10 Methods for Better Room Block Negotiations
September 28, 2017
Events. They are busy, taxing, and strangely rewarding. But before the craziness of any event begins, you have to lay the groundwork. And that starts with picking a venue and securing your hotel room blocks.
The following ten tips will help you negotiate better hotel contracts:
- Get fully informed before going to RFP. Explore room rates around your event on hotel and third-party websites. Knowing the publicly offered rates lets you see if a hotel might be more motivated to secure your business. If rates are much higher over your dates, the hotel might already have a large group booked. Go in knowing this for your preferred property and their competitive set before getting in the ring with them.
- Use your connections. A local hotel likely won’t be aware of your value to the global brand based on just one RFP. If you use a hotel brand regularly, leverage your clout with your global hotel rep who will be motivated to help you to book. They can sometimes cut through the clutter and legitimize the RFP for you.
- Enlist the CVB. If you are looking at more than one possible city, enlist the local convention and visitors bureau in your negotiations. They will be willing to go to bat on your behalf in order to secure the business. They may even have incentives (cash or otherwise) to entice you into their city.
- Get all of your cards on the table. If it is your first time in a city and you are likely to come back, use that possibility to entice aggressive proposals. If you can negotiate more than one contract, use that buying power to your advantage. Don’t expect the promise of future business alone to carry the weight. Come prepared with multiple RFP’s and a willingness to sign multiple contracts. Make sure you negotiate hard the first time since it will set the precedent for when you come back.
- Validate your business. If you have historical data for the same event, share this information to let hotels understand the impact and pick-up performance of your business. Business that is less risky is usually determined to be more attractive and can be negotiated harder.
- Leverage your BATNA (Best Alternative To a Negotiated Agreement). RFP to multiple properties and use the best offer as leverage with your preferred hotel. Example: Hotel A is offering $199 with 10 upgrades to suites. Hotel B (your preferred option) is offering $219 with 8 upgrades. Tell Hotel B you would like to go with them but they would have to beat Hotel A’s offer.
- Make it personal. Once you collect your proposals, engage in one-on-one conversations with the hotel sales manager. Chat about their hotel and the city; listen to their expertise. Creating a personal connection will help them buy into you and your event. No technology takes the place of a good old fashion one-on-one conversation.
- Collaborate with the hotel to lower your attrition risk. If the hotel wants 90% at 30 days and you want 80%, there are many ways to negotiate. Ask for a tiered attrition over multiple dates. This might see you releasing 5% at 90 days, 5% at 60 days and 10% at 30 days. You get your 80% and the hotel gets more time to resell those rooms thereby reducing their risk. You can also offer to enforce a fenced rate (non-cancellable or pre-paid), increase your F&B spend, offer head quarter hotel status, or give back some of the concessions you’ve already won.
- Protect your block. A great contract on paper is worthless if your guests are booking outside the block. Insist on a “lowest rate” guarantee to ensure there is no publicly available rate lower than your contracted rate. If you find lower rates in lead up to your event, contact your hotel sales manager ASAP to have it rectified.
- Conduct an audit. Add a clause in your contract requiring the hotel to compare your registration list against everyone booked in the property over the event dates. If they find any of your guests that were booked outside of the block, they will honour them towards your final numbers. This is especially important if you are in an attrition situation or have revenue being made on the consumption of rooms.
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