Beyond the Room Rate: Choosing Affordable Meeting Destinations

Editor's Note: A shorter version of this feature ran in the July issue of Successful Meetings.

Even if the price seems right, don't be fooled. When it comes to selecting the most affordable site for your meeting, today's meeting planners can't assume that what's in the contract will be more or less the same as what's reflected in the final bills.

Measuring the true affordability of a meeting destination involves much more than just room rates. It involves taxes, union labor fees, ancillary hotel fees, and so much more. Taking a more holistic approach to budgeting for your group, and anticipating any and all expenses, can have a tremendous impact on your bottom line.

"Even before you being the actual site selection, you've got to have a budget and figure out what your potential costs might be," says Joan L. Eisenstodt, founder of Washington, D.C.-based meeting consulting firm, Eisenstodt Associates. "You have to weigh all the factors, and understand what your meeting can bear by having that budget up front."

Here are a few of the most common factors that can add up to the cost of a meeting.  
 

NOT-SO-HIDDEN HOTEL FEES 
When it comes to picking the right hotel for your meeting, don't be drawn by room rate alone. "Many planners focus on the room rate, and they assume that if you get a low room rate, it's the most practical place to go. But if you don't read the contracts you might be surprised," says D. Benson Tesdahl, an attorney with Powers, Pyles, Sutter & Verville, P.C. in Washington, D.C., who specializes in meetings law.

Loretta Lowe, a San Francisco-based meeting, planning, and special events manager adds, "By creatively recalibrating contracts, hotels have learned they can lure planners in with low room rates, but ding them with other ancillary costs to meet revenue goals. These days, you have to look at everything."

"Some people might call these 'hidden costs' but they aren't. Hotels are used to charging these fees and they think we planners should know about them," says Eisenstodt. She adds, "We can't forget that there's an actual cost to the hotels, too. It takes a lot to run a hotel." Here's a look at some of the most common ancillary fees charged by hotels.

Service. "Labor is the No. 1 cost for hotels," says Eisenstodt. "Let's say you book a meeting room from 8 a.m. to 5 p.m. but you assume that you can get in at 7 a.m. to set up and let your speakers get ready and so on," explains Eisenstodt. "The issue is that, unless you ask, you may be charged for A/V and labor because the hotel may need to have staff there to keep that room open for you."

From the bell desk and housekeeping to catering, a lot of manpower goes into pulling off a successful meeting at a hotel, and hotels are charging for those services when it comes to food and beverage, especially. In some cases, some hotels are even requiring mandatory gratuities for housekeeping and bell desk service.

Contracted labor rates with unions may also impact costs. "Many planners assume that if the hotel is non-union there won't be labor charges and that's not true," says Eisenstodt. "Planners need to ask that and hotels need to disclose that."

Food and beverage. Service charges related to F&B can really add up, and even more so when you take taxes into account. Tesdahl recommends planners look at the cost of a gallon of coffee as a sort of measuring stick to determine how much F&B costs will be.

There are some strategies planners can use to save on F&B. Lisa Dyson, director of conference services for Alexandria, VA-based Teachers of English to Speakers of Other Languages (TESOL) International Association, says one way to save on F&B costs is to "piggybacking onto what another group is serving so that both groups get a discount."

Marcia Cosenza, a Pleasanton, CA-based senior meeting planner for Kaiser Permanente's corporate meetings division, says she often negotiates, up front, on F&B when she books a hotel meeting. "Just having a 10-percent reduction on F&B is often times enough to save a couple thousand dollars."  

Rob Bergeron, executive director and CEO of the Society of Government Meeting Professionals, recommends that planners review menus carefully and lock in the current year's prices when signing.

A/V, Internet, and Wi-Fi. Cosenza also tries to negotiate costs related to A/V during the RFP/contract phase. Tesdahl and Eisenstodt say that it pays to know whether or not a hotel has a preferred A/V vendor, and that some hotels have even started charging for each individual device that connects to the Internet. In one case, one of Eisenstodt's clients was charged for every device that was plugged into the electrical wall outlets in a meeting room.

Bill Kubiak, general manager for Freeman Audio Visual Chicago, and president of the MPI Chicago chapter, recommends planners look at the "all-in cost" when it comes to A/V. "Don't just compare line item to line item among vendors. Remember there may also be costs for delivery, set up, and pick up, too."

Bergeron adds, " Check that the hotel doesn't add a surcharge for groups bringing their own A/V and check their box storage rates."

Parking. If a large number of your attendees will drive in for the meeting, it pays to try to negotiate hotel parking fees. "Parking can be very costly, especially in urban destinations," says Lowe. "In San Francisco, some hotels charge up to $72 a day to park your car. That can affect people's ability to attend your meeting."

Resort Fees. "Watch for resort fees, sometimes called service fees, that are either fixed price or a percentage of the room rate, that go to pay for ancillary services," says Bergeron.

"I've brought meetings to hotels where they said they didn't have resort fees and they did," says Lowe. "Always ask if there is a resort fee and, if there is one, try to negotiate on that."

Shipping. Eisenstodt says that planners need to be mindful that shipping costs at hotels may be higher than they might normally expect, too. "In-house Fed Ex and UPS services at the hotel business center may charge you a handling fee and you may also have to pay another charge to the bell staff to get your boxes delivered to your room," she explains. "That can cost an extra $50 to $100 a box."
 
The bottom line when it comes to booking a hotel meeting? Pay attention to the contract and, as Eisenstodt, Tesdahl, and Lowe suggest, always include a "no surprises" clause in your contract.

Timing. If your group can afford to be flexible with the timing of your meeting, you may also find more affordable meeting rates. In Bellevue, WA, which is located approximately 12 miles East of Seattle, groups can find weekend room rates that are 30-percent less than in Seattle, for example.


UP IN THE AIR
How much does it cost to make it to your meeting? The answers may surprise you, and they could impact your bottom line -- or your attendees' -- significantly.

For example, according to a recent study compiled by Oliver Wyman's PlaneStats.com, Cincinnati/Northern Kentucky International is the most expensive airport to fly into among the largest 75 airports in the U.S. Passengers who traveled to the Midwest city during the last quarter of 2013 paid, on average, 22.2 cents per mile traveled. By comparison, those headed to Honolulu only paid 10.8 cents per mile traveled in the same time period, and travelers bound for San Juan, Puerto Rico paid 10.7 cents -- the lowest cost per mile.

Why was Cincinnati so much more expensive than other airports? Well, 83 percent of its flights operate on regional jets with limited seats, and Delta Air Lines carries 75 percent of the airport's passengers. The study notes that airfare prices are impacted by plane type (i.e. number of seats) and the passenger population. Airports located in comparatively wealthier communities, or those that service many business travelers, typically had higher average airfares than those airports that catered to budget-friendly leisure travelers.

"When we help clients analyze where to go, we always encourage them to take both air lift and the average airfare costs into consideration," says Eisenstodt. "We just did an analysis for five meetings for 15 different cities for one client, and one of the cities the group wanted was really reasonable for taxes, but the airfares were double that of other cities."

That's one reason why many planners choose a city like Denver, says Rachel Benedick, vice president of new sales and services for Visit Denver. "Of all the major airports, we have some of the lowest fares, and we're 340 miles from the exact center of the U.S. We're also the hub for three competing airlines, which as really driven rates down, with approximately 1,300 flights daily." In the last quarter of 2013, travelers paid an average of 14.4 cents per mile traveled to fly into Denver.

Anchorage, AK, is another city that has fairly low airfares when you consider the cost per mile -- 12.5 cents. "I like to say that we're a second-tier city with a first-tier airport," says Julie Dodds, director of convention sales for Visit Anchorage. "United, Continental, Alaska, JetBlue--they all fly in. There's a big misconception that we're too far away and too expensive and that our airfare is really expansive," she adds.

The ease of getting to a destination is also crucial. "One of the biggest drivers today for my meetings isn't the hotel -- it's the flights," says Lowe, who often organizes meetings for technology companies. "Can I get reasonable flights with minimal connections and a good variety of flight options? Ease of access, in addition to price of access, are critical to the choice when we pick a destination. That's one of the reasons why Vegas is one of the most popular MICE destinations in the U.S.; it has more flights and flight options at a great price than almost everywhere."


ON THE GROUND
Once you arrive in a destination, ground transportation can also make a big difference on your budget. What's the travel time between the airport and your meeting site? How much does it cost to get there via taxi? How much does it cost to coordinate shuttle service? All of these are questions you should consider during the site selection process, say Eisenstodt and Lowe.

For TESOL's Dyson, avoiding the use of shuttles is something she always considers when she organizes meetings and conventions. "We don't use shuttle buses; it's really expensive, and it goes against our inherent desire to bring our members together in an affordable destination," Dyson explains.

In March, TESOL held its annual global convention in Portland, OR. To get around the city with ease, the nearly 6,900 attendees used free MAX Light Rail passes provided by Travel Portland. "It was a huge cost savings not only for us, but for our attendees as well. They really enjoyed exploring the city by using the public transportation system."

A UNIVERSAL CERTAINTY 
Benjamin Franklin was certainly right about taxes, and no matter where you hold a meeting, you'll certainly be paying them. Being aware of different tax rates for hotels, food and beverage, and sales in different destinations can be helpful when it comes to sticking to your budget.

"Taxes are the one thing that planners often don't look at, at all. People forget how much tax is," says Eisenstodt.

Taxes on food-and-beverage, in particular, can be extremely costly, warns Tesdahl. "Sales tax and service charges for food and beverage can easily add up to 30 percent to the cost of food," Tesdahl explain. "People read the menu prices and forget to add at least 30 percent to those prices because that's what it's really going to cost you."

While sales taxes and hotel taxes generally don't vary too much in most cities -- Eisenstodt and Tesdahl estimate that the national average hotel tax to be around 12 to 14 percent -- it's still important for planners to know how much those rates are. "We always have a clause in our client's contracts that says that if there is a change in tax rates, the hotel has to notify the group immediately," says Eisenstodt. She also adds that some cities may add fees for improvements to convention centers or to go toward tourism funding.

There are some bargains out there. In some cities, such as Portland, OR, there are fewer taxes than in most. Oregon, for example, does not have any sales tax. "We don't have sales tax or food-and-beverage tax," says Michael Smith, vice president of convention sales for Travel Portland. "A catered meal function here in Portland may wind up costing 15 to 18 percent less than in other cities. The lack of a sales tax make everything more affordable for attendees, too."

A December 2013 study conducted by the Global Business Travel Association looked at the overall tax burden (lodging, rental cars, and meals) in various U.S. cities, and found that the top city for the lowest total travel taxes was Fort Lauderdale, FL. Other cities in the top 10 include Fort Myers and West Palm Beach, FL; Detroit; Portland, OR; Orange County and Burbank, CA; Honolulu; Ontario, CA; and Orlando.

Tesdahl also notes that nonprofit organizations can also be exempt from paying a sales tax for a meeting that is held in their state of incorporation.

Meeting held outside the U.S. are subject to value-added tax (VAT), a surcharge that is applied to goods and services in more than 140 countries worldwide. In some countries, however, meetings may qualify for VAT refunds. "You should always inquire if you can get a refund on VAT," says Nancy Eide, co-owner of Omaha-based CEI VAT Reclaim. "It can make expensive destinations more affordable. For example, the English pound is expensive but in Italy, they don't refund VAT. In the U.K., they do."

Regardless, Eide warns clients not to count to heavily on VAT to help their budgets. "Nothing is ever 100-percent certain," she says. "I call [VAT] the gravy, not the meat. It's money you've already spent but that can come back to you, if you fill out some documents. And every country has its own rules, so don't hang your hat on it."

She says that, in Europe, the countries most likely to offer a VAT refund include the United Kingdom, Germany, France, and Monaco. Australia and Canada, she says, have a goods-and-service tax (GST) that is similar to VAT; in both countries, however, it is rare to get a GST refund. In Asia, she says that South Korea and Japan do offer a VAT refund; however, most of her clients have had very little luck claiming their refunds. In Mexico, the VAT refund is an exemption and is determined at the very beginning of the contract process, not after the program has been completed.

At a recent meeting she organized in Cabo San Lucas, Mexico, Lowe was able to receive approximately $7,000 in VAT exemptions. "If you don't ask about the exemption, the hotels won't tell you about it," she notes.


BY CONVENTION 
If booking a hotel meeting can be complicated, booking a convention center can be even more confusing in some cases. Union labor contracts, Internet, and food and beverage costs can increase the cost of your meeting tremendously.

As with any meeting contract, planners need to pay special attention to the contracts they sign with convention centers. "Convention centers are almost impossible to get any changes made -- especially since they're the only game in town in most places," says Tesdahl. "It's very hard to anticipate the exact total costs, especially when you take labor and security into consideration."

Union contract disputes, most recently in Philadelphia and previously in Chicago, have demonstrated the importance of union labor at many convention centers nationwide. While non-union convention centers are generally less expensive than those with union contracts, that doesn't mean that working with a unionized convention center will cost too much.

"One of the fallacies some people have is that if they go into a union city, they'll have a bad experience," says Freeman's Kubiak. "That's not true. It's just important for planners to work with a supplier or suppliers who know how to work with those unions, and know the intricacies of the contracts. And make sure to give them as much information, up front, about your group."

For example, says Kubiak, when doing a convention center site inspection, planners should ask how to control the lights. "It sounds silly, but if you need to turn the lights off for a presentation and there are three sections, you may need three different people to shut off the lights," he explains. "That can become a big cost."

Kubiak also says planners should pay attention to where the loading dock is located. "Time is money. If you have a venue where the loading dock is far from the ballroom or exhibit space, that could mean more man hours just because of the distance; it will take longer to complete the load out," he adds.

In Portland, OR, the Oregon Convention Center has a variety of contracts with different unions, and exhibitors are allowed to set up their own booths, with some restrictions related to electricity. By working with the Oregon Convention Center's in-house Internet provider, Dyson's TESOL convention saved a lot of money. "The pricing to use the in-house Internet provider was so much more affordable than what we're used to," she says. "We had 6,900 attendees, and each one could easily access the Wi-Fi at the center to be able to use our event's mobile app. "Being able to do that really enhanced the overall experience of the meeting."

In Bellevue, WA, the Meydenbauer Center offers an F&B credit to groups. "When a group hosts meal function, 20 percent of what they purchase from us is applied to their rent and they can reduce or waive their rent," explains Jane Kantor, director of sales for Visit Bellevue. In Anchorage, AK, although the city itself has a strong union presence, the convention centers are all non-union, says Julie Dodds, director of sales for Visit Anchorage.


A HELPING HAND 
Some convention and visitors bureaus, or destination marketing organizations, can help to subsidize larger meetings and conventions. Dyson's TESOL convention in March 2014 benefited from additional funding from Travel Portland. "Portland has this special fund that they can tap into, to help offset convention center rental costs if you have a particular number of room nights," Dyson explains. "That's what made a huge different for our board of directors and, ultimately, one of the reasons why we chose to bring our meeting to Portland."

Travel Portland's Smith adds, "There are parameters involved and some hoops that organizations have to jump through in order to qualify, but some cities like ours have the ability to offer grants that can assist with some of the costs that an organization may incur. We also have a marketing program with Pittsburgh and Milwaukee whereby we have financial incentives for organizations that meet in our cities."


SECOND TO BEST 
Don't rule out second-tier cities, says Dyson. "Give second-tier cities a chance; they might surprise you," she says. "The more I look at them, the more pleasantly surprised I am with them. If the content of your meeting is compelling enough that your attendees need to go, the destination itself is kind of secondary to that individual decision-making process. It's all about the entire package -- not just the destination anymore."

Kaiser Permanente's Cosenza finds it much easier to hold meetings smaller cities such as Concord, CA, which is 30 miles northeast of San Francisco. "I don't think Concord is a necessarily a destination people think of, but the fact that it's closer to urban areas and has the value makes it worth considering, especially now that it's getting harder and harder to book in those urban areas because of pricing and availability," Cosenza says.

Availability, says Visit Bellevue's Kantor, is a major selling point for bringing meetings to Bellevue. "Small- to medium-size groups can really benefit from being in a smaller market because the booking requirements for larger or first-tier cities may be tougher."


WEIGH ALL THE OPTIONS 
Ultimately, choosing the best destination for your meeting group is a combination of all the factors -- not just affordability -- and it's worthwhile for planners to consider all the factors, both financial and non-financial, that can make or break the meeting.

"It's really about having a holistic approach, and developing good working relationships with your vendors," says Lowe. "Don't be afraid to ask for what you need when you're in the RFP process," Dyson notes. "The answers may surprise you."

It also pays to consider the overall meeting experience you want your attendees to have, says Dodds. "I always try to get people to look at the experience as a whole," she says. "It's that added-on value -- that unique and different experience -- that you can have here in Anchorage. Educate yourself, let the CVB help you, and ask for real numbers. You might be surprised by how affordable a destination really can be."

A UNIVERSAL CERTAINTY 
Benjamin Franklin was certainly right about taxes, and no matter where you hold a meeting, you'll certainly be paying them. Being aware of different tax rates for hotels, food and beverage, and sales in different destinations can be helpful when it comes to sticking to your budget.

"Taxes are the one thing that planners often don't look at, at all. People forget how much tax is," says Eisenstodt.

Taxes on food-and-beverage, in particular, can be extremely costly, warns Tesdahl. "Sales tax and service charges for food and beverage can easily add up to 30 percent to the cost of food," Tesdahl explain. "People read the menu prices and forget to add at least 30 percent to those prices because that's what it's really going to cost you."

While sales taxes and hotel taxes generally don't vary too much in most cities -- Eisenstodt and Tesdahl estimate that the national average hotel tax to be around 12 to 14 percent -- it's still important for planners to know how much those rates are. "We always have a clause in our client's contracts that says that if there is a change in tax rates, the hotel has to notify the group immediately," says Eisenstodt. She also adds that some cities may add fees for improvements to convention centers or to go toward tourism funding.

There are some bargains out there. In some cities, such as Portland, OR, there are fewer taxes than in most. Oregon, for example, does not have any sales tax. "We don't have sales tax or food-and-beverage tax," says Michael Smith, vice president of convention sales for Travel Portland. "A catered meal function here in Portland may wind up costing 15 to 18 percent less than in other cities. The lack of a sales tax make everything more affordable for attendees, too."

A December 2013 study conducted by the Global Business Travel Association looked at the overall tax burden (lodging, rental cars, and meals) in various U.S. cities, and found that the top city for the lowest total travel taxes was Fort Lauderdale, FL. Other cities in the top 10 include Fort Myers and West Palm Beach, FL; Detroit; Portland, OR; Orange County and Burbank, CA; Honolulu; Ontario, CA; and Orlando.

Tesdahl also notes that nonprofit organizations can also be exempt from paying a sales tax for a meeting that is held in their state of incorporation.

Meeting held outside the U.S. are subject to value-added tax (VAT), a surcharge that is applied to goods and services in more than 140 countries worldwide. In some countries, however, meetings may qualify for VAT refunds. "You should always inquire if you can get a refund on VAT," says Nancy Eide, co-owner of Omaha-based CEI VAT Reclaim. "It can make expensive destinations more affordable. For example, the English pound is expensive but in Italy, they don't refund VAT. In the U.K., they do."

Regardless, Eide warns clients not to count to heavily on VAT to help their budgets. "Nothing is ever 100-percent certain," she says. "I call [VAT] the gravy, not the meat. It's money you've already spent but that can come back to you, if you fill out some documents. And every country has its own rules, so don't hang your hat on it."

She says that, in Europe, the countries most likely to offer a VAT refund include the United Kingdom, Germany, France, and Monaco. Australia and Canada, she says, have a goods-and-service tax (GST) that is similar to VAT; in both countries, however, it is rare to get a GST refund. In Asia, she says that South Korea and Japan do offer a VAT refund; however, most of her clients have had very little luck claiming their refunds. In Mexico, the VAT refund is an exemption and is determined at the very beginning of the contract process, not after the program has been completed.

At a recent meeting she organized in Cabo San Lucas, Mexico, Lowe was able to receive approximately $7,000 in VAT exemptions. "If you don't ask about the exemption, the hotels won't tell you about it," she notes.


BY CONVENTION 
If booking a hotel meeting can be complicated, booking a convention center can be even more confusing in some cases. Union labor contracts, Internet, and food and beverage costs can increase the cost of your meeting tremendously.

As with any meeting contract, planners need to pay special attention to the contracts they sign with convention centers. "Convention centers are almost impossible to get any changes made -- especially since they're the only game in town in most places," says Tesdahl. "It's very hard to anticipate the exact total costs, especially when you take labor and security into consideration."

Union contract disputes, most recently in Philadelphia and previously in Chicago, have demonstrated the importance of union labor at many convention centers nationwide. While non-union convention centers are generally less expensive than those with union contracts, that doesn't mean that working with a unionized convention center will cost too much.

"One of the fallacies some people have is that if they go into a union city, they'll have a bad experience," says Freeman's Kubiak. "That's not true. It's just important for planners to work with a supplier or suppliers who know how to work with those unions, and know the intricacies of the contracts. And make sure to give them as much information, up front, about your group."

For example, says Kubiak, when doing a convention center site inspection, planners should ask how to control the lights. "It sounds silly, but if you need to turn the lights off for a presentation and there are three sections, you may need three different people to shut off the lights," he explains. "That can become a big cost."

Kubiak also says planners should pay attention to where the loading dock is located. "Time is money. If you have a venue where the loading dock is far from the ballroom or exhibit space, that could mean more man hours just because of the distance; it will take longer to complete the load out," he adds.

In Portland, OR, the Oregon Convention Center has a variety of contracts with different unions, and exhibitors are allowed to set up their own booths, with some restrictions related to electricity. By working with the Oregon Convention Center's in-house Internet provider, Dyson's TESOL convention saved a lot of money. "The pricing to use the in-house Internet provider was so much more affordable than what we're used to," she says. "We had 6,900 attendees, and each one could easily access the Wi-Fi at the center to be able to use our event's mobile app. "Being able to do that really enhanced the overall experience of the meeting."

In Bellevue, WA, the Meydenbauer Center offers an F&B credit to groups. "When a group hosts meal function, 20 percent of what they purchase from us is applied to their rent and they can reduce or waive their rent," explains Jane Kantor, director of sales for Visit Bellevue. In Anchorage, AK, although the city itself has a strong union presence, the convention centers are all non-union, says Julie Dodds, director of sales for Visit Anchorage.


A HELPING HAND 
Some convention and visitors bureaus, or destination marketing organizations, can help to subsidize larger meetings and conventions. Dyson's TESOL convention in March 2014 benefited from additional funding from Travel Portland. "Portland has this special fund that they can tap into, to help offset convention center rental costs if you have a particular number of room nights," Dyson explains. "That's what made a huge different for our board of directors and, ultimately, one of the reasons why we chose to bring our meeting to Portland."

Travel Portland's Smith adds, "There are parameters involved and some hoops that organizations have to jump through in order to qualify, but some cities like ours have the ability to offer grants that can assist with some of the costs that an organization may incur. We also have a marketing program with Pittsburgh and Milwaukee whereby we have financial incentives for organizations that meet in our cities."


SECOND TO BEST 
Don't rule out second-tier cities, says Dyson. "Give second-tier cities a chance; they might surprise you," she says. "The more I look at them, the more pleasantly surprised I am with them. If the content of your meeting is compelling enough that your attendees need to go, the destination itself is kind of secondary to that individual decision-making process. It's all about the entire package -- not just the destination anymore."

Kaiser Permanente's Cosenza finds it much easier to hold meetings smaller cities such as Concord, CA, which is 30 miles northeast of San Francisco. "I don't think Concord is a necessarily a destination people think of, but the fact that it's closer to urban areas and has the value makes it worth considering, especially now that it's getting harder and harder to book in those urban areas because of pricing and availability," Cosenza says.

Availability, says Visit Bellevue's Kantor, is a major selling point for bringing meetings to Bellevue. "Small- to medium-size groups can really benefit from being in a smaller market because the booking requirements for larger or first-tier cities may be tougher."


WEIGH ALL THE OPTIONS 
Ultimately, choosing the best destination for your meeting group is a combination of all the factors -- not just affordability -- and it's worthwhile for planners to consider all the factors, both financial and non-financial, that can make or break the meeting.

"It's really about having a holistic approach, and developing good working relationships with your vendors," says Lowe. "Don't be afraid to ask for what you need when you're in the RFP process," Dyson notes. "The answers may surprise you."

It also pays to consider the overall meeting experience you want your attendees to have, says Dodds. "I always try to get people to look at the experience as a whole," she says. "It's that added-on value -- that unique and different experience -- that you can have here in Anchorage. Educate yourself, let the CVB help you, and ask for real numbers. You might be surprised by how affordable a destination really can be."