a certain time frame of the circumstance becoming known. The Force Majeure clause can be long and detailed or short and to the point. In either case, it should incorporate a few key elements.
First, the basic wording must be there, acknowledging that circumstances beyond the control of either the planner or the hotel may make it impossible for one or both parties to meet their contractual obligations. Immediately after 9/11, for example, many meetings were canceled due to the grounding of flights nationally for some time after the attacks – people simply could not get to meetings that required air travel. This was an event well beyond the control of the planners that made it impossible for them to meet their contractual obligations to hotels.
Second, including examples is a good idea. That helps make clear when the clause can be used and when it cannot. If there is a specific circumstance that concerns you, be sure to include it if the hotel does not have it in their existing language. For example, if you are concerned about hurricanes, include that in the list of examples. If you work with government groups, failure of the legislature to pass a budget may mean that the group will need to cancel – government action (or, in this case, inaction) could make it impossible for the group to meet its obligations.
Third, do include a “window of action” to make a decision. Once notified that a particular circumstance exists that could be a problem, immediate action should be taken – too long of a delay in activating the Force Majeure clause effectively means that you agree to continue with the contract as written.
Finally, and this one is the most important in my mind, the clause must be reciprocal. This means that it imparts the same protection to both parties. At one time, I saw many contracts with Force Majeure clauses written so as to provide protection for the hotel but none for the group contracting with them. So, a hotel could say that the recent earthquake made it impossible or unsafe for them to meet their obligations to the group but the group had no such option available to them (contractually). Fortunately, this has changed considerably over the years and most hotel contracts now do have reciprocal language here. Double-check it, though. Occasionally, I will still see one that protects one side and not both. When that happens, I make sure to change the clause to protect both parties.
~ Karl Baur, CMP • Project Director, RDL enterprises
A basic clause may run something like this: “The performance of this agreement is subject to termination without liability upon the occurrence of any circumstance beyond the control of either party to the extent that such circumstance makes it illegal or impossible to provide or use the hotel facilities.”
The clause will usually go on to include examples of what qualifies for exercising the clause (disaster, war, civil disorder, government action, etc.) and what does not (such as strikes involving agents of the side seeking protection of the clause). An action date is typically included as well – the party seeking protection must notify the other party of their intent to use this clause within a certain time frame of the circumstance becoming known. The Force Majeure clause can be long and detailed or short and to the point. In either case, it should incorporate a few key elements.
First, the basic wording must be there, acknowledging that circumstances beyond the control of either the planner or the hotel may make it impossible for one or both parties to meet their contractual obligations. Immediately after 9/11, for example, many meetings were canceled due to the grounding of flights nationally for some time after the attacks – people simply could not get to meetings that required air travel. This was an event well beyond the control of the planners that made it impossible for them to meet their contractual obligations to hotels.
Second, including examples is a good idea. That helps make clear when the clause can be used and when it cannot. If there is a specific circumstance that concerns you, be sure to include it if the hotel does not have it in their existing language. For example, if you are concerned about hurricanes, include that in the list of examples. If you work with government groups, failure of the legislature to pass a budget may mean that the group will need to cancel – government action (or, in this case, inaction) could make it impossible for the group to meet its obligations.
Third, do include a “window of action” to make a decision. Once notified that a particular circumstance exists that could be a problem, immediate action should be taken – too long of a delay in activating the Force Majeure clause effectively means that you agree to continue with the contract as written.
Finally, and this one is the most important in my mind, the clause must be reciprocal. This means that it imparts the same protection to both parties. At one time, I saw many contracts with Force Majeure clauses written so as to provide protection for the hotel but none for the group contracting with them. So, a hotel could say that the recent earthquake made it impossible or unsafe for them to meet their obligations to the group but the group had no such option available to them (contractually). Fortunately, this has changed considerably over the years and most hotel contracts now do have reciprocal language here. Double-check it, though. Occasionally, I will still see one that protects one side and not both. When that happens, I make sure to change the clause to protect both parties.
~ Karl Baur, CMP • Project Director, RDL enterprises
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