There was more, but I’ll make this the last post about Tim Brown’s negotiation session at NEMICE yesterday:

It’s important to know the difference between mitigated and liquidated damages, he said.

"In liquidated damages, you have to pay the hotel within a certain time frame, usually 30 days," he said. "It doesn’t matter if they resell the rooms or not. Liquidated means they want the check right now."

Mitigated damages is different–it’s "the obligation of the hotel to resell as much as they can to try to reduce or eliminate your damages. Deposits made by the group go into the equation. Include in the contract that you can put 75 percent of what they don’t resell toward a future meeting."

He left us with these words of wisdom:

Put everything in writing and be specific.

Stay away from vague phrases like "ample," "reasonable," "appropriate," etc.

Evaluate and outline your specific contract requirements and present them to the hotel, along with value-added concessions and performance clauses. Request a return date to receive the hotel contract.

Discuss all contract components with the hotel in an open and honest manner.

There is no "contract" until both parties have signed the document. Initialed scribbles don’t count. Written changes on the contract with date and initials constitutes a counter-offer, not a done deal.

Don’t rush into signing a contract if you don’t understand or agree with the content.

Negotiate an option date to sign and return the contract. (If you can’t make the date, get an extension in writing.)

If you want to avoid lawyers and arbitration, communicate, communicate, communicate!

More from Tim Brown’s negotiation session at NEMICE yesterday:

Variables that affect pricing include transient demand at the property, room-to-space ratio, group F&B, lead time, whether you’re in high, low, or shoulder season, history, arrival/departure patterns, the potential for incremental revenue, and the total value of your business. Another factor is the potential for risk to the hotel, such as the likelihood you won’t be able to fill your room block and the cancellation and attrition clauses in your contract.

Generally speaking, hotels like Sunday-Wednesday and Thursday-Sunday arrival/departure patterns, he said. "The pattern is very important–be sure to ask your salesperson what their patterns are." He also suggested that you add your square footage needs in your RFP where possible, and that you calculate the total financial contribution of your meeting will be for the hotel. "Calculate your average F&B for each function, room rates, spa usage–everything," he said.

Another tip was to not depend on your relationship with sales to fix problems after a contract is signed, such as asking after the fact if you can rebook another meeting to replace the one that just got cancelled, fixing an attrition problem by working out more F&B, etc. "That should all be in your contract, not handled after the fact," he said.

If you do have to cancel, be sure to have a sliding scale also in the contract, he said. "The further out you cancel, the less you pay because you give them more time to recoup their loss." He added that managed hotels really like to be able to rebook business within their fiscal time frame, since once that quarter’s numbers are in, that’s it as far as they’re concerned. Business in the next cycle won’t help this cycle’s numbers.

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…