NEMICE contract/negotiations session, part 1

Tim Brown, a partner with Meeting Sites Resource, gave a very thorough presentation at NEMICE yesterday. I might have to break up a post about it into several items, since he went through so much material in his hour-and-a-half time slot.

For background, he went over challenges that meeting planners and suppliers have in today's markets, from hotels not being willing to assign specific meeting space in the contract, offering discounted promotional rates that impact group room pickup, to too-high attrition and cancellation penalties and food and beverage guarantees. On the supplier side, challenges include incomplete meeting specs and lack of group history, unrealistic concession requests, out-of-proportion room blocks and meeting space, and new addendums showing up in contracts without being discussed first.

He also went over trends that are affecting the negotiation process these days, including the cyclical nature of new hotel development, which after a boom in the late 90s is subsiding, at least until the next wave comes, which he predicts will happen in 2006 to 2008. The trend toward managed versus owned hotels also factors into negotiations, he said. "It is more difficult to negotiate with managed hotels than owned ones," he said. And yield management is here to stay. "The revenue manager is the new sherriff in town, usually joined at the hip with sales and marketing. It's hard for planners to know what a good value rate is under a yield-management system--planners tend to negotiate to what's in their budget, not on actual best rates." He suggested to ask what the yield is over your dates, not if they can meet your budget.

On the corporate side, the procurement manager is the new sheriff in town, he said. "Procurement's role is to minimize liability and maximize savings," said a procurement pro in the audience. "Our role isn't to get involved inthe details." He suggested that planners work more closely with their procurement people, "because if you have a cancellation, we might be able to leverage using another meeting, or corporate travel, or other group business."

Brown also said that companies increasingly are looking at meetings as investments, and they want to know the total meeting costs--not just in terms of air and hotel, etc., but also the cost involved in taking attendees away from their work for the duration. He mentioned that one New York company estimated that it cost $75,000 per hour to take their people away from Wall Street (I didn't catch how many people were involved in that estimation, but it doesn't take too many brokers to add up). "Planners are shifting from being logistics managers to be communication managers--they're shifting from being cost centers to profit centers."

He emphasized that it's important to educate your corporate leaders on what meetings are all about: "Very few in management come from meeting planning, so they don't know what you do."

To be continued...

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