When negotiating hotel contracts, it is fair to say things have changed. There are new rules, clauses, and regulations to be mindful of. If the pandemic taught us anything, it was that nothing is predictable, and everything needs to be flexible.
Both hotels and those sourcing hotels have strong interests in protecting their bottom line, but they can’t forget they must also provide their clients a first-class experience. Negotiations are vital to delivering a next-level experience, and there is no better time than the present to dust off these skills. Many are surprised when they discover the requests they can make; however, it is not easy to know what to ask.
There are several things you need to be mindful of, but before we get into our key list, let’s go over three crucial requests that are a must in every hotel negotiation:
- Ask for reduced non-refundable deposits
- Ensure force majeure and extended rebooking clauses are added
- Guarantee clauses for COVID and other possible pandemic protocols
When you have ensured that these requests have been satisfied above, you can rest easy knowing that you’ve avoided some of the largest headaches in the hotel sourcing world. Now, let’s discuss our five main tips.
5 Key Tips for Negotiating Hotel Contracts
- Source When You are Ready to Buy
- Be Transparent About Your Budget (& Research the Market)
- Be Detailed Upfront
- Timing is Everything
- Pick Up the Phone
1. Source When You are Ready to Buy
Gone are the days when you could sit on a held space for weeks or months. A hotel partner recently shared that you should be ready to sign a hotel contract tomorrow when you begin your sourcing process. Space is a high commodity, and with two years of compressed activities being scheduled in the next 12-18 months, it’s no wonder open venues are hard to find.
If you hesitate or wait, another group will displace your meeting, and you will end up going through multiple rounds of date and program revisions. Hotels are seeing this happen time and time again, and they are quite fatigued with the cycle. It’s crucial that you advise your clients to confirm program details. Wait until you know the exact dates, the number of attendees, and meeting space needs before you initiate the sourcing process. The faster you can nail down these details, the better chance you will grab your desired timing and venue.
Your clients may be short-term focused and work on a quarter-to-quarter budget mindset. This means you may only begin negotiations within a quarter, and you usually have less than three months to nail down the hotel and dates. However, with that timing window, you are already too late. The incentive trip may not take place until another 18 months or so, but that’s the perfect time to solidify your plans. This corporate America mindset needs to change if you want to have any luck procuring your desired venue.
Hotels are enjoying high occupancy, high ADRs (Average Daily Rates), and high demand for both group and leisure travelers. They are inundated with loads of RFPs (Request for Proposals), which means your proposal may not even get a shot at being accepted when you submit it at the last minute. For example, a Grand Cayman resort declined to bid on a medium-size incentive travel program saying, “we have proposals to 10 different companies for those same dates, and we stop proposing at 10.”
2. Be Transparent About Your Budget (& Research the Market)
Hotels traditionally offer the highest rate they hope to get from a group. Knowing the estimated market rates through research will give you an edge. Is the rate the hotel provides typically for the season and occupancy? Work with your hotel to gain trust by setting a tone of transparency and being smart about the market environment. You can also be strategic by working with an incentive travel company, such as Brightspot, to leverage buying power in the market.
3. Be Detailed Upfront
When negotiating hotel contracts, it is crucial to include all the important event details in your initial RFP. This will help reduce revisions down the line for you and the hotel. Many times, things change from the initial RFP, and this is unavoidable and understandable. However, when it is time to request a hotel contract, take the time to prepare a thoughtful email to the hotel that shows preparation and less ambiguity. This should include your standard agreement or any standard clauses, top concessions (not just the bucket of standard concessions you might have requested in your RFP), a summary of the items you have discussed to date (to ensure they are incorporated into the contract), and any other special notes or requests. The more information you can provide in that first email, the less back and forth and confusion later.
4. Timing is Everything
Consider closing your contract at the end of a quarter or year. Hotel sales teams are highly motivated to meet their numbers by these dates and tend to give better packages to close the deal. Multi-year deals are also a great way to win larger concessions.
5. Pick Up the Phone
When the finer points of hotel contracts are being negotiated, numerous emails will undoubtedly be exchanged. Due to this, miscommunications run rampant, and vital notes get inadvertently lost. We all have busy schedules, which makes it very tempting to simply send an email to complex requests. However, you can often save yourself time, confusion, and headaches if you pick up the phone and give a verbal response. You might even get your hotel contact to make the changes over the phone and have them send it to you immediately. Now, that sounds like a better plan!
With these five tips in mind, you will become the expert negotiator ready to handle anything the hotel market or hotel staff brings your way. Your hotel contact will see you can quickly move requests along the pipeline, and they will become your most prominent advocate.
Before we leave you, here’s a list of several additional concessions you can ask for when negotiating hotel contracts. These go beyond the standards, but there’s no telling what the hotel may say. You may be pleasantly surprised by the outcome.
- 15-20% attrition clause
- 1 complimentary room for every 35 rooms booked (or lower)
- Upgraded suites for VIPs at the group rate
- Reduced room rates for staff or speakers
- Discounted spa or in-house audiovisual services
- Waived meeting space rental fees
- Complimentary internet in guest rooms and meeting spaces
- Reduced resort fee
- Discounted parking and/or transportation costs
- Complimentary office staff for specific events
- No package handling charges
- Complimentary VIP room amenities
- Group rate extended three days pre- and post-meeting
At Brightspot, we strive to match corporate groups with fantastic hotels and venues. Our sourcing teams do the research, send RFPs, review proposals, and present their recommendations. If you want to avoid wasted time, labor, and repeated processes due to hotel shortages, drop us a line! Brightspot can be the catalyst that brings your meeting group to the perfect hotel.