Suzette Eaddy learned the hard way.
It was 1993, and the longtime planner was in discussions with a resort property in Florida about her annual conference. But no matter how hard she tried, the hotel wouldn't give in to one of her key demands.
"I needed a certain number of suite upgrades for our vice presidents and senior staffers," recalls the director of conferences for the National Minority Supplier Development Council in New York City. "We went back and forth, and they wouldn't let me have them. Finally I said, 'If you won't give me the suites, we can't do this deal.' "
Eaddy waited a week, expecting the sales team to contact her. "Every day that went by, I was so nervous we were going to lose this venue," she admits. Eventually she was forced to call back and give in. "That woman there"—and 13 years later, Eaddy can still reel her name off as if it had happened yesterday—"was really tough. I never want to see her again!"
Fortunately, thanks to Eaddy and the other planners interviewed by Successful Meetings, you won't have to blink in a negotiation the way she did. With hotel industry analysts forecasting that the cost of planning meetings will continue to rise this year, effective negotiating is more important than ever. So we decided to kick off 2006 with a guide: Here, we present the stories of planners who know how to drive a smart bargain. Consider it a slightly belated holiday gift.
The Art of Haggling
If you have any doubt about the current meetings climate, a talk with industry veteran Cindy Stark will set you straight. "It's definitely a seller's market right now," declares Stark, who handles a major technology conference (attendance: 30,000) for SmithBucklin, an association management firm in Chicago. "I spoke to a hotelier yesterday who wanted a 15-percent increase over the last time I'd met there. When I balked, he said, 'If you don't take these rooms, I can sell them for even higher.' "
Indeed, planners everywhere report that negotiations now are tougher and more time consuming. "Every clause in the contract has to be discussed and reviewed at length before hotels will agree to it," says Stark. Marcia Gerard, executive vice president of the New York City sales office of Krisam Group, a Washington D.C.-based meetings management firm, recently spent four and a half hours on the phone negotiating a hotel contract.
But there are some common-sense ways to shorten the process, starting with remembering the other party's interests. "Sometimes we forget about how important the win-win is," says Shar-magne Taylor, CMP, a 21-year industry veteran and owner of On-Site Partners, an independent planning firm in Houston. "I know when my suppliers are in demand and I ask for holes to fill when they're not. I always bring them a clientele that can attract further business, and they can see that happening."
She also saves time by doing her initial negotiation in an e-mail: "I get right to the point—'This is my group, this is who they are, what they represent, what they need; can you do it?' Be upfront about your needs, negotiate in good faith, and be fair." Sometimes, she finds herself creating spreadsheets for clients "so I can tell them, 'Your meeting is worth $250,000 and you're asking for $100,000 in concessions. That's untenable.' A lot of people have read that they can negotiate for this or that and don't necessarily use common sense."
That was where Eaddy fell short years ago. At one point in the aforementioned negotiations, her counterpart sent her a memo breaking out the cost of the suites she was demanding. "I didn't realize how much they cost," Eaddy admits now. "I learned to always cost out what I'm asking for, so I don't ask for something that's unreasonable."
Vicky Betzig's seven years of experience on the hotel side have proven invaluable in helping her understand where properties are more likely to be flexible. "The highest profit margin for hotels is on guest rooms, so in a seller's market I negotiate other things instead, to keep my overall meeting costs in line," says Betzig, president of Meetings Industry Consulting in Brookfield, WI, and a two-decade industry veteran. "Hotels make much less money on food and beverage, so I can negotiate, say, complimentary continental breakfast for my group," she notes. "That saves me $10 per person or more, and it's easier than trying to lower the room rate $10." Other concessions Betzig has successfully negotiated include complimentary parking and free amenities; she also makes sure to have any "comped" rooms that are earned after her cutoff date credited to the master account. "That way, even though it's too late to assign those rooms to speakers or staff, I still get credit for them," she explains.
The In-Person Approach
A few years back, SmithBucklin's Stark made a major change in how she negotiates for her citywide. "I used to send out requests for proposal, wait for responses, negotiate the terms in the RFP document, then go to contract," she says, "but because the RFP doesn't include all the language in the contract, it was like having to negotiate all over again. Now, I do all my negotiations face to face."
Key to this tactic is getting her association's board to narrow down her options to just two cities. "I send RFPs to both cities about a week before I go there. I don't talk to them about anything beforehand," says Stark. "It takes three or four days to finalize everything, but when you think about how much time I used to spend on the phone with 15 or 20 hotels negotiating both RFPs and contracts, I'm saving time and money."
The strategy has other advantages. "All surprises are gone because both RFPs and contracts are discussed at the same time. And the hotels realize that I have the authority to say yes or no. If everything goes well, I can send them their contracts by the end of the week, and that gives them more incentive to work with me." Stark also finds that by narrowing her options down to just two cities, she gets much better bids. "The more cities you bid on, the weaker your lead looks to any given city." And because she doesn't release her second city until meeting with the first, she can still walk away if she has to.
That was the biggest mistake Eaddy made back in 1993: leaving herself no option. "Up until then, I'd been spoiled; I'd always gotten everything I wanted," she confesses. "I learned that you don't always get what you want—you have to be willing to walk, or take less." Eaddy adds that "I still get everything I want nearly all the time, but now I have to sharpen my pencil more. Before I go into hard negotiations now, I write everything out, and do role-playing."
Expanding Your Contracts
Mark Roysner, an attorney with Roysner & Associates in Calabasas, CA, has worked in the hospitality industry for over a quarter-century, for the last eight years exclusively as counsel to meeting planners, trade-show organizers, and others who use meeting facilities. Here, Roysner's hints on negotiating contracts with suppliers:
Look out for clauses that calculate attrition charges on per-night rather than cumulative pickup. If your room pickup varies significantly from night to night, on any given night you might fail to meet the minimum necessary to avoid attrition fees, even if your total pickup is more than 85 percent (or whatever the property demands). "Planners have been hit for tens of thousands of dollars in attrition charges because of this," warns Roysner.
Be careful with clauses addressing step reductions of room blocks. These let you periodically reduce your room block without liability—usually up until 30 days out—but often require you to guarantee 100 percent of the remaining block after that cutoff date. Instead, planners could insert a provision stipulating that they only need to pick up, say, 90 percent of the final adjusted block, to account for last-minute no-shows.
Include a cancel-and-replace provision. This lets you know when attendees cancel their reservations so that you can fill those rooms with people from your waiting list. And make sure that those new attendees are still paying the negotiated rate for their rooms.
Don't be foolish about force majeure. Since 9/11, says Roysner, most properties have gone to what he calls an "impossibility provision," which releases planners from liability if the facility is unavailable or otherwise unable to meet their needs. But contracts need to address emergencies that aren't facility-related, as these can make it next to impossible to hold a meeting even if the property is open. "What if a hurricane cuts off the path to where your conference is, but the facility is still there?" asks Roysner. Also, consider the special circumstances of your group. If the National Rifle Association, for instance, had signed contracts to meet in a city that subsequently outlawed gun shows, the hotels or the center could hold the NRA liable for cancellation. Bottom line: Read force majeure clauses carefully, and negotiate them smartly.
Be codependent. Roysner says that planners frequently forget to add a codependency provision, which allows them to terminate all facility and supplier contracts without liability should any one supplier's inability to perform make it necessary for them to cancel their meeting: "We've seen this happen a lot—that the convention center becomes unavailable and [the meeting organization] has to pay damages to the hotel" because performance under one contract isn't linked to the other.
Finally, don't sign without reading every word. Cross-reference everything, even the dates of your meeting, urges Roysner: "Some of the most expensive problems I've dealt with happened because planners didn't notice a transposed date in the meeting contract." Getting every detail right is time-consuming, he admits, "but getting it wrong is a lot more expensive!"
Let Me Hear Your Body Talk
Want to know how your negotiations are really going? Then you'd better bone up on body language. "Body language is the key to knowing if you are on the right track in every negotiation," declares Shelle Rose Charvet, a communications expert in Burlington, Ontario, and the founding president of the Canadian Association of Neuro-Linguistic Programming.
"People unconsciously signal their agreement or disagreement with changes in their microbehaviors," Charvet explains. Muscles tighten or relax, breathing patterns vary slightly, the tone of voice changes, that light in the eyes goes on or off—all involuntarily. We automatically pick up these signals in loved ones, Charvet notes; with practice, we can learn to read them in people we don't know: "Skilled negotiators know how to figure out how their counterpart signals them, which they do by making statements the other person will agree or disagree with, then looking for unconscious behaviors."
Thus, when meeting with the conference services manager, the planner could say something she knows to be true—such as, "Today we're here to go over room rates and seating arrangements for the meeting rooms, right?"—and observe closely how the other person signals affirmation. To study disagreement, "Make up something you know is false," suggests Charvet, "like, 'I see you've got a lot more staff in your events department to work with this year.' Then watch the other person's face."
"Good negotiators are good observers," adds Charvet, who frequently draws on her own such skills when negotiating with planners for her speaking engagements. "For instance, I often deal with planners who are nice and who might agree to a particular request, but I can hear the hesitation in their voice, so I know it's a useless agreement."
This is even easier to do over the telephone, Charvet notes, as you can focus exclusively on the other person's tone of voice: "Most people are pretty good tone readers—they can hear the difference between an 'uh huh' that means, 'I agree' and one that means 'I'm not sure.' " They should also listen for the difference between attentive silence (indicating that the other person is paying attention to what you're saying) versus "stony" silence. The latter is "a dead giveaway that the other person has disconnected from the conversation," says Charvet. "It means you should stop whatever you're doing because it's not working."
Want even more tips on body language? Go to www.MiMegasite.com, click on "Articles By Topic," then on "Contracts/Legal," and read "More Body Talk: Reading People During Negotiations."