When entering into a negotiation, it is extremely beneficial to know what the person sitting across the table is thinking.  A nugget of intelligence gleaned from the opposition could provide you with the competitive advantage needed to tilt the results in your favor.

For the convention and meeting sales staff at hotels, the “opposition” is the meeting planner.  Certainly, a meeting planner is not perceived as an antagonist.  In fact, planners represent highly desirable customers.  However, much negotiation goes on when attempting to lure the meeting planner to your hotel.  The deal is never closed until the contract is signed and both sides agree to specific terms and conditions regarding timing, pricing, services, and use of facilities.

In order to assist hotel sales personnel gain an understanding of the current mindset of meeting planners, The Hospitality Research Group of PKF Consulting conducted a survey of 201 planners responsible for approximately 6,000 meetings a year.  The survey was conducted in conjunction with Convention South Magazine.  Although the survey focused on the planners’ experiences with meetings held in the Southern region, the planners represented companies and associations located throughout the United States.

The survey addressed issues ranging from technology, to contracts, to relationships with suppliers.  In this article, we focus on the findings that relate most directly to hotels.

Interaction with Hotels

A key to understanding meeting planners is to realize the strength of their desire to establish personal relationships with the hotel’s on-site personnel.  Our survey showed that a positive rapport with the convention services department and sales staffs were perceived to be “very important”, while a good relationship with the property general manager was deemed only to be “important”.

While positive relationships do make the booking and planning processes more enjoyable and comfortable, the ulterior motive for meeting planners is a perceived advantage when contracting for certain services.  By establishing a positive connection with hotel personnel, meeting planners believe they improve their advantage to get better room rates, book with shorter lead times, receive more complimentary concessions, and contract with more lenient attrition clauses.

The practice of hotels paying commissions and incentives to meeting planners as compensation for business booked at their property has blurred the exact nature of the “relationship” between hotel and meeting planner.  This practice has received a great deal of ethical scrutiny from both sides.  Of the 201 planners participating in our survey, 6.4 percent of the sample received some degree of compensation from a hotel in 2000.  The average commission received equaled 14 percent of the business booked.

Contracts

While relationships may be becoming more cordial between meeting planners and hotels, eventually both sides need to sit down and agree to some terms and conditions.

Of the contracts signed by our survey participants in 2000, all of them contained attrition clauses.  The average percent of non-pick-up allowed before penalties would be enacted was 37 percent.

Incentives are also included in most contracts in order to motivate the client.  The most common incentives found in contracts were complimentary rooms (88 percent) and room upgrades (60 percent).  Least frequently seen were offerings of free use of recreational facilities (23 percent) and complimentary receptions (27 percent).

The inclusion of exclusivity clauses is also becoming more routine.  The exclusivity clauses most frequently encountered were for catering (77 percent) and audio/visual services (62 percent).  Least frequently encountered were mandatory requirements to use in-house decorating services (23 percent).

Not coincidental is the fact that the preceding statistics are consistent with the preferences expressed by meeting planners regarding the use of site-exclusive vendors.  Given their choice, the majority of meeting planners would prefer to use their own decorators and audio/visual providers.  However, for catering and security, the requirement to use hotel-operated services or exclusive vendors was deemed reasonable.

Perceptions of Marketplace 

When evaluating market conditions in 2000, most meeting planners (56 percent) found it just as easy to find hotel rooms as it was in 1999.  However, 44 percent  believed it to be more difficult.

Given the fact that most respondents believe market conditions are not changing dramatically, the number of months in advance that planners are booking their destinations and hotels has not changed from that reported in 1999.  Meeting planners are selecting their destination 28 months prior to their event, and contracting with their headquarters hotel three months later.

Perceptions of Hotel Service

When asked to evaluate the influence of 15 different factors on the site selection process, all but one were considered to have some degree of influence on the meeting planner’s decision.  The percentage of room tax charged by the local municipality was the only factor viewed as slightly “non-influential”.  The factors that were rated most influential were the size of meeting space, room rates, and quality of service.

Given the high degree of importance quality of service has on the site selection process, it is interesting to see how these meeting planners perceive the current level of service they are receiving at meeting sites.  Asked to rate the price/value of eight meeting site services, all ranked as better than “average”.  However, none were rated above “good”.

Overall, the majority (56 percent) of respondents believed that service levels remained the same at their meeting sites during 2000 when compared to 1999.  Twenty-five  percent felt that service improved during the year, while the remaining 19 percent believed the quality of service deteriorated.

Leverage

Most meeting planners currently feel challenged when attempting to deal with hotels. Given the relatively high occupancy levels of the nation’s convention hotels, hotel sales people find it easier to hold their ground on room rates, exclusivity clauses, and attrition clauses.  In response, meeting planners continue to show their willingness to move their meetings to alternative locations such as secondary cities, resorts, universities, and conference centers.

It is a test for hotel sales people to hold their ground, while not upsetting the potential client.  However, this balancing act must be accomplished in order to preserve the relationship for the long term.  The meetings business is cyclical, and most certainly the negotiating leverage will tilt back towards the meeting planner in the future.

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