Joan Eisenstodt (pictured) of Eisenstodt Associates says all meeting supplier contracts need the same level of detail as a hotel contract
When it comes to creating a successful meeting or event, there's no denying that the most important factor is the host hotel, or, in the case of very large meetings and events, the convention center. That's why so many planners pay a great deal of attention to the negotiations and contracts they arrange and sign with these two key partners. But there are many other suppliers whom planners rely on to make sure the goals of the event are met, that attendees and executives running the meeting are happy, and that everything goes smoothly.
The destination management companies (DMCs), transportation suppliers, off-site venues, A/V firms and other partners are vital to the success of any meeting or event, but many planners -- particularly overworked corporate planners who may have other responsibilities as well -- often treat these partners as an afterthought. And that's a mistake.
"I think, a lot of times, people don't realize that they need to make sure they pay as much attention to the details with all other vendor contracts as they do with hotels and convention center contracts," says Sharmagne Taylor, CMP, president, and CEO of Houston-based meeting planning firm On-Site Partners. "There is a much greater risk of failure to deliver on the side of outside vendors than there is with what's happening in the hotel itself and in the convention center. Make sure that you are just as diligent about talking about everything that could possibly happen, positively or negatively, with those vendors."
She's not the only experienced professional planner who feels this way. "Many organizations don't do the same kind of thorough request for proposal [RFP] for the other vendors and services as they do for hotels," says Joan Eisenstodt, president of Washington, D.C.-based Eisenstodt Associates, who teaches contract negotiation classes for planners. "It's often sort of an afterthought, especially for smaller meetings."
The problem with this, Eisenstodt says, is that "the proposals that come from these other vendors -- from DMCs, transportation providers, A/V companies, production companies, and even some from decorators -- are, in my opinion, pure marketing pieces. It's a lot of copy without substance. It's more, 'These are all the things we can do. Sign this and we'll sort of figure it out later.' I'm appalled by that."Budget Busters
It's not just a risk of the meeting failing to achieve its objectives, Taylor adds, noting that the smaller partners can still have a big impact on the budget. She points back to the experience of a client she had to drop a few years ago, when a parent's long-term illness forced her to cut back on work. Instead of replacing Taylor, the client just planned and managed the event on its own.
"They went $100,000 over budget on the event that I planned the previous two years," she says. "They didn't know what questions to ask, and they didn't monitor the things that I would normally monitor as a professional."
What happened, Taylor explains, wasn't caused by one big problem, but by dealing with seemingly small changes with suppliers, without knowing what to ask. "You know how much the hotel is going to charge, and you know what your [room-night and food and beverage] minimums are," she says. "It's delivery charges, setup charges, or rush charges, those kinds of things. They creep up into thousands of dollars when you don't know what to ask for when a change happens."
One example Taylor gives is that her former client planned a dinner at the hotel for 1,000 that jumped to 1,500, so they just told the outside decorator to add more tablecloths. "Being an event professional I know to ask the hotel to provide linens in this color," Taylor says. "They'll blend with the other 1,000 and you're already at budget on the linens."
One reason these secondary suppliers get short shrift in negotiations, Eisenstodt adds, is simply that meeting planners are busy, and many don't know what they don't know.
"When I look at my checklist for hotels, it's no different, in many ways, than what I do with these other vendors," Eisenstodt says. "In a hotel contract, planners get very specific about amenities, for example. Why would you not get specific about the services you're going to get from a DMC? If they're providing food, I want to talk about food safety and put that in there, even if they're subcontracting it. If they're bringing in décor, I want to know everything about the décor. What's it going to cost us? When will it be loaded in [to the facility]? When will it be loaded out?"
The flip side of course, is that suppliers need details if they're going to give the planner detailed bids and negotiate a detailed contract. "The onus is on us to provide them that look into what the program is," says Joanie Miskowiec Phillips, director, purchasing and industry relations, of Minneapolis-based MotivAction, a meeting and incentive planning firm. "What is the client trying to accomplish? It's looking at the event as a whole and really giving [suppliers] enough information so that they can give us good information back. When you talk to a lot of suppliers and partners, what you often [hear] is, 'If you can tell more information we can target your proposal a lot better.'"
This is particularly an issue when dealing with corporate meeting planners who are new to the job, or who also have other responsibilities, says Patrick Sullivan, president of Allied PRA New York, a DMC.
"It's a big responsibility when your director or your CEO tells you, 'Go out and put this meeting together and bring me cost.' That planner doesn't know to ask, 'Well, what is our budget?' That's the No. 1 thing -- most of them come to the table without even knowing what they can spend," Sullivan says. "Then they want the five-star restaurants and all the beauty and creativity, and when you send [the cost breakdown] to them they say, 'Oh my God, that's so expensive,' and then, 'I presented it to the director and it's just way out of line.' That's why it's important that planners get the other meeting stakeholders thinking about the budget from the very beginning."Destination Management Companies
When it comes to non-hotel supplier negotiations, there is no more important partner that the DMC, both because most planners consider the DMC their feet on the ground and because, many times, planners rely on DMCs to hire other suppliers such as transportation and catering firms.
Julie Benson, Aimia
"We are very stringent with them because the DMC is responsible for the transfers. They're responsible for activities. They've got so many touch points with the attendees," says Julie Benson, director, business planning & procurement, of Minneapolis-based Aimia, a major meeting and engagement firm. "There are times when we're going to need to bring in a major speaker, so we'll have to work with a speaker's bureau, or an entertainment broker to bring in major entertainers that a local DMC wouldn't be privy to. [But] the DMC is our local supplier that's in the destination."
In the majority of cases, the DMC is a full-service provider, agrees Rebecca Jones, director, industry relations, of Chicago-based BCD Meetings & Events.
"The DMC and the planner partner together and really create the structure of the program," says Jones. "What the DMC does with it can truly enhance the experience, from creating activities that match the demographic and the price point you're looking for, to creating the evening events that reflect what you're trying to accomplish."
For all that, what planners want and need most from DMCs is not creativity, but liability -- specifically, liability insurance.
For most clients, the primary "role of the DMC is to make sure that all the insurance and the liability coverage is there," says Sullivan. "Everybody wants to protect themselves."
Benson agrees. "We do rely on our DMCs to make sure that that's in place, and they warrant it in the contract," she says. As a result, she adds, the contract terms Aimia negotiates with DMCs are far more stringent and detailed than they are with other suppliers. "If we go to a florist, let's say, we make sure the insurance and indemnification are there, and the terms of service is completely defined," Benson says. "That's pretty much it."
What is not in the contract is the ability of DMCs to get flexibility from other third-party suppliers in the event of attrition or cancellation, Sullivan says. Yet after liability insurance concerns, it is one of the top issues for the planners.
"If the numbers go up, there's never a problem with that, but if the numbers go down, clients want to know, 'Is there a little bit of flexibility?'" says Sullivan. "DMCs work with a lot of the same suppliers over and over, so they do build that flexibility. It's not in the contract. It's really more of a partnership."
The amount of lead time is also a factor, Sullivan says. Like hotels, he notes, if suppliers can resell what was contracted or haven't racked up hard costs -- buying food or contracting with freelance staffers, for example -- they will often cut planners a break to build goodwill with a DMC that has been a good partner to them.
This is something planners should ask about when negotiating with a DMC and approving the third parties it recommends, Sullivan says. "The loyalty factor is, 'Have you worked with this venue many times previously? Were they exceptional? Were they flexible?" he says. "I think clients don't necessarily want to ask the hard questions … [but they] should, even if they have to ask the supplier directly. 'Is there some flexibility in your agreement if there's a terrible storm and my guests can't get in and we have to cancel the evening event?' Ask some tough questions up front."
The broadest category of meeting suppliers, off-site venues include everything from small restaurants used for dine-arounds, to giant theme parks, museums, and other public spaces, to stand-alone catering halls and conference centers. All have their own issues that must be considered during negotiations, which is one reason why many planners contract for venues through DMCs.
"I've done a lot of dine-arounds for broker-dealer meetings in the insurance industry," Taylor says. "You want to make sure that you have looked at the entire process, from the time that the people board the buses to their likely behavior once they get there, to when they return. For example, if the restaurants are closed for your event, then obviously when it's over everybody is going to get back on the bus and go back to the hotel. But if you go [to a nightclub] on a night when it is open to the public and reserve it for two hours, you may have to negotiate for the attendees to stay and party at no additional cover charge."
When working with public spaces and museums, Eisenstodt says, it's vital to ensure that you are aware of the special restrictions they may have. These can range from a ban on red wine (and its potential for stain) by many museums to an inability to close early to allow for event set-up. And many require reciprocal liability insurance from the renter to cover potential damage to exhibits, Benson adds.
Then there's access. In 2012, Taylor brought a group to the Denver Museum of Nature & Science, but discovered that entrance to a popular Pompeii exhibit, which attendees expected to see, was not included in the rental fee. "When we rent out theme parks, sometimes the rides are included and sometimes you have to pay extra for certain rides or attractions," she adds.
Standalone conference facilities, on the other hand, are like DMCs and hotels in wanting to know the context, strategy, and desired outcomes of the meeting, says Christopher Kelly, president and co-founder of Convene, which has five custom-built day conference centers in New York and one in Washington, D.C.
"If the client can help us to understand at a higher level what they're trying to achieve, then we can have a conversation that's about more than tables, chairs, and square footage," Kelly says. It's also important to understand the difference between a conference facility and a hotel, he says, pointing especially to technology that wouldn't come standard anywhere else, such as built-in videoconferencing equipment.
"I don't think there's anything that has the ability to shape the outcome of their event more than the stability of the technology," Kelly says. "We find the large majority of planners are not asking detailed questions about the [available Wi-Fi] bandwidth and the venue's ability to effectively distribute and deploy that bandwidth to the devices in the room. I think that's a major oversight. If you don't have the right distribution, it's like putting a fire hose to a garden hose -- it just doesn't come out the end."