Successful Contract Negotiations

By Marie Tamayo

What Is a Negotiator?

The goal of a negotiator is to reach an agreement which will be mutually beneficial for all parties.

Although he or she may represent a specific party, this does not mean that the negotiator is only interested in achieving this party's interests and goals.

A negotiator is someone who specializes in mediating agreements between two or more parties.

What Is a Negotiator?

A good negotiator recognizes that a mutual agreement will be beneficial in the long term.

He or she can use a variety of techniques, relying heavily on knowledge of the industry, tools, established relationships. etc.

A good negotiators balances the needs and desires of their clients with the reasonable expectations of the other side.

Good news!!! You don't have to go to a negotiation seminar to sharpen upyour ability to negotiate.

Hotel Contract Negotiation

We all negotiate in our personal and professional lives. We negotiate when we go to a garage sale, or when we want to do something different at work, or when we are dealing with members of the public. .

Sometimes its easy to negotiate, but other times, when we are not negotiator at heart or have a great deal at stake…. or we are upset, the task can be intimidating or difficult. Following are some tips that can help us be

State Your Needs : The other hotel needs to know what you need. It is important to state not only what you need but why you need it.

Be assertive not aggressive: Note that there is a difference between being assertive and being aggressive. You are assertive when you take care of your own interests while maintaining respect for the interests of others. When you see to your own interests with a lack of regard for other people's interests, you are aggressive. Being assertive is a quality of a good negotiator.

Hotel Contract NegotiationDon't be afraid to ask for what you want. Successful negotiators are assertive andchallenge everything – they know that everything is negotiable.

Be quiet and listen. Negotiators are detectives. They ask probing questions and then listenThe other negotiator will tell you everything you need to know – all you have to do is listen.

Hotel Contract Negotiation

Do your homework. This is what detectives do. Gather as much pertinent information prior to your negotiation. What are their needs? What pressures do they feel? What options do they have?

Doing your homework is vital to successful negotiation. You can't make accurate decisions without understanding the other side's situation. The more information you have about the people with whom you are negotiating, the stronger you will be.

Hotel Contract Negotiation

Always be willing to walk away… and came back later. In other words, never negotiate without options. If you depend too much on the positive outcome of a negotiation, you lose your ability to say NO. When you say to yourself, "I will walk if I can't conclude a deal that is satisfactory," the other side can tell that you mean business. Your resolve will force them to make concessions.

Don't be in a hurry. Being patient is very difficult for Americans. We want to get itover with. Anyone who has negotiated in Asia, South America, or the Middle East willTell you that people in those cultures look at time differently than we do in NorthAmerica and Europe. They know that if you rush, you are more likely to makemistakes and settle for less.

Show the other hotel how their needs will be met. Successful negotiators always look at the situation from the other side's perspective. Instead of trying to win the negotiation, seek to understand the other negotiator (hotel) and show them ways to feel satisfied.

Trying to win at all costs does not workIf you "win" there must be a loser, and that can create more difficulty down the road. The best perspective in negotiation is to try to find a solution where both parties "win". Try not to view negotiation as a contest that must be won.

Hotel Contract Negotiation

Focusing on Personalities, not Issues : Particularly with people we don't like much, wehave a tendency to get off track by focusing on how difficult or obnoxious the personseems. Once this happens, effective negotiation is impossible. It is important to stick tothe issues, and put aside our degree of like or dislike for the individual.

Hotel Contract Negotiation

Prepare Options Beforehand: Before entering into a negotiating session, prepare some options that you can suggest if your preferred solution is not acceptable. Anticipate why the other party may resist your suggestion, and be prepared to counter with an alternative.

Ultimately you need to know what you are negotiating for in order to be successful at it…Step 1 – Visit the site

Step 2 -Request For Proposal (RFP)

The RFP is a request for a quote for service identifies the goals and objectivesprovides a profile of the groupprovides historical data

When writing an RFP, think about it

as the first step to negotiating a

contractUse Facility

Negotiation check list. Forms Package

Pg. 41(See sample of

RFP)

Consider what you need vs. what you want Needs are non-negotiableWants can become the basis for negotiations

Hotel RFP

What It Should Include: Group profile (who/what the event is about) Preferred event dates (pattern and any flexibility) Number of attendees (if possible, include attendee profile) Meeting space requirements (i.e. setup of each room, # of people, accessibility) Preliminary schedule of events Estimated food/beverage functions Room block pattern (days/number of rooms per night) Concessions (i.e. suites required, parking passes, etc.) Specify if you plan to use your own a/v supplier Conference history (past locations, actualized room pick up, food/beverage spend) Date when proposals are due Decision date

The Contract

Parts of Facility Contract (see Samples):

The ContractPreamble

Event DetailsSleeping RoomsFunction SpaceFood and beverageOutside VendorsFunction SpaceConcessionsBilling arrangementsTerminationCancellation and AttritionIndemnificationInsuranceDispute ResolutionMiscellaneous ProvisionsFinal Section

1. Preamble: Is a statement at the beginning of a contract that identifies the partners involved with names and addresses:The intent Background InformationOffer of acceptance Window of time. Etc. Recital information such as “whereas” Clauses

2. Event Details Section Include Facts about the event such as:Event Name Event TypeMove-in and Move-out dates Early Arrival and departure RequirementsSponsors and facility obligations under the Americans with Disabilities act (ADA)

3. Sleeping Rooms Section:Types of rooms Numbers of rooms reservedReservation ConfirmationComplementary Rooms Cut-off DatesGuarantees DepositsCheck-in/Check-out RatesTaxes Early departure feesOther Charges

The ContractThe Contract

Function Space: Should include • Basic terms • Conditions of Facility Clause

Basic Terms Specify:Function Space RequirementsRoom rental feesSet up chargesConvention ServicesFacility-Provided equipmentDetails on union contracted facilitiesClause to disclose other events booked

The Contract

Function Space - Should include:• Basic terms • Conditions of Facility Clause

Conditions of Facility ClauseProtects a group from physical deterioration of the premises between the time the event is contracted to the time it is held.Should address the facilities obligation if it is undergoing construction, remodelations, etc.

The Contract

Food and beverage:Number of meal functionsGuarantee date to confirm function spaceExpected attendanceMenu and beverage Confirmation datesGratuities details, taxes, additional fees and regulations.Attrition clause: Indicates the consequences if the event does not meet its commitment or falls bellow number projected consumption.

Outside Vendors:Details the facilities exclusive services allowable and what conditions are involved to have outside vendors work at the facility.

The Contract

Concessions: There are 2 types of concessions

• Merchandise: food or refreshments sold on site (Concession stands) Hotel may allow client to set up its own concession standsIf income will be shared

• Contractual Agreement: One party provides something of value to the other party in exchange for something else. i.e. Hotel might offer free parking, free one day spa, etc. (SEE PAGE 132 /Students Success Guide)

The Contract

Billing arrangements and terms:• Method of payment• Master account, third party billing etc. • Deposits• Terms• Format of billing

Termination:Details termination clauses for non-performance of the contracts without any liability, and requires procedures that must be followed to terminate.Force Majeure or Act of God: Limits liability for contractual non-performance due to an event that cannot be controlled or avoided by any party.

Cancellation and Attrition:Cancelation Clause – One party cancels the contract and does not provide the services outlined.Can include liquidated damages clause that estipulate the amount of damages.Attrition Clause – details the minimum requirement that have to be met by the event sponsor.Attendance, sleeping rooms, food and beverage.Slippage is usually between 10% to 20%

The Contract

The ContractIndemnification: • One party agrees to protect the other party from liability as a result of a lawsuit from a third party. Each party indemnifies the other from liability and they are equally protected.

• Some State laws outline indemnification- Insurance will provide the appropriate protectionNote: To avoid litigation costs or damages, add the language that “both parties hold harmless, indemnify and defend” one another.

Insurance:Outline insurance policies each party must have established:

Event cancelation • General liabilityCertificate of insurance should be exchanged • Umbrella policiesIf Additions existing policies are required. • Fire liabilityIndependent Contractor Liability • ExhibitsValuable Papers and records • On-site OfficeWorkers compensation • Non-appearance• Event cancelation

Dispute Resolution: Outlines the right and remedies of each party. Where and how will the dispute be resolvedState laws that apply in the interpretation of the contract Alternative Dispute Resolution (ADR) stipulates the procedures to be used when resolving the conflict. Arbitration: Non- court procedure using 1 or more neutral third partiesMediation: Neutral third party meets with opposing side to find a solution

Miscellaneous Provisions:Includes additional provisions:Special Parking requestVIPsShuttles, transportation

Final Section:Notices state who and how notices are to be deliveredAssignment addresses who can assume the responsibilities the contract.Attachments are identified and clearly incorporated.Authority of signatures states who can sign the contract.Signature block

(Use venue Contract Check List – Forms Package Pg. 38)

The Contract

The Process

Step 3:Receive the contract Review, amend, etc. Link to Contract Double Tree

Step 4: Receive BEO’s Banquet Event OrderLink to BEO (Pg. 136)

Industry Acronyms Link (Page 139)

Women are the best negotiators

When it comes to hotel contracts, everything is negotiable, from amenities to food and beverage.Here is what experienced corporate event managers have learned about to negotiate the best deal.

Modified and adapted by Marie Tamayo

1 Develop Your Own Contract

The ideal starting point for contract negotiations is to write your own version of the hotel contract.

Even if a hotel doesn’t accept your contract, the process of writing it will help you get familiar, learn and ultimately clarify clauses in the contract. It will become a guide line of what you want included in the hotel’s contract. While negotiating, you can also add clauses from your own contract to the hotel’s standard contract.

Writing your own contract allows you to protect yourself against problems you’ve had at other events and to provide for the specific needs of your attendees.

2 Get Everything in Writing

If the hotel doesn’t accept the contract, you may send the hotel a prioritized list of items you wants included in the hotel’s contract.

These items should not surprise the hotel. By the contract- negotiation phase, the hotel should know your basic needs for the event, based on your request for proposal (RFP) and subsequent conversations.

As you’re establishing your relationship, you should talk about your wish list the whole time.

Do not rely on the fact that you talked about it. Put it in the contract.

3 Read Every Word

Read every word of your hotel contract, but read it three times

Keep an eye out for hidden fees as you read the contract.

During negotiations, ask the hotel about each of its charges

Always try to negotiate away any charges that do not apply to your guests.

Hotels often add a maid-gratuity charge to the cost of the room without telling the occupant or the event planner. Make sure this is clear on the room rate section of the contract.

There are new policies and practices in the industry, such as early-checkout fees, extended-stay fees, etc. . Ask the hotel for a copy of its registration policies, including a breakdown of charges for rooms, food and beverage, and other fees.

4 Negotiate For Amenities

You can negotiate for specific amenities to be included in a contract for free or at discounted rates.

You can also ask the hotel to exclude some of these amenities in return for lower rates or discounted fees. Providing the hotel with historical information about your attendees can help you negotiate amenities away.

Free parking, free local calls, no charge for 800 numbers, Internet service, access to the health club, complimentary shipping and receiving, room upgrades, airport transfers, and the use of hotel props and décor.

5 Specify Penalties

Most hotel contracts include specific penalties if YOU fail to comply with the terms of the contract, but many do not include penalties if the HOTEL cancels your event or fails to meet other terms in the contract.

Consider “no competitors” clause in a hotel contract if necessary.

Included penalties to protect your client if the hotel breaches the contract.

Last minute changes cost money ….Concessions

6 Sell Your Event to the Hotel

If a hotel recognizes the value of your business, it will be more willing to negotiate in your favor. To help the hotel recognize this value you have to know what your meeting is about and what it will bring to the facility.

Emphasize the aspects of your event that will bring the hotel revenue.

Other hotel assets, such as meeting rooms, do not provide the hotel significant revenue. In fact, if you don’t use them, they’re likely to sit empty during your event. Because of this, free meeting space may be easy to negotiate.

For example, a typical hotel makes a 70- percent profit margin on sleeping rooms20-percent profit margin on food70-percent profit margin on beverage

7 Partner with the Hotel

Make small adjustments to your meeting in the hotel’s favor, such as booking your event over non-peak days like Monday, Tuesday, and Wednesday, or booking multiyear contracts. These concessions may give you more leverage during negotiations.

• Keep the needs of your sales manager in mind

• Be flexible with the hotel – They will be flexible with you

• Be fair – They will appreciate it

8 Leverage

Leverage multiple meetings at same location. One of the more effective strategies to saving money is to hold the bulk of your events throughout the year at the same property. Hotel sales managers are looking to achieve certain revenue numbers that they are likely to show more flexibility to a client who they know will return throughout the year vs. a one time client.Leverage total number of guest rooms for the event. Hotel sales managers will show flexibility on meeting room space costs and even catering expenses if they know that an event will incorporate a block of rooms. Guest rooms offer a greater profit margin than any other event service.Leverage additional discounts on guest rooms. Sales managers will also discount guest rooms or provide their clients with the lowest rate at that time. Event planners should compare the prices that sales managers provide against any corporate contract already established with that hotel -- especially if it's a chain -- to secure the best price.

9 Do no negotiate against yourself

Never negotiate against yourself

• Once you make an offer, wait for a response before making another offer. By waiting, you avoid the possibility of rejecting your own offer and making further concessions in a revised offer.

• If you don't wait, it encourages the other side to hold off its response in hopes of getting a better offer, and you lose the opportunity to learn from the other side's response.

Do not negotiate

against yourself

10 Ask Questions

Throughout the contract negotiation process, ask open-ended questions about the contract terms and how the hotel operates.

Can you tell me more about your check-in and check-out policies

Ask about in-room amenities: Do the rooms have a refrigerator that’s usable for more than a mini-bar?”

Inspect the rooms personally.

Ask if the hotel uses union labor. If so, make sure you know the hotel’s labor policies so you don’t run into extra fees.

Ask who are their recommended vendors.

Ask Questions

“The best negotiating tool is a smile”marie@planaheadevents-cgmiami.com

Tel- 786-238-9110