Strategic Hotel & Contract Negotiations, Part 1

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1 Strategic Hotel & Contract Negotiations, Part 1 Presented by Robyn Mietkiewicz, CMP, CMM Director, Global Meeting Management Services Meeting Sites Resource Moderated by Tyler Davidson Chief Content Director Meetings Focus Wednesday, March 12, 2014

3 Housekeeping Today s Webinar is worth the following credit toward the CMP application through the CIC: Project Management, 1 hour. To receive this credit for attending simply visit: Here you may also find a copy of today s presentation and watch the webinar On Demand. We will redirect you to this page following today s presentation. Use the Ask a Question box to ask questions at any time during the presentation. Should you experience any technical difficulties, please send a message in the Q&A area or call

4 Thank you to our Webinar Sponsors:

5 Today s Speaker: Robyn Mietkiewicz, CMP, CMM Director, Global Meeting Management Services Meeting Sites Resource rmietkiewicz@meetingsites.net

6 Learning Objectives Learn industry issues and trends that impact value based hotel negotiations Discuss methods to get a fast response to your RFPs Know how to assess the value of your meeting and leverage total spend Examine specific metrics to report added meeting value and cost savings, by meeting Review how meeting data management drives measurable value/strategic decisions

7 Breaking Barriers Strategic Hotel & Contract Negotiations, Part 1 Robyn Mietkiewicz, CMP, CMM Director, Global Meeting Management Meeting Sites Resource ext. 300 Meeting Sites Resource

8 State of the Industry Continued increases in meeting demand Reduced new hotel inventory / sleeping rooms in all brands Steady increases in hotel occupancy, average daily rate and RevPAR / Shift to a seller s market Hotels refocus on revenue management to maximize profitability Planners focus on Strategic Meetings Management (SMM) / measurable meeting value. Hotels offering less flexibility on hotel contract performance clause terms

9 Key Hotel Revenue Management Criteria Variables That Influence Pricing & Availability Arrival / departure pattern Rooms to space ratio Group food & beverage revenue Season History Potential incremental revenue

10 Meetings are BIG investments: Have a negotiations plan for each meeting!

11 Strategic RFP Process Meeting Dates and Room Block Type of Room (Day 1) Sat (Day 2) Sun (Day 3) Mon Totals Single Double / Double Suite (by category) Staff Rooms Totals

12 Peak Night Pattern Flexibility Hotels are focused on pattern selling for all market segments and often an arrival / departure shift by one or two days can save 15% 20%

13 Event History 3 years: In a seller s market hotels will check performance of past meetings

14 Meeting Agenda: Start - End Time PPL Name Type Setup Sq. Ft. Ceiling Ht. 24 Hr Notes A/V Notes Sunday (Day 1) 06:00 AM - 12:00 AM 06:00 AM - 07:00 PM 06:00 PM - 08:00 PM 5 Workroom Office Dry Run & Set Up GS Room Welcome Reception Flow (no tables or chairs) 1,000 sq ft 0 ft Yes Misc. Custom 3,000 sq ft 14 ft No Located near General Session room. Client needs a spacious general session room for flow / 8 table top displays. 24 Hour hold 24 Hour hold Reception Reception 1,250 sq ft 14 ft No N/A N/A

15 From Hotel e-proposals / Short List Comparisons (At Space Hold): Begin negotiating to have meeting room rentals discounted or waived Negotiate room rate Compare breakfast, lunch & dinner costs, plus tax & service charge Hotel to assign specific meeting rooms per function, by day Set up site inspections with hotels that meet all stated RFP criteria

16 Assess Your Leverage From your strategic RFP, evaluate the following: Sleeping Room Block / Revenue multiply total room nights by proposed room rate Peak Night Pattern / Flexibility Group Food & Beverage / Revenue all functions from RFP X average menu prices X attendees Rooms To Space Ratio total space on heaviest use day, calculate as % of total space in hotel Season / demand over your date(s) Ancillary Spending projected revenue for business center, AV, production, Internet, golf/spa, sponsored events / ICW revenue, etc. History

17 Sample Revenue Management Case Study Recap Based on 375 total contracted rooms (3 nights, 125 peak) Sleeping Room Rates Meeting planner proposed budget $179 Hotel group rate offered $205 Difference: $25 x 375 = $9,375

18 Peak Arrival / Departure Pattern Group desires Monday Thursday Hotel desires Sunday Wednesday or Wednesday Sunday

19 Group Food & Beverage Contribution Meeting planner proposed budget $32,000 Hotel minimum guarantee $41,250 Difference: $9,250

20 Rooms to Space Ratio Customer requests 7,000 square feet on heaviest usage day Hotel offering 5,500 square feet Difference: 1,500 square feet Group has 30% of allocated group room block thus hotel is offering 30% of their meeting space.

21 Season Groups meeting dates are March 2013 which is high season

22 Ancillary Spending Projected: Business Center - $3200 AV - $3800 Golf Tournament - $5,000 For a total of $12,000

23 History In 2012, Group contracted 400 total rooms and picked up 337 Group requesting more rooms than pick-up history, which is a yellow flag for the hotel

24 Ratings Review Determine the amount of risk involved for the Hotel: Room rates 2 F&B 2 Rooms to space ratio 2 History 3 Arrival/departure 3 pattern Season 3 Ancillary Spending 3 Total: 18 Ability to Negotiate 0-10 Excellent Good Poor

25 Cost Savings Metrics to Measure Success Cost Savings Report By Meeting Sleeping Room Rates Internet Discounts Concessions Hotel Fees & Surcharges F&B Comp / Discounts Preferred Suppliers AV Production / Hotel Support Services Master Account Discounts (for larger meetings)

Sample Cost Savings Report (from countersigned contract / supplier agreements) Sleeping room rates difference between rates provided in proposal vs. final negotiated room rate i.e., proposed rate $209, negotiated group rate $189 = $20 savings X 360 rooms = $720 savings Suite upgrades at group rate - i.

26 Sample Cost Savings Report (from countersigned contract / supplier agreements) Sleeping room rates difference between rates provided in proposal vs. final negotiated room rate i.e., proposed rate $209, negotiated group rate $189 = $20 savings X 360 rooms = $720 savings Suite upgrades at group rate - i.e., group rate for one bedroom suite $650, contracted at group rate of $189 ($650 - $189 = $452 savings). Benchmark against group rates, not rack rates Staff rooms generally 50% off group rate, i.e., $189 group rate = $94.50 staff room rate

Sample Cost Savings Report Complimentary rooms total contracted room block negotiated comp policy, i.e. 360 contracted rooms 1/40 = 9 complimentary rooms at $189 group rate F&B Discount total contracted F&B guarantee X percentage of negotiated discount, i.

27 Sample Cost Savings Report Complimentary rooms total contracted room block negotiated comp policy, i.e. 360 contracted rooms 1/40 = 9 complimentary rooms at $189 group rate F&B Discount total contracted F&B guarantee X percentage of negotiated discount, i.e., $65k F&B guarantee X 10% off catering menus = $6,500 Waive In-Room Internet Fee total contracted room nights X published in-room Internet rates, i.e., 360 contracted room nights X $12.95 = $

28 Sample Cost Savings Report Waive Meeting Space Rental / Set-up Fees do not report savings if space is complimentary based on room block pick-up percentage / F&B guarantee (only if space rental / set up fees in proposal) AV Discount AV budget X percentage discount i.e., $17k AV budget X 15% negotiated discount = $2, Hotel Fees & Surcharges the goal is to eliminate or reduce fees / calculate savings against published fee or surcharge rates, i.e. waive $20 resort fee X 360 rooms = $720

29 Sample Cost Savings Report Complimentary Pre-Planning Room Nights - total negotiated planning room nights X negotiated room rate, i.e., 8 pre-planning comp rooms at $189 = $1, Complimentary Acceptance / Storage Meeting Materials calculate published rates / savings by box or pallet size, pound or storage duration Preferred Supplier Volume Buying calculate savings for meeting support services, off-site venues, DMC s, etc. (and preferred supplier volume buying)

Key Risk Reduction / Cost Containment Components Sleeping Room Rates Rate integrity process Value Added Concessions Prioritize for each meeting Published Rate Clause No lower group rates via website

30 Key Risk Reduction / Cost Containment Components Sleeping Room Rates Rate integrity process Value Added Concessions Prioritize for each meeting Published Rate Clause No lower group rates via website after contract signing Attrition Guarantee percentage of room block / no sliding scale fees / damages based on profit not revenue Cancellation Sliding scale damages on profit not revenue / resell / if damages, apply to future meetings F&B Guarantee Allowable attrition Hotel Fees & Surcharges Eliminate or reduce No Early Departure Fees Covered by Attrition

Key Risk Reduction / Cost Containment Components Resell / Audit Resell / credit accountability, percentage of damages applied to future meeting Relocation Accountability when attendees walked

31 Key Risk Reduction / Cost Containment Components Resell / Audit Resell / credit accountability, percentage of damages applied to future meeting Relocation Accountability when attendees walked Construction / Remodeling No construction or renovations over meeting dates that impact meeting, image, logistics, guest experience Unauthorized Changes Hotel not to change or alter contracted room block, meeting space, services without written approval Meeting & Event Space Complimentary / no sliding scale fees Force Majeure Termination without damages Breach By Hotel Failure to provide services as agreed render Hotel liable for direct & indirect damages Legal Department Language Indemnification, insurance, dispute resolution / arbitration, bankruptcy, successors & assigns, etc.

Five Steps To Value-Based Negotiations 1. Utilize a strategic RFP / Assess your leverage for each meeting 2. Calculate your revenue contributions, by category 3.

32 Five Steps To Value-Based Negotiations 1. Utilize a strategic RFP / Assess your leverage for each meeting 2. Calculate your revenue contributions, by category 3. Custom hotel contract / negotiations plan for each meeting 4. Focus on negotiating added meeting value / Cost savings and contract risk reduction 5. Track meeting history & spend, by category / hotel

33 Complimentary Planning Resource: Strategic RFP / Value Based Negotiations Action Plan Robyn Mietkiewicz, CMP, CMM Director, Global Meeting Management Meeting Sites Resource (ext. 300) rmietkiewicz@meetingsites.net

34 Questions? Robyn Mietkiewicz, CMP, CMM Director, Global Meeting Management Services Meeting Sites Resource Tyler Davidson Chief Content Director Meetings Focus

35 Housekeeping Our TAKE 10 feature, offered either on our website or via our Webinar Wrap e-newsletters, provides answers to some of the key questions we just did not have time to get to during today s webinar. Look for an coming soon! Upcoming Events Strategic Hotel & Contract Negotiations, Part 2 - presented by: Robyn Mietkiewicz, Wednesday, March 26 th at 1pm Eastern Site Selection Best Practices - presented by: Joan Eisenstodt, Wednesday, April 30 th at 1pm Eastern On Demand - Also available for you to view at any time. Visit ( today learn more, register and Watch Now!

36 Thank you to our Webinar Sponsors:

Meetings Webinar Club On each Webinar Club page, the individual sections will allow you to: Download webinar PPT slides View the webinar On Demand Obtain CMP Credit

37 Meetings Webinar Club On each Webinar Club page, the individual sections will allow you to: Download webinar PPT slides View the webinar On Demand Obtain CMP Credit information Read related articles and so much more! Each webinar has it s own Webinar Club page and URL! For today s Webinar Club page, visit:

38 Thank you for joining today s webinar! Strategic Hotel & Contract Negotiations, Part 1 Please stay connected as you will be redirected to the Meetings Focus Webinar Club page where you can obtain a copy of this presentation as well find information to gain CMP Credit. If you are not automatically redirected, please visit:

Negotiating Techniques For The Win

Negotiating Techniques For The Win Wednesday, March 30, 2016 Presented by Robyn Mietkiewicz, CMP, CMM Senior Director, Global Meeting Management Meeting Sites Resource Moderated by Tyler Davidson Vice