5 Negotiating Tips to Get the Hotel Contract You Want
Here are a few negotiating nuggets gleaned from attending industry event sessions.
Remember the Golden Rule: If you ask for something before a contract exists, it’s called negotiating.
If you ask for something after a contract exists, it’s called begging.
Be sure to cover all your bases before you sign that contract.
Use a three-step process for your contract. The first time, look the contract over for clauses that are vague, one-sided, or overly burdensome.
The second time, look for what’s missing that needs to be added.
For example, in the case of the International Women’s Bowling Congress v. Hyatt, where the lack of an attrition cause led to a lawsuit, Foster says, “If the bowling group had just one more sentence, they could have avoided two years of litigation.”
The third step is to revise, provide addenda, or rewrite the contract to include all the new terms and conditions.
“Give the other side what they’re asking for, but change the terms—that’s the secret of compromising,” says Foster.
Watch out for penalties. “Penalties are meaningless in civil litigation, with ‘penalty’ being defined as something that allows the injured party to benefit more than they would have if the contract were performed.
Contracts should always talk about damages, not penalties,” he says.
Damages equal lost profits, not total lost revenues.
In hotels, the average is 75-85 percent profit margins on guest rooms; 25-35 percent on catered food; and 80-85 percent on alcohol beverage functions.
And if a hotelier insists on getting 100 percent of revenue for guest rooms damages, just reply, “Are you crazy?” You shouldn’t have to pay for expenses the hotel doesn’t incur.
Sales bonuses are based on total revenue, he says, not profit, which is why salespeople tend to think this way.
“It’s not your obligation to help them meet their revenue goals,” says Foster. If they won’t budge, ask to speak with someone who is authorized to make those changes, because this really isn’t up for dispute.
Be careful with attrition clauses.
Though hotels like to have groups guarantee they’ll spend a minimum amount of revenue for guest rooms in their attrition clauses, Foster says not to let them.
This shifts all the risk to planners. For example, what if you booked the meeting in a seller’s market for a meeting held in a buyer’s market economy?
If your contract was written to guarantee revenue, you’re basically out of luck if you can’t make the minimum.
“It’s not your responsibility to manage a hotel’s room rates,” he says. “Why should it be the hotel’s responsibility to manage the planner’s revenues?”
A better way is to base your formula on guaranteed room nights, he says.
Also, include an audit provision so you can check for rooms that should be credited to you.
Source : John Foster, legal counsel, Meeting Professionals International : https://meetingsnet.com
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