contract negotiations: prepared and fair are effective in any market

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Contract Negotiation: Prepared and Fair are Effective in Any Market

Christy Lamagna, CMP, CMM, CTSM Chief Strategist, Strategic Meetings & Events

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The Market Swings Both Ways !

“Sellers’” markets versus “Buyers’” markets Where the market is today How to adjust your planning to work within the current

environment Be flexible If you can’t be flexible, plan ahead Leverage your spend Explore new destinations Be creative!

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Clarity is Crucial Understand your program’s specific goals Confirm all key stakeholders are on the same page Know what you need versus what you would like and

understand the difference Realize that what you want comes with a ‘price’ Know your bottom line Don’t play games. Say what you mean and mean what

you say.

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Your Approach is Key to the Process Remember that there is a person on the other side of

the phone, not an ‘opponent’ Both sides are coming to the table with the shared goal

of booking the business. It’s up to you to help navigate how that process unfolds

This is not about you. The dialogue is not personal Communicate clearly, calmly and precisely Explain what you value and why. Often when the other

party understands your goals, an alternate (and sometimes better!) solution may be discovered

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It’s Not All About You Contracts are about opportunities and relationships Don’t begin the process until you are fully prepared Don’t be afraid to ask questions Read every word. Remember that precise words are

chosen for a reason Avoid ‘will’ and ask for ‘may’ Protect yourself Do NOT agree to the ‘that would never happen’

conversation

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It’s Not All About You Approach the negotiations understanding that both

parties need to walk away with an answer to the ‘What’s in it for me?’ question.

Be prepared to explain anything you’re asking for. Understand and be able to articulate your, “Why”

If a request is declined, ask why. Ask for alternatives to any requests that are declined Remember you can escalate the conversation if you

don’t feel as if you’re making headway Draw upon your hotel sales team

resources if you need additional help

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Fair Negotiations Work in Any Market Never ask for something that causes the other side to

lose Be up front throughout the process Remember that “emotion drowns reason” Create a template of standard clauses you require and

send them in advance Review the contract first and then discuss edits Have a backup plan if discussions don’t yield the results

you need Be willing to walk away from the deal

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Do Your Homework Check that all your figures match Double check that your dates and room nights are listed

correctly Confirm that the edits requested appear and are consistent

throughout the document Have the hotel define the costs associated with canceling

the program and slippage beyond what you have negotiated Ask for a ‘rebooking’ clause Make sure your management team understands the

penalties associated with canceling the contract BEFORE IT IS SIGNED

• Share a copy of the contract with your finance team

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Let’s Make a Deal!

Know your group’s history and base your room and F&B guarantees on past demonstrated performance

If you have an attrition situation, pay only profit on sleeping rooms and food (the 70/30 rule)

Industry standard profit on sleeping rooms is 70%

Industry standard profit on food is 30%

Negotiate out room rental fees in return for meeting your F&B minimum

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Ask for concessions 1:40 comp rooms Staff rooms billed at a discounted rate Attrition calculated cumulatively Attrition billed on profit (70% industry average) Attrition based on class of rooms used Group rate available for three days pre and post event

dates Internet rates discounted/complimentary Complimentary parking passes for pre-determined

number of guests

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Let’s Make a Deal!

VIP upgrades to suites at ROH rates Amenity of hotel’s choice for all VIP upgrades Flat rate for internet access in ballroom 15% discount on all AV Reduced service fee rates Business center will meet a big box store rate for all

services Flat rate for ingoing/outgoing shipments

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Know Your Audience: Hotels look at ‘space/dates/rates’. They need to

control one of the three Promotional item vendors value return business; using

one vendor for all your giveaway business may allow you to negotiate discounted pricing or year end rebates for the entire year’s spend

Independent contractors value consistent business and may lower their rates if you can contract a series of events at once instead of ‘one off’ programs throughout the year

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Know Your Audience Onsite help (photographers, travel directors, etc.) may

enjoy staying at the host hotel a day after the program Small businesses value prompt payment. Cash is king.

Negotiate for a discount on your bill for payment within 10 days of invoice

Speakers value exposure. Offering the opportunity for a speaker to sell books, CD’s etc., at the event and via a mailer after the event may yield savings off the booking fee

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Key Points to Remember: Identify your goals before you begin the negotiation

process Negotiations are not successful unless both sides win Know the difference between what you want and what

you need and what you’re willing to do to get there Don’t ask for anything you can’t defend, be proud of or

would not agree to if you were asked for it It’s a small world and both word and people travel.

Whether you establish yourself as a difficult or delightful negotiator, word will get around. Make sure you can be proud of what is being said and thought about you

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For a series of articles written by Christy, search www.planyourmeetings.com or go to www.smeplanners.com/inthenews Want to continue the conversation? Email Christy at:

[email protected]

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Or come to PYM LIVE NYC August 7, 2014! PlanYourMeetings.com/PYMLIVE-NewYork-2014

http://www.planyourmeetings.com/

http://www.smeplanners.com/inthenews

mailto:[email protected]

http://PlanYourMeetings.com/PYMLIVE-NewYork-2014