Creativity and bundling—the signing of meeting contracts for multiple programs, preferably over a number of years—are the keys to successful negotiating in today’s seller’s market.
That’s the consensus among several hoteliers, meetings buyers and attorneys who discussed the current seller’s market with Meetings Focus MidAmerica.
“Occupancy has gained momentum and we’re expecting a big shift on average daily rate,” said Mark Theis, director of group sales, North America, for Starwood Hotels & Resorts. “Our heat, gas and oil costs are rising; that has to be compensated with rate.
“At Starwood, especially across the Sheraton and Westin brands, we have done a number of renovations and added new properties within the last three years,” Theis continued. “There’s a premium that comes with that upgraded inventory.”
Hyatt is also experiencing an uptick in business.
“Not all markets are thriving, there are bubbles and pockets of the U.S—like second- and third-tier cities—and even international destinations that haven’t recovered as much as others,” said Gus Vonderheide, vice president of group sales for Hyatt Hotels Corp. “But in general, we are selling more rooms than we ever have.”
Healthier hotels, of course, create a tougher negotiating climate.
“Some things that were on the table have been pulled off, like free Internet access—whether in guest rooms or meeting space—meeting room rental, meeting set-up and bartending fees,” said Dave Scypinski, senior vice president of ConferenceDirect. “Anything involving profit has become a sacred cow.”
But there are reasons for that, and planners must understand a hotel’s challenges before sitting down at the bargaining table, contends industry attorney Lisa Sommer Devlin, who typically represents hotels.
“What customers don’t understand is that hotels need commitments; they’re accountable to owners, they have to make forecasts etc.,” she said. “Planners need to know that many hotels out there are over-mortgaged and they don’t have flexibility.”
Understanding where hotels do have flexibility—and what buyers can do to make their salespeople more inclined to help them—is vital to creating a win-win deal, industry experts say.
“We have a general session and, on average, eight breakouts, but I don’t ask for a 24-hour hold so that the hotel can sell space in the evening,” said Sekeno Aldred, events manager at Goodwill Industries. “As a result, sometimes I can get more space for a longer period of time, or maybe a food and beverage discount.”
Hyatt’s Vonderheide agrees.
“Flexibility on the customer’s side makes a big difference on my flexibility,” he said. “Especially if that customer can help out with my need dates, or if they’re willing to use the F&B outlets at the hotel.
“If a customer can sign with us for two or three meetings, I can respond with a very attractive package,” he added.
Bundling is especially helpful to multibrand companies like Starwood, Theis noted. “If we can cross-leverage across brands, concessions are provided based on total spend. Wecan include items such as a welcome reception, a percentage off F&B costs, or complimentary Internet access.”
Scypinski noted, “The answer to the question ‘What should I try to negotiate on?’ is ‘everything.’ The average occupancy throughout most of the country is barely touching 70 percent, so there’s still wiggle room. It never hurts to ask.”