Hotel Contract Strategies
- Everything is negotiable. Not only are room rates and food beverage costs negotiable, but other items that may not be obvious are on the table, as well, including phone/Internet access charges, fax send/receipt feeds, overnight mail surcharges for sending/receiving packages through the hotel, bellhop and housekeeper gratuities, resort fees, established banquet menus/pricing and more.
- Beware: hotels can cancel your meeting. If a better piece of business comes along, a hotel can cancel your meeting or event.
- Keep hotel profit margins in mind when negotiating. If agreeing to attrition or cancellation, don’t pay full price for unused rooms or uneaten food. Profit margins for sleeping rooms and group food/beverage are high, so there is plenty of room for negotiation.
- Require post-event reports. Use historical spend data to leverage better deals for future meetings with hotels and other suppliers.
- While force majeure clauses are probably raised most often when a meeting has to be entirely canceled, meeting planners should not assume that cancellation of a meeting is the only time the clause can come into play. Instead, given the right circumstances, it is possible for a properly drafted force majeure clause to also save an organization from having to pay attrition and other types of contract damages.The concept is sometimes referred to as “partial force majeure,” and the idea is that a party should be excused from paying damages not only when there is the complete cancellation of the event, but also if any portion of a contract cannot be complied with due to circumstances beyond that party’s control.
- Last year, the average hotel daily room rate and revenue per available room (RevPAR) was the highest ever recorded by STR, a global provider of competitive benchmarking, information services, and research to the hotel industry. Occupancy for the first quarter of 2015 was also the highest ever recorded by STR for hotels worldwide.
- According to Freitag, a 66.8 percent occupancy rate in the U.S. is the highest STR has ever recorded for March. The industry also set a record with more than 100 million rooms sold worldwide, and RevPAR increased in the U.S. for the 61st consecutive month.
- "Hotels are no longer bending over backwards to win your business," explains Brooklyn, NY-based Roxane Kramer, a global account executive at ConferenceDirect, a full-service meetings solution company. "Plus, they are tightening their contract terms. Distinctly less flexibile, hotels are writing their contracts in their best interests."
- "When the hotel issues the contract, it is typically one-sided and missing key cost savings and risk-reduction clauses," she adds. Clauses that are missing in hotel issued contracts according to Woodin include resell, so in the event of cancellation, the group and the hotel shall negotiate to establish mutually acceptable dates for a subsequent meeting to be held no later than twelve months after the original meeting dates and the hotel shall credit 50 percent of any cancellation paid against the subsequent meeting.