In our August issue we tackled the five most common negotiation hurdles for planners today
. It’s hard to pin down a negotiation strategy when there are improving business conditions because until a recovery firmly takes hold there is always an uncertainty as to whether or not hard times are really over.
The negotiating position of hoteliers is a bit more straightforward than that of planners. Hoteliers want to slowly raise their prices and drive a harder bargain to make up for all the price-cutting they had to do when things were bad. While the planners must struggle with predicting how many more meetings they will be planning and how big a bump their attendance numbers will receive. But the farther into the future a meeting is, the more of a problem it is for the meeting planner and the hotel.
“Both parties have to be very cautious because you just can’t tell what’s going to happen,” says Benson Tesdahl, Esq. a meetings and convention lawyer with the Washington, D.C.-based firm of Powers, Pyles, Sutter & Verville, P.C. “I think both parties in a contract situation have uncertainty and neither has any advantage over the other. The only real strategy is to be very conservative in what you agree to in terms of food and beverage and attrition. It’s better to underestimate that overestimate. Try not to book meetings too many months in advance. Until we have a clearer picture of how the domestic and international economy is going because things can go downhill very quickly, as we have discovered.”
A shorter lead time is a real advantage in economic uncertainty because fewer things can go wrong, but as the economy improves, short-term room availability becomes harder to find. One way to combat that is to expand the pool of possible destinations. “As we shift into more of a seller's market, we will begin to see more planners consider second tier destinations to find value that is more aligned with their budget,” says Robyn Mietkiewicz, CMP, Director, Accounts & Global Meeting Management Services at the Irvine, Calif.-based Meeting Sites Resource.
Mietkiewicz also advises planners to pre-plan and assess the amount of negotiating leverage they have based on hotel revenue management criteria, or its RevPar (revenue per available room).
But planners who do get pushed into a longer-term booking situation due to the improving economy should negotiate more like hoteliers in order to protect themselves from economic uncertainty. Mike Mason, founder of Zentila.com
, an online booking engine, suggests that planners should approach long-term booking negotiations by planting their flag in one of three areas: You believe the economy is going to grow by the time you have your meeting; you believe the economy is going to shrink by that time; or you believe nothing is going to change. “The struggle that hotels have in these negotiations when it comes to economic issues is few planners come from any one of those three positions,” says Mason. “They walk in not having a position and that makes it almost impossible to get to the end in dealing with this issue. Right now, every hotel has their stake in the ground saying here’s where we believe the economy is going to be one year from now and two years from now. Planners need to have those same positions staked out from their perspective before they negotiate.”