In 2012, there are two red hot topics that are creating continuous buzz in the industry trade publications. The first is strategic meetings management (SMM) and the other is the big shift to a strong seller’s market.
Strategic meetings management became part of the meeting management landscape in 2004, but did not gain major traction until the great recession, where "meeting value & accountability" skyrocketed. When you review the mission statement of SMM, you see words like "disciplined approach"..."achieving measurable business objectives"..."strategic goals"..."quantitative savings"..."risk mitigation"...."data"...and "service quality". Corporate and association planning teams are on a mission to prioritize their needs and get key SMM solutions integrated into their planning environments.
Increased Expectations and Measurable Results
Post-recession, there are increased expectations from senior management for improved planner productivity and ROI and SMM is the vehicle to make this happen.
Big Picture SMM Benefits:
• Achieving management and stakeholder meeting goals and objectives
• Focus on core competencies
• Improved planning processes / team productivity
• Transparency of metrics to define and measure success
• Meeting cost savings
• Custom hotel contract / risk reduction / cost avoidance
• Meeting consolidation / leveraged spend
• Improved meeting quality / learner outcomes / attendee experience
• Robust technology / data management
• 24/7 access to management / financial reports (including cost savings / risk reduction by meeting)
Feedback from recent planner surveys reveals that, while more overall meeting value is the focus, it's not always achievable in a hot seller’s market. How hot is it, you ask? 2011 was a huge bounce back year for hoteliers, with big increases in occupancy, average daily rate and RevPar (revenue per available room). an important barometer for a hotel's financial stability. My point is validated by the fact that there were 1 Billion hotel rooms sold in the US in 2011, which is 20 Million more room nights that any past year (2007). What makes this number more remarkable is the fact that during the peak of the recession (2008 – 2010) there were approximately 300,000 new rooms added to U.S. hotel inventory (all brands).
So if SMM is focused on added meeting value, cost savings, contract risk reduction and ROI, how do you make this happen when hoteliers can now be choosy and are turning down more meeting opportunities than they accept?
Think Like A Hotel Revenue Manager
OK, the recession (and hotel sale) is over, but don't throw in the towel on negotiating measurable meeting value. This can be achieved, but now requires a game plan for each meeting. The hotel Revenue Manager is back in the driver’s seat and is laser beam focused on criteria like arrival / departure pattern, by market segment, rooms to space ratio, group F & B contribution, meeting performance history, season and total revenue potential.
The other part of the equation is the total revenue generated by other groups in-house over your proposed dates. So from each RFP, assess your leverage based on hotel revenue management criteria and have a negotiations plan.
Show Me The Money
From your negotiations plan and countersigned contract, create a cost savings report, for each meeting. Key components include:
- Sleeping room rates
- F&B comp / discounts
- A/V production / hotel support services
- Internet discounts
- Hotel fees and surcharges
- Preferred suppliers
- Master account discounts (for larger meetings)
The key to your cost savings reports is not the amount of savings, but the credibility of your metrics and defending your math. As an example, on room rate savings, use the proposal room rate, less the final negotiated room rate, not rack rates (which inflate savings). Same with concessions and other negotiated value adds.
Contract Risk Reduction / Cost Containment
The most effective method to add meeting value, generate cost savings and reduce risk is by creating a custom contract template that can be modified for each meeting. Your custom contract (ready for signature) should address all contract components, value added concessions, hotel fees and surcharges (eliminate or reduce), all performance clauses (based on lost profit not revenue) and company liability language.
If you currently utilize a contract addendum with select performance clauses, you can easily expand this into a complete contract. The challenge with addendums is that often, the performance clause language in the hotel contract is different than the attached addendum content, which immediately creates a conflict. Additionally, hoteliers appreciate receiving all contract requirements at one time, so that they can properly evaluate your meeting and prepare a proposal.
New Marketplace Conclusions
Yes, it is a hot seller’s market, which can complicate the "art of the deal". Success today requires raising the bar on the overall meeting analysis, planning process and open, honest communications, by planners and hoteliers. Both sides need to put all their cards on the table and know their "walk away" position, and if this happens, no hard feelings, just the reality of the new market dynamics.
Our industry is very cyclical, but this much I know for sure: regardless of shifts in the marketplace, when meeting planners carefully evaluate each meeting and understand their leverage & flexibility and have a negotiations plan, clearly they will add more value to their meeting and bottom line!