While there has been much talk of the return of the hotel seller’s market in 2012, hotel negotiating experts say planners can still find value.
The basic tenets of cultivating relationships and a smart approach to negotiating can trump whatever happens with occupancy and ADR (average daily rate) trends this year.
“Successful negotiations have been around a lot longer than the so-called buyer and seller markets,” says Nancy Norman, a meeting planner, author/educator on negotiation techniques and president of The Norman Group. “Expert negotiators are not successful just when hotels are in a compromised economic position—they’re successful because they’ve seriously studied how to be competently effective at all times.”
Hotels still need business
In any case, Norman maintains that hotels will not hold all the bargaining chips in 2012.
“Our economy continues to be distressed and most hotels will be greatly challenged to raise their rates, except, perhaps, the luxury segment,” she says. “Hotels will need our business as much as we need theirs.”
Hospitality industry consultant Cindy Estis Green, managing partner of The Estis Group, agrees, adding that it’s important to remember that hotel rates, particularly at luxury properties, fell about as far as they could during the recession.
“If hotels cut rates too deeply, they can’t deliver,” she says. “It’s actually a good situation for planners now—you don’t want to be dealing with a struggling hotel.”
Estis Green believes the last few years have been a “reality check” for both planners and hotels, resulting in more awareness about the value of long-term partnerships that don’t rise and fall with the stock market.
“You can’t just say ‘I want the cheapest rates,’” she says. “It’s about sitting down and figuring out what you really need and working on that. Things are more nuanced.”
Knowledge is Power
When it comes to successful negotiating with hotels, Norman says “knowledge is crucial.”
She advises planners to first educate themselves on how hotels operate—learn what is important to a hotel’s bottom line, particularly about revenue streams and which are the most important.
“Planners should keep up-to-date with hospitality news, events, contract law, contracting, negotiating and trends. This will place them in a very strategically important position when negotiating,” she says.
Planners also need to assess their organization’s wants and needs in relation to those of a hotel. In addition, they need to be aware of any potential liability issues that should be addressed in contract clauses.
“It’s up to the planner to determine what they really need, and what they can ‘give up’ if necessary to get it,” Norman says.
It’s a matter of give and take.
“Both parties [hoteliers and planners] need to be informed and current regarding the needs of the other party in order to be able to leverage all possibilities competently for a fair and worthwhile negotiating effort.”
Don’t start with rates
Instead of starting negotiations by discussing the group rate, Norman advises planners to “leave this negotiation while you still have leverage. Never discuss the group rate up front. Then, you’ve lost before you’ve begun.”
According to Estis Green, getting overall value from the hotel means looking at the whole package and also knowing where the hotel might be most likely to make concessions.
“There are certain services that have fewer costs for the hotel, things like waiving Internet charges, meeting room rental or admission to the fitness center,” she says. “By contrast, food and beverage has a fixed cost, so it’s harder to find a good deal there.”
When it comes to asking the hotels for concessions on elements other than rates, Norman says planners should research the concessions currently being promoted by the hotel, as well as concessions being offered at other hotels.
Not only can planners use this knowledge to gain leverage, but hotel sales managers “will be impressed with your knowledge and news of the industry,” she says. “This will add to your credibility, and your level of competence and skill during the negotiations.”
Maria Lenhart is a former editor at Meetings Focus.
