Let's Make a Deal
Buyers and suppliers offer negotiation tips for the current seller's market
By RAYNA KATZ
Creativity and bundling—meaning signing meeting contracts for multiple programs, preferably over a few years—are the name of the game for meeting planners when negotiating in today’s seller’s market.
That’s the consensus among several hoteliers, meeting buyers and industry attorneys who’ve seen it all when it comes to contracts.
Of course, whether we’re in a seller’s market is still up for debate. After all, as the economy goes, so too goes the industry, and the country is not yet on solid ground. But—again mirroring the nation’s economic situation—some markets have seen big improvements.
“Occupancy has gained momentum and we’re going to see a large shift on average daily rate,”predicts Mark Theis, director of group sales, North America, at Starwood Hotels & Resorts. “Our costs for heat, gas and oil are rising and that’s going to have to be compensated with rate.” In addition, he notes, “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; there’s a premium that comes with that upgraded inventory.”
Adds Gus Vonderheide, vice president of group sales for Hyatt Hotels Corp., “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. But in general, we are selling more rooms than we ever have.”
Healthier hotels mean a more robust industry and that’s ultimately better for meeting planners than being in a field on the decline. But it means negotiating concessions is a tougher road than it’s been in recent years.
“Some things that were on the table have been pulled off, such as free Internet access—whether in guest rooms or meeting space—or things like meeting room rental, meeting set-up and bartending fees,” says Dave Scypinski, senior vice president of ConferenceDirect. “Anything that involves 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 says. “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, say industry experts.
“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,” says 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; because we always spend a lot on that side and I track everything so I have data to back up my request. Read More...
Prices, Demand Take a Hike
Smith Travel Research just issued its latest research on hotel room occupancy and rates and, according to the findings, bookings and rates are clearly on the rise.
“Overall,we’re suggesting that group demand is back,” says Jan Freitag, senior vice presient. “At least to the level of 2011 and maybe even a little stronger.”
The latest STR Monthly Segmentation Review,” which showed results on occupancy, average daily room rate (ADR) and revenue per available room (RevPAR) for March and for the first quarter of the year, indicates several signs of health in the industry.