Contracts & Negotiating

Contract Negotiations in a Seller’s Market

July 5, 2023

Prevue panelists weigh in on how planners and hoteliers are negotiating contracts in an era of rising fees and reduced services.

Speaking at Prevue’s recent webinar, Site Selection and Contract Negotiation in a Seller’s Market, industry experts Anne Gorman, Vice President, Sales & Marketing, streamlinevents; John Klukan CHA, Market Director of Sales + Marketing, JW Marriott Dallas Arts District; and Terry Matthews-Lombardo CMP, TML Services Group, LLC, shared tips on how to manage contract agreements in the challenging new normal. The following edited Q&A from the webinar, moderated by Prevue Senior Editor Steve Grasso, shares both sides of the story.

Prevue: What new fees are you seeing? How are are both sides dealing with this in contract negotiations?

Gorman: We’re not just seeing new charges, but also things we can no longer negotiate, like paying for meeting space. Meeting space charges used to always be negotiable. We’re also not having much wiggle room with resort fees, or the new “destination charges” from some city hotels that are equivalent to resort fees. And we’ve even had a few hotels charge what they call “cleanliness protocol fees.”

Matthews-Lombardo: Now, every time I look at a hotel bill I see charges we didn’t expect. We used to be given comped parking passes for our staff, for example, but today most of the hotels we work with no longer provide that. We often have a nursing mother’s room in the hotel. Recently, we were charged $100 day for the refrigerator we always keep in the room. When we questioned the charge, the hotel said it was for the staff moving the refrigerator in and out. We negotiated to pay just for that moving time, and the hotel was fine with it. But planner beware. We should start asking questions early on about things we formerly took for granted.

Klukan: We know that sticker shock is real. We really try to approach new fees from a pragmatic standpoint rather than a must-have. We try to balance that scorecard between planner and hotelier and to stay away from some of the outrageous charges that get everyone into trouble. It’s a delicate balance to price for profit and also satisfy the meeting planner. Our goal is to partner with the planner so that the client wants to return to the same hotel in the future. So we need to be very vigilant about how we approach pricing in contract negotiations.

Prevue: What about changes in hotel staffing levels and housekeeping?

Matthews-Lombardo: Not only are we concerned about pricing, but staffing in many areas isn’t what it used to be. Our experiences with housekeeping are all over the board. Some of our contracts that were negotiated pre-pandemic no longer have have daily housekeeping. When a contract is signed and when a meeting happens are two different things.

Gorman: When we experienced infrastructure issues with hotels, we put contractual language into the contract to protect the client, along with recourse details if the staffing level doesn’t live up to the terms of the contract.

Klukan: Our staffing levels are back. The hotels that have a solid team to take care of their employees, that are sensitive to work-life balance, pay employees a competitive wage and are flexible to employee needs in a way that they weren’t so much in the past—those hotels are leading the pack.

The key word here is transparency. Planners should ask about staffing levels for their event and try to get that level of service included in the contract. It’s all about trust and being open. If staffing levels don’t adhere to the contract, bring it up at the post-con and talk about an adjustment.

Prevue: Is room service becoming a thing of the past? How can planners ensure a high-quality F&B experience?

Matthews-Lombardo: It’s getting harder and harder to find a hotel with traditional room service. As a planner, this really affects me. I need room service, not just grab and go.

Klukan: The room service changes from china, glass and silver to paper bags and plastic forks started pre-pandemic with Hilton and Marriott. However, individual hotels have the latitude to buy into the changes or not. The hotels that I represent still have traditional room service. When a room costs $500 a night, you don’t want a brown paper bag with saran wrap and a fork that breaks.

A lot comes down to the individual hotel. We’ve heard things all over the board. Planners should do the digging. Both sides should be transparent on what the reality is and how we can work through issues. We don’t want to be a 5-diamond hotel that turns out to be a 3-diamond hotel. It’s all about relationships, honesty, transparency and doing due diligence.