Negotiating: The Basics - Meetings Today · Negotiating: The Basics Presented by Robyn Mietkiewicz...
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Negotiating: The Basics Presented by Robyn Mietkiewicz Director of Accounts & Global Meeting Management Services Meeting Sites Resource Moderated by Tyler Davidson Chief Content Editor Meetings Focus Wednesday, March 13, 2013
Transcript of Negotiating: The Basics - Meetings Today · Negotiating: The Basics Presented by Robyn Mietkiewicz...
Negotiating: The Basics
Presented by
Robyn Mietkiewicz Director of Accounts & Global
Meeting Management Services
Meeting Sites Resource
Moderated by
Tyler Davidson Chief Content Editor
Meetings Focus
Wednesday, March 13, 2013
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Thank you to our Webinar Sponsors
• How to understand industry issues and trends that impact negotiations
• Pinpoint the variables that influence hotel availability and pricing
• How to review how hotels value your meeting/key hotel revenue
management components
• How to examine methods to assess your leverage using a strategic RFP
process
• How to implement five steps to value-based negotiations
Learning Objectives
Today’s Speaker
Robyn Mietkiewicz, CMP, CMM
Director of Accounts & Global Meeting
Management Services
Meeting Sites Resource
Negotiating: Advanced
Wednesday, March 27th
at 1pm Eastern
How Hotels Value Your Meetings & Strategic Negotiations
Robyn Mietkiewicz, CMP, CMM
Director, Accounts & Global Meeting Management
Services
Meeting Sites Resource
949.250.7483 ext. 300
Breaking Barriers
@MSR_Global Meeting Sites Resource
Goals For Today
• Increased demand in corporate & association meetings / increased attendance
• Steady increases in hotel occupancy, average daily rate and RevPAR / Shift to
a seller’s market
• Greatly reduced new hotel inventory / sleeping rooms in all brands
• Individual meeting budgets remain flat / hotels incorporating a multitude of
fees and surcharges
• Hotels refocus on revenue management to maximize profitability
• Planners focus on Strategic Meetings Management (SMM) to assure
accountability and measurable value
• More accountability for group contract performance clauses
Industry Trends That Impact Negotiations
0
10
20
30
40
50
60
70
80
Sleeping Rooms Group F&B F&B Outlets Recreation/Spa Retail/Misc Depts
ROOMS - 77%
GROUP F&B - 38%
F&B OUTLETS - 19%
RECREATION/SPA - 15%
RETAIL/MISC DEPTS - 15%
Industry Profit Margins (Average Hotel Chain & Independent)
• Transient demand
• Arrival / departure pattern
• Rooms to space ratio
• Group food & beverage
revenue
• Lead time
• Season
• History
• Potential incremental
revenue
• Value of total account
• Risk
• # of rooms held vs.
ability to pick-up block
• Cancellation/attrition
clauses in contract
• Other groups contracted
over same dates / revenue
contribution
How Hotels Value Your Meetings (Variables That Influence Pricing & Availability)
Meetings are
BIG investments:
have a
negotiations plan
for each meeting!
Meeting RFP / Hotel Revenue
Management Process
• San Diego Mid-Range Hotel
• Corporate Meeting RFP
Mid-Range Hotel – Southern California
AnyCo Meeting Specifications
Season – Peak: January – May October - November
Meeting Dates: January 20 -24, 2011 (negotiated in 2010)
Desired Group Pattern: Wednesday – Sunday Or Sunday - Wednesday
Thursday – Monday (4 nights)
Group Rate: $199.00 offered $169.00 budgeted
Hotel Room Availability: 390 Total Rooms
100 rooms – transient 290 rooms – group business 200 group rooms available
150 rooms per night (x 4 nights = 600 rooms) *Asking for more rooms than history indicates – 100 rooms per night (400 total)
Available Meeting Space: 13,000 sq. ft. 11,500 sq. ft. needed on heaviest day
Desired Catering Revenue: $49,800 $36,000 budgeted
Contract: *Want attrition and cancellation clause
*Will sign contract with a cancellation clause/no attrition clause
Case Study Key RFP Components
Compare AnyCo desired Group Rate to Hotel Group Rate to
determine % discount:
AnyCo Group Rate: Sgl/Dbl/Flat - $169.00
Hotel Rate: Sgl/Dbl/Flat - $199.00
% Discounted: 15%
$199 - $169 = $ 30.00
$199 x 15% = $ 29.85
$199 - $29.85 = $169.15
Rating: Peak Shoulder Off______
1. 5% - 10% 10% - 20% 20% - 30% 2. 10% - 15% 15% - 25% 25% - 35% 3. 15% - 20% 20% - 30% 30% - 40%
Room Rates
Room Rate
Rating:
2
AnyCo Total Catering Revenue: $36,000 Divided by Total # of Room nights: 600 Equals AnyCo catering per room night $60
Rating
1. $83 and up
2. $71 - $82
3. $70 or less
Catering Rating:
3
Catering
Determine AnyCo total revenue contribution to the Hotel:
AnyCo Room Rate
$169 x 600 (total room nights) = $101,400
AnyCo Catering Revenue
$60 x 600 (total room nights) = $36,000
Total AnyCo Revenue = $137,400
Hotel Desired Rate
$199 x 600 (total room nights) = $119,400
Hotel Desired Catering Revenue
$83 x 600 (total room nights) = $49,800
Total Hotel Desired Revenue = $169,200
Total Revenue
AnyCo revenue compared to hotel needs: $169,200 - Hotel $137,400 – AnyCo $31,800
Variance is 18.5%
$169,200 x 18.5% = $31,302 100% - 18.5% = 81.5%
Rating:
1 Group Achieves 95% of the hotel desired revenue
2 95% - 90%
3 90% and lower
Revenue Rating:
3
Total Revenue
Compare AnyCo desired arrival & departure days of the week to Hotel needs:
Hotel Peak Days Fri – Sat
Off Peak Days Sun- Thurs
Desired ARR/DEP Patterns Wed - Sun, Sun- Wed
AnyCo ARR/DEP Pattern Thurs – Mon
Rating:
1. Matches Off Peak Days & Desired Pattern
2. Matches Peak Days or Desired Pattern
3. Off Pattern or Creates Void
Pattern Rating:
3
Arrival/Departure
Total square footage needed on the heaviest usage day.
A. 13,500 sq. ft. (B & L in separate room)
B. 11,500 sq. ft. (B & L in same room)
C. 11,000 sq. ft. (B & L in same room & 1 breakout in GS)
D. 9,500 sq. ft. (B & L in GS)
E. Other possibilities?
Rooms to Space Ratio
Compare AnyCo allocation of guest rooms to meeting space:
Total hotel rooms 390
Subtract transient demand 100
Allocated group rooms 290
Available group rooms 200
AnyCo peak night rooms 150
% of total group rooms occupied 52%
Rooms to Space Ratio
Total Available Hotel Space (Sq. Ft.) 13,000 sq. ft.
Subtract AnyCo space requirements 11,500 sq. ft.
Remaining Space 1,500 sq. ft.
Calculation:
1,500 divided by 13,000 = 88% = % of space occupied
Difference between 100% - 88% = 12% space not utilized
Rating
1. Equal to or less than rooms to space ratio
2. 10%-15% more space than rooms
3. 16%-20% more space than rooms or
extensive setup/tear down
Rooms to Space Rating:
2
Rooms to Space Ratio
Determine potential displacement if AnyCo meeting is in a high demand timeframe:
Rating
1. Group meeting off-season or fills short term need or holiday
2. Shoulder season
3. Peak season
Season Rating:
3
Season
Determine the amount of risk involved for the Hotel with AnyCo block of rooms:
Rating
1. Group is holding the same amount of rooms history indicates
2. Group is holding more rooms than history indicates
3. First time meeting or depressed industry
History rating:
2
History
Determine the amount of risk Involved for the Hotel:
Rating
1. Contract includes a cancellation AND attrition clause
2. Contract includes ONLY cancellation OR attrition
clause
3. Contract has NO cancellation OR attrition clause
Contract Rating:
2
Contract Terms
Determine the amount of risk involved for the Hotel:
• Room rates 2
• Total revenue from 3
rooms & catering
• Rooms to space ratio 2
• History 2
• Catering 3
• Arrival/departure 3
pattern
• Season 3
• Contract terms 2
Total: 20
Ability to Negotiate
8 - 11 Excellent
12 - 17 Good
18 - 24 Poor
Ratings Review
How? Change Pattern
Add Food & Beverage
Reuse Space
Add Contract Clause
Reduce Room Block
Move to Shoulder Season
Can this become a “Good” meeting?
Season / demand over your date(s)
Peak Night Pattern / Flexibility
Sleeping Room Block / Revenue – multiply total room nights by
proposed room rate
Group Food & Beverage / Revenue – all functions from RFP X average
menu prices X attendees
Room To Space Ratio – total space on heaviest use day, calculate as
% of total space in hotel
Ancillary Spending – projected revenue for business center, AV,
production, Internet, golf/spa, sponsored events / ICW revenue, etc.
Assess Your Leverage From your strategic RFP, evaluate the following:
Big picture contract negotiation goals:
Contract integrity
Added meeting value
Cost savings
Risk reduction / cost containment
Hotel Contract Negotiations
Your custom hotel contract should address all
contract components, value added
concessions, hotel fees and surcharges
(eliminate or reduce), hotel performance
clauses (based on lost profit, not revenue) and
company liability language.
Custom Hotel Contract Process
Sleeping Room Rates Internet Discounts
Concessions Hotel Fees & Surcharges
F&B Comp / Discounts Preferred Suppliers
AV Production / Hotel
Support Services
Master Account Discounts
(for larger meetings)
Cost Savings
Metrics to Measure Success Cost Savings Report By Meeting
Sleeping Room Rates Rate integrity process
F&B Guarantee Allowable attrition
Unauthorized Changes Hotel not to change or alter
contracted room block, meeting space, services without written approval
Value Added Concessions Prioritize for each meeting
Hotel Fees & Surcharges Eliminate or reduce
Meeting & Event Space Complimentary / no sliding scale
fees
Published Rate Clause No lower group rates via website
after contract signing
Resell / Audit Resell / credit accountability,
percentage of damages applied to future meeting
Force Majeure Termination without damages
Attrition Guarantee percentage of room
block / no sliding scale fees / damages based on lost profit not revenue
Relocation Accountability when attendees “walked”
Breach By Hotel Failure to provide services as
agreed render Hotel liable for direct & indirect damages
Cancellation Sliding scale damages on lost
profit not revenue / resell / if damages, apply to future meetings
Construction / Remodeling No construction or renovations
over meeting dates that impact meeting, image, logistics, guest experience
Legal Department Language Indemnification, insurance,
dispute resolution / arbitration, bankruptcy, successors & assigns, etc.
Key Risk Reduction/
Cost Containment Components
1. Utilize a strategic RFP / Assess your leverage for each meeting
2. Calculate your revenue contributions, by category
3. Custom hotel contract / negotiations plan for each meeting
4. Focus on negotiating added meeting value / Cost savings and
contract risk reduction
5. Track meeting history & spend, by category / hotel
Five Steps to Value-Based
Negotiations
Thank You Complimentary Planning Resource:
Strategic RFP / Value Based Negotiations Action Plan
Robyn Mietkiewicz, CMP, CMM
Director, Accounts & Global Meeting Management Services
Meeting Sites Resource
949-250-7483 (ext. 300)
www.meetingsites.net
Questions?
Tyler Davidson
Meetings Focus
Robyn Mietkiewicz
Meeting Sites Resource
Our TAKE 10 feature, offered either on our website or via our
Webinar Wrap e-newsletters, provides answers to some of the key
questions we just did not have time to get to during today’s webinar.
Look for an email coming soon!
Upcoming Webinar - Negotiating: Advanced
presented by Robyn Mietkiewicz
Wednesday, February 27th at 1pm Eastern
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Negotiating: The Basics
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