Developing an open and honest relationship between a hotel and a meeting planner is crucial to creating a successful and profitable meeting for both parties. Here's a look at ways to build and nurture that relationship.
Even the most experienced association meeting planners don't always understand the mysterious way hotels operate. From room rates that seem to change daily to room blocks, revenue-management formulas, and attrition clauses, hotel operations can seem confusing and overwhelming.
As associations try to sustain revenue amid declining membership and conference attendance rates, it's important that they understand what makes hotels tick and how to work together to produce events that are profitable for all involved. That's especially true in the Midwest, a region hit particularly hard by the recession and home to some of the nation's largest convention hotels and largest concentration of associations outside of the Washington, DC, area.
So how can associations and hotels create a win-win in this economic environment? The key is knowledge, open communication, and clearing up misconceptions.
How Hotels Evaluate Business
While hotels need all the business they can secure, association planners should be aware that larger, meetings-oriented hotels have a sophisticated system for evaluating business that can affect the rates you're offered.
"Revenue management has been around a long time, but it's still a mystery, and it's not something everybody understands or cares to understand," says Kay Granath, CAE, director of meetings and conventions for the Association Management Center in Glenview, Illinois. Granath, who plans meetings for 25 full-service associations, says large hotels usually have a specific business-evaluation formula that takes many factors into account.
"Hotels carefully analyze their history over those dates, what's going on in the city, and your group's history, like what's your rate of pick up, does your group register early or are they last minute, are your attendance patterns going up or down," Granath says.
"There is no detail too small to share, so even if you think it's silly, put it on the RFP or have that discussion with your hotel salesperson."—Kristine Morgan
"I remember when I first started in group sales for Hyatt Hotels, rate quoting was not very scientific, and there were no revenue managers or yield meetings," says Carol Buseman, a Chicago-based director of Hyatt worldwide accounts specializing in association management companies. "Back then, we would hope the meeting had at least 50 percent of their attendees staying over and we were good to go. Now, I evaluate business on many levels. The date pattern, space needs, concessions requested, group history, and food and beverage are the obvious, but I also take into consideration the volume they're doing with Hyatt, the pace [or] lead time in which the business is booked, the competitive marketplace, their historical rates, attendee demographics, overall financial impact on the hotel, and flexibility of the customer on all requirements."
Andrea Kasnic, director of sales at the Hyatt Regency Chicago, emphasizes that flexibility is critically important in determining what type of rate a group will be offered or if she can accept the business at all. "We look at the total booking instead of a separate component, and we also consider the time of year and weekday or weekend patterns," she says. "If some groups can shift even one day, there's a possibility we can be a little more flexible with our offer if we can make it layer better with what we already have on our books."
Dan Boyer, director of sales and marketing for the Renaissance St. Louis Grand Hotel, says the meeting-space-to-guest-rooms ratio sometimes can be a delicate conversation, especially with less-experienced meeting planners who may not understand as much about hotel operations. "Where we make money is in the sleeping rooms, and if you take up a lot of meeting space, it may not allow me to book sleeping rooms," he says.
Kristine Morgan, meetings manager for APICS-The Association for Operations Management in Chicago, agrees with Boyer that the space-to-room ratio is often misunderstood. "I'm surprised sometimes when a lot of meeting planners think of it in the perspective of, ‘Well, since I'm giving you business, why isn't this good if we want your meeting space, but we only want 10 sleeping rooms?'" she says. "The majority of the time, it's not going to be a good piece of business for the hotel, and some planners don't seem to understand that."
Maintain Open Communication
To help clear up the possible confusion—and get your association a better overall package—both hoteliers and planners alike stress open communication and providing detailed information from the start of the RFP process.
"There is no detail too small to share, so even if you think it's silly, put it on the RFP or have that discussion with your hotel salesperson," says Morgan. "Planners sometimes wonder why [hotel salespeople] ask all these questions, but it helps them figure out if the hotel can satisfy your business needs."
Morgan advocates sharing your room-rate history or at least a rate ceiling, something many planners are hesitant to reveal. "A lot of planners think the hotel is this big, bad dude that's trying to rip us off and they're not. Don't hide anything; have an open, honest dialogue because if you build a good relationship and become a good client, that hotel will want to take care of you," Morgan says.
"You can negotiate about everything but taxes; any price, any gratuity, because the hotel recognizes the competition out there so don't take anything for face value."—Thelma Dietsch, CAE
Lisa Haller, executive director of sales and marketing for the Galt House Hotel & Suites in Louisville, says she sees RFPs run the gamut from having specific rate requirements to being open bid requests sent nationwide. "It can be hard to position yourself when you realize the planner is looking at 25 different cities, so some parameters (like a room-rate ceiling) really do help prequalify groups," she says.
Kasnic says that the need for hotels to add attrition clauses is something that's frequently misunderstood. "I don't think clients truly understand sometimes that when we sign a contract, we take those rooms out of our inventory for any given period of time," she says. "So, when they're asking us to have no attrition in our contract, all of the risk is on the hotel. Ultimately, we need to be able to sell our property. But, if they can show us their history and we understand where they have picked up in the past, it definitely opens up the conversations [about attrition]."
Granath, also an open-communication advocate, says that many planners don't invest the time to really understand what type of hotel they're dealing with and what may be affecting demand like special events in the city. "Are they in a downtown business hotel, or is it an airport location where there could be a snowstorm and they could be full that night anyway so you won't have to worry as much about your attrition?" she says.
Granath adds that the communication needs to continue throughout the event. "If you've got a room block and you're not picking up on the rooms, for example, the sooner you let the hotel know the better because they can try to sell some short-term business for those rooms," she says. "But, if you hold onto those rooms until the very end and you don't come through, you could face some attrition charges because you didn't give the hotel the opportunity to sell them."
Thelma Dietsch, CAE, assistant director of meetings and programs for the Association Forum of Chicagoland, agrees that doing your research is important. "Most hotels and convention and visitors bureaus have high and low dates for the year, so you know that winter months in Chicago, for example, are low months and Sundays and Fridays are low days of the week, so you can negotiate better with that," she says. "You can negotiate about everything but taxes; any price, any gratuity, because the hotel recognizes the competition out there so don't take anything for face value."
"The RFP is a bunch of facts, the basics of what I want, but it shouldn't be cast in concrete; it is a conversation starter," Granath says about negotiating with hotels. "Also, planners, especially those beginning their careers, need to understand that yes, you do receive a contract and yes, there are many things in that contract that probably will stay the same. But, there also are things that can change. So, if you're uncomfortable with a particular clause and you'd like to see it changed a little bit, go back to the hotel and ask them. And find out what their hot buttons are; maybe it's not attrition but rather cancellation," she says, adding that attrition and cancellation penalties, room rates, and reservation cutoff dates are areas that typically can be negotiated.
Granath believes that determining what the hotel actually is in a position to negotiate is extremely helpful. "When you're negotiating with the hotel, find out what they can give you at no charge," she says. "If you're dealing with a downtown hotel, for instance, they may not own the parking facility, but they might have a ton of suites, so they may give you a suite since that means less to them than something else. It's really all about communication and relationship building."
"[The hotel] wants the partnership as much as the association does, and while there may be different points of interest and different bottom lines, we both have a responsibility to make that meeting successful," says Aiysha Johnson, director of education and programs for the Association Forum of Chicagoland. "It's an opportunity for [the hotel] to shine in front of our members and an opportunity for us to bring value to our meetings."
Jeff Waddle is a Cincinnati-based freelance writer and editor of ASAE & The Center's Meetings & Expositions newsletter. Email: [email protected]