5 Ways to Win an 'Impossible' Negotiation

As the meetings industry continues a slow recovery, there are some new challenges as well as some established stumbling blocks that can impede the negotiation process. 

We asked several planners and suppliers for their best strategies on coping with a few of these factors and closing the deal. Here’s what they had to say. 

Problem: In the first quarter of the year, fuel prices spiked to nearly record-high levels and the issue rocketed to the top of many a planner’s “things that keep me up at night” list.

 

“Many of our clients are seeing budgets remain at a standstill and are not able to increase their travel budgets to accommodate the changing market,” says Robyn Mietkiewicz, CMP, director of accounts and global meeting management services at the Irvine, CA-based Meeting Sites Resource.

Solution: Start at the source and try to strike a deal with the airlines. Mietkiewicz says that it can be done if planners bring their whole meetings spend to the table. “Look for opportunities to develop strategic partnerships with air travel partners to leverage volume buying opportunities,” she says.

David Gabri, president of the Orlando-headquartered Associated Luxury Hotels International (ALHI), says that negotiations on this issue might be easier with suppliers in destinations served by numerous air carriers. “Airlines operating in markets with the highest level of competition for airfares would be more open to a deal than those destinations that don’t have those kinds of competitive pressures,” he says.

 

The other option is to bring the hotels into the mix. “Fluctuation in any commodity means an increase in overall travel costs, so a review of cancellation and attrition clauses should be a part of the strategy,” says Lisa English, CMP, marketing manager of strategic meetings management at Cvent, based in Washington, DC.  

How receptive a hotelier would be to addressing these issues depends on how the individual negotiates. 

“It’s really never about fuel prices; it’s about understanding how those types of uncontrollable situations impact the hotels and the planner,” says hospitality industry veteran Mike Mason, founder of the online booking engine Zentila. “The best strategy for planners and hoteliers is to find common ground and figure out together what happens if fuel prices go up.”

D. Benson Tesdahl, a meetings and convention lawyer with the Washington, DC-based firm of Powers, Pyles, Sutter & Verville, P.C., says a planner could attempt to create a special clause for fuel prices. “The clause would stipulate that if the national average price of one gallon of gas is above a set price within a predetermined number of days before the event, then the group has the right to lower its room block by an agreed-upon percent without penalty,” he says. 

Edge: There are strategies that can be tried but they’re long shots. “Suppliers that are desperate enough for the business might agree to negotiate fuel prices,” says Tesdahl. “Though a high-demand hotel probably wouldn’t.”

Problem: Attendance levels at meetings are higher compared to a year ago, but lead times remain short. 

“I think the biggest challenge on the planner side, as lead times shrink, is finding the time to deal with the extra work,” says Mason. 

Solution: “When you have increasing attendance, the good news is that if planners use the same room block numbers as the previous year, the chance of attrition is slim,” says Tesdahl. “A short lead time is also good because the closer to the event you book the room block, the less chance there is of an outside factor causing the meeting to be canceled.”

Of course the catch is being able to find a hotel that has room for the group. “The key is to be flexible when trying to find a good fit,” says Mietkiewicz. “If the planner can help a hotel fill a gap in its calendar, there is certainly an advantage to a shorter lead time. It can give the planner some leverage during the negotiation process.”

Edge: “Most planners have gotten used to short lead times in the past few years,” says Cvent’s English. “The bottom line is to have the key clauses relating to attrition in good shape.”

But this advantage won’t last forever. Gabri of ALHI warns that things will change with regard to the supply and demand factor. “The shorter-term bookers will start to be at a disadvantage, not necessarily in the next 12 months, but certainly if you’re looking on the horizon into 2013,” he says. 

Problem: Virtual and mobile technologies are another cost center for both planners and hoteliers to deal with, while meetings procurement technologies add an additional step to the negotiation process.

Solution: Planners who have substantial bandwidth needs and attendees who expect Wi-Fi to be available put significant demands on bandwidth—especially if everyone tries to stream video. “Hotels are starting to agree to give groups Internet access for a rate worked out during the negotiation process,” says Corbin Ball, founder of Corbin Ball Associates, a meetings technology consultancy based in Bellingham, WA. “But it’s not unlimited. The attendees can answer email, but they can’t stream video without paying a higher rate. That’s a key point in most negotiations.”

According to Ball, planners are in the driver’s seat in these negotiations simply because of the ubiquitous nature of this technology in our culture. 

“This kind of access is fast becoming as basic as access to light and water. You don’t want to be nickeled and dimed on this as you go into a facility,” he says. “The negotiating position is that if Motel 6 can provide Wi-Fi, why can’t the upscale hotels? It really comes down to that.”

Registration and procurement tools are a mixed blessing for negotiations. The upside is that these tools enable planners and suppliers to expand their relationships in the marketplace. But the ability they give planners to submit multiple proposals for the same meeting also creates barriers in getting to the face-to-face negotiation part of the process. 

“These types of software enable planners to send out 20 to 30 proposals for one meeting. What ends up happening is something called lead spam,” says Mason of Zentila. “There are just so many leads coming in, the salespeople at the hotels know there’s no chance of booking most of these meetings. So planners don’t actually get the best service from the salespeople.”

But Ball thinks that overall the trend toward procurement technologies will ultimately have a positive effect on negotiations. “So many organizations still don’t know what their meetings spend is, and procurement technologies do that. And that’s a good thing. Knowing what you’re spending and having a standardized way of sourcing and tracking meetings ultimately make for better negotiations,” he says. 

Edge: “Tablet PCs and smartphone usage are creating a demand that is not going to go away—it’s the way we live and do business now,” says Ball. “The hotels have always been reactive rather than proactive on the technology issue, and I don’t see them deviating from that stance.”

While many suppliers feel that procurement technologies are having a detrimental effect on doing business, Cvent’s English feels that will change over time. “The electronic proposal format is challenging for suppliers right now, but people are understanding how to take advantage of these platforms more every day,” she says. 

Problem: “While the numbers of meetings and attendees are increasing, individual meeting budgets remain flat, and that places a heightened focus on strategic negotiations,” says Mietkiewicz of Meetings Sites Resource.

Solution: Be flexible, offer full disclosure, and emphasize building the relationship rather than closing one specific deal. 

Mietkiewicz advises planners to prioritize their needs for each meeting and focus on creating a “must-have” versus “nice-to-have” list. “Being up front with the hotels about your budget parameters is critical,” she says. “If the hotels have this information readily available, they can work with you on getting creative to fulfill your meeting requirements. Look at your pattern to see if there are any holes you can fill for the hotel. I would also consider looking at your past spend with a hotel chain or specific hotel to see if you can use that as leverage.”

Mason agrees that filling a hole for the hotel is the best negotiation strategy for a planner with a tight budget. “If I were a planner, I would negotiate as far as I could with the hotel until I didn’t have any more wiggle room, then I would ask them, ‘Where could you put me?’ It’s one of the best questions a planner can ask in a negotiation. Maybe the planner wants a Monday-to-Wednesday timeframe but the hotel has a Wednesday-to-Friday hole,” he says. “Flexibility is the number-one bullet in the holster for planners during a negotiation.” 

Edge: “We’re in turbulent times. I’ve been through a few waves of this over my career and seen the pendulum swing back and forth. The important thing is not to panic. Circle back to your best practices,” says English. 

 

Problem: Very little new hotel room inventory is scheduled to come on the market, and many properties are in the situation of having to deal with debt that was accrued during better economic times. Both trends tend to make hotels unwilling or unable to negotiate with you.

Solution: Extend your lead time as far as possible and take a negotiating position.

If the economy continues to improve, things might be getting tight by 2012 and planners need to be prepared for a landscape where it would be tougher to find space for short-term meetings. 

Mason suggests that planners adopt negotiation positions for long-term bookings similar to those that hoteliers take. According to Mason, every hotel takes one of three long-term booking positions:

• The economy will be worse in one year than it is today.

• The economy will be better in one year.

• The economy will be more or less the same in one year.

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