Approach hotel contracts with the same creativity and tenacity as planning a programme and you’ll sign on the dotted line with confidence. By Kelly Argiropulos, April 26, 2010
Negotiation is a give-and take process between two or more parties seeking to find common ground to produce an agreement. Hotel-contract negotiations involve a multitude of players on either side, all with their own agenda, yet mutual goal. The process, at times, is tedious and daunting; however, seeking assistance from colleagues, third party professionals, or, if budget permits, lawyers, can route you through basic principles to tackle the fine print with ease.
Know your event
It may be stating the obvious, but be thorough. List all requirements, address previous on-site problems and any specific needs of your event during the RFP process. If you are able to take advantage of off-peak months — flexible with your days of the week — or willing to commit to a multi-year contract, state it.
Respect your hotel partner’s time and avoid introducing small but important details after submissions are received, which could disqualify a property.
Be creative and flexible
Never underestimate an unusual request; it may be a negotiable one. A laundry list of desired concessions may not be entirely accepted line-by-line, but it will give rise to compromise. Ask for everything from the obvious (group rate, terms for attrition or cancellation, guaranteeing menu prices, complimentary guestroom upgrades and meeting space) to the unconventional (blended room rates and free amenities, including parking, health club access, Internet access, complimentary beverage service for your on-site office, or waiving shipping and receiving charges within 24 hours of arrival on-site). By sheer quantity of requests, you can forego the superfluous and focus on a fair negotiating process where both parties feel satisfied.
Embrace your inner lawyer
Hotel contracts vary in length, language and formality, from property-to-property. There is no obligation to accept an agreement at face value, since each party has its own agenda. By keeping a summary of discussions and a record of e-mails, you can delve into this database of information to amend the original contract or draft your own Addendum to Contract (a written summary of previously discussed and agreed-upon items submitted and counter-signed by both parties).
Another approach is to consider that each party is accountable to the other; however, two-way penalties are not as commonly applied in our industry.
Consider including penalties for the hotel if they fail to meet the terms of the agreement. This could include a hotel’s breach of a “no competitor” clause; not maintaining the property at the same condition as at the time of contracting; or scheduling disruptive renovations during your programme.
If volume permits, a hotel-chain contract negotiated with the banner’s global sales manager can bring you one step closer to closing the deal. Main clauses are predetermined and amendments are added to suit the destination. Above all, get it in writing.
Plan your protection
Last year, programme cancellations became an unwanted norm and highjacked our planning and execution routines. Endless hours were spent poring over hotel contracts, calculating attrition and cancellation penalties, and conceiving risk-adverse clauses to integrate into future documents. Typical cancellation and attrition clauses protect the hotel if you cancel or reduce the scope of your programme. Don’t be shy to request them as reciprocal, in case the hotel cancels on you. Also consider adding a resell clause, to reduce your financial exposure; base the damage calculation on lost profit, not revenue; and negotiate a rebooking clause to protect yourself further.
Rebooking allows you to reschedule your programme and apply penalties to future business — definitely a saviour for the savvy planner.
Approach the contracting process with the same creativity and tenacity as planning a programme, and master the art of negotiating to sign on the dotted line with confidence.
— Guest columnist, Kelly Argiropulos is vice-president of client services at Communiqué, based in Toronto.