During much of the 1990s, the leverage of negotiation between hotels and meeting planners has been on the supplier's side.  High occupancies and limited new convention venues allowed hotel sales staffs to virtually dictate all terms of negotiated contracts.

In recent years, however, as new convention hotels have opened and occupancies have softened, the pendulum of leverage looks like its swinging back towards the side of the meeting planner.  After years of submission, meeting planners appear to have a window of opportunity to make some headway when negotiating with hotels.

Recently, The Hospitality Research Group (HRG), the research affiliate of PKF Consulting, in conjunction with Convention South Magazine, conducted a survey of 56 meeting planners across the nation.  The survey covered a variety of issues that might help hotel sales staffs gain a better understanding of the current mindset of meeting planners.

While the survey focused on the planning for meetings held in the South, several topics were not necessarily tied to geographic market conditions.  In this article, we are pleased to share with you the results of the survey regarding such issues as contracts, site selection, and the importance of relationships with meeting venue sales staffs.

Contracts

While meeting planners may have gained more leverage during 1999, they don't appear to be feeling overly powerful looking towards 2000.  Slightly more than half of the planners surveyed (53 percent) expected to see fewer incentives written into their contracts during 2000 when compared to those written in 1999.
 

When it comes to what hotels are offering as incentives, the standard room concessions seem to prevail.  Complimentary rooms were found in 93 percent of the contracts written, followed by room upgrades (73 percent).  Offering complimentary use of recreational facilities or food and beverage was limited.

The need to use an exclusive vendor at the meeting site does not appear to be a factor of concern for most meeting planners.  While catering exclusivity clauses were frequently found in their contracts, the majority of planners preferred to use the on-site caterer, as opposed to selecting their own.  On the other hand, planners overwhelmingly prefer to choose their own decorator, albeit exclusive decorator clauses are a rarity.

Site Selection

When searching for meeting venues, the availability of hotel rooms is an important criteria, although not the most important.  In our survey, the availability and quality of meeting space, along with the quality of the guest rooms, were ranked as more influential in the site selection process than the availability of hotel rooms.

The majority of meeting planners surveyed felt that room availability issues would be the same in 2000 as they were in 1999.  Despite projections of declining occupancy, 27 percent of the survey respondents felt it would be more difficult to find a hotel room in 2000.  Only 9 percent believed accommodations would be more readily available.
 

Once a site is selected, no one single service or facility feature appears to have impressed meeting planners as consistently offering a high degree of price/value satisfaction.  Agreed-upon deadlines in the meeting contract ranked as the most valuable service provided by the meeting venue, while audio/visual was rated as offering the least value relative to the price paid.  However, it should be noted that the rankings for all of the services or facilities rated were very close to the mid-point of the rating scale.

Relationships

Can meeting planners improve their negotiating position by building positive relationships with the sales staff at the meeting site?

Given the reality of recent historical market conditions, meeting planners still do not believe that they can overcome their leverage deficiency by schmoozing with the on-site sales person.  Based on a scale of one to five, with one being most important, the meeting planners surveyed rated the importance of a positive relationship with the sales staff at the meeting site as 3.2, or just moderately important.

When able to establish a positive relationship with the sales person, meeting planners felt it did enhance their ability to receive more complimentary concessions and eased the overall booking process.  On the other hand, establishing a positive relationship was less helpful in getting better rooms rates, larger room blocks, or more lenient attrition clauses.

Still Despondent

While market conditions may appear to favor meeting planners, it does not appear that planners are a buoyant bunch when assessing their future dealings with hotel sales personnel.

This perception is very consistent with our firm's forecast for convention hotels in the near term. While occupancies may flatten or decline, and ADR growth is projected to be slow for the next few years, the actual achieved occupancies and ADRs are still at high levels compared to long-term averages.  Therefore, it is not surprising that meeting planners are not perceiving any significant improvements in their negotiating leverage during the next few years.

Patrick Quek is president and CEO of PKF Consulting, an international hospitality consulting firm headquartered in San Francisco.