Nobody wants to ever set themselves up for failure (or be set up for failure) but it can happen. And it can be painful. Ask any seasoned meeting planner about the day, or days, they stepped on a contractual landmine.
Not pretty.
It’s often due to carelessness, poorly defined upfront expectations, or simple naiveté. (You don’t know what you don’t know … until you do. And that can sometimes be brutal, if not career-jolting.) I’ve been in situations where I inherited an event long after the contract had been “negotiated” and signed by a less-than-experienced planner or administrative assistant, thus leaving me with a serious mess to clean up.
Assuming you do have the opportunity to negotiate a contract before it’s signed and build a solid, corresponding meeting or event budget, here are 10 “Gotchas!” you may not know you didn’t know:
1. Location, Location, Location – Proximity to an inbound/outbound airport is a huge consideration when deciding on a city and venue. You may have negotiated a killer room rate at a property but if it’s 50 miles from the airport, ground transportation fees (think taxi, shuttle or car rental) may quickly gobble up those hotel savings.
2. Airline Fees Can Be a Pain in the Seat! – And by “pain the seat”, I mean seat-purchase fees. The last thing you want to separate is a couple on their way to an annual incentive trip because you didn’t budget for seat purchase fees.
Did you know that air travelers who haven’t earned frequent-flyer status with certain airlines can incur seat assignment fees of $30-40 for each flight when booking? (Having said that, you can usually snag one of those “ohhhh-so-desired” — snort! — middle seats in the back free of charge. Yeah … no thanks.)
On a separate but equally important note, establish a maximum reimbursement for baggage fees ($50 would probably be fair) and communicate this to your invitees before they pack that extra bag of Tory Burch wedges.
3. A Room-Rate Is a Room-Rate … and So Much More! – Taxes and fees on top of room-rates must be clearly identified in your contract so you can build a corresponding budget that’s accurate and realistic. There are other things to keep in mind, too. For instance, in the State of Georgia, there’s a $5 Hotel/Motel Fee tacked on to each room night, regardless of room-rate or type. If you’re doing a program northwest of Atlanta in Cobb County, there’s an additional $3 per-night Recreational Tourism Fee to help offset the county’s costs related to the new Atlanta Braves baseball stadium. (“Take me out to the … cleaners!”) Plus, city and state taxes combined have risen to 14% so that seemingly killer $189 room-rate you so stealthily negotiated actually bottom-lines at $223.46 per night. If your group of 150 stays three nights, your city and state taxes alone on the room-block would add an incremental $3,600. Yikes!
4. There’s More than Food & Beverage in Your F&B Fees – Most know this, but your F&B minimum does NOT include taxes and service charges which can run 18-27%, or higher. So, that F&B minimum of $40,000 really means it will appear as $55,000, or more, when all is said and done. Overlook that and your event budget management swirls down the drain.
Also, be sure to ask if there are hidden surprises like bartender fees, chef fees, fees for customizing menus, etc. And some properties will tack a hefty surcharge on last-minute F&B events that your client decides to add “on the fly”. A smallish cocktail reception for 25 in the CEO’s Presidential Suite may cost an additional 20% because it was booked with less than 48 hours’ notice.
5. Is Your Venue Open to Outside Vendors? – Some properties tack on a 20-25% penalty if you don’t use their in-house services. I was once asked to manage a program but the contract had already been signed and the client hadn’t negotiated these vendor penalties out of the contract. As a result, fees charged by the hotel made using dynami group cost-prohibitive. Had they successfully scrubbed that penalty in contract negotiations, all would’ve been fine and we would have happily stepped in and helped them out. But because the ink had dried, they ended up paying more for in-house services which were delivered at a lesser level. And when I say “in-house” services, I’m not talking about production vendors alone, I’m talking about other vendors like florists, decorators, entertainment, linen companies, etc.
6. I’ve Got the Power! – A big part of event budgeting and event budget management is knowing what your electricity and power pull costs will be. Negotiate these fees or, at the very least, estimate what charges will be for electricity in all rooms including general session, breakouts, and outdoor functions.
Also, BYOPS – Bring your own power strip! I was once charged $50 for the delivery of the actual power strip and $100 for them to plug it in and tape it down.
7. Don’t Let Your Attrition Ride Up on Ya! – You may leave the negotiation table feeling pretty darned satisfied you’d gotten the venue to agree to a 20% attrition rate. Everyone knows to negotiate for cumulative attrition vs. that based on a nightly pattern, but alas, there may be a hidden surprise …
The venue may slip in an attrition detail you haven’t experienced before. Yes, you can slough off 20% of your block without penalty but only until the cutoff date or when the rooming list is due. After that, all rooms you have committed to, even if you are well within your attrition percentage, will be counted against you if for any reason you don’t fill them. This includes no-shows, family emergencies, or just simple cancellations. As a result, that three-night program with eight fewer people than anticipated turns into a painful $5,171.04 penalty. Ouch!
8. But Wait, There’s More! – Once you feel you’ve negotiated all you can possibly negotiate and are ready to sign, be sure to have the following clause added to your contract just in case you failed to ask about something that could impact your budget negatively:“Hotel agrees that no additional fees or service charges will be added to the room-rate or existing fees increased after this contract is signed. Fees and service-charges which may not be increased after signing include, but are not limited to: hotel fee, energy surcharge, fuel-service charge, taxable food and beverage charges, in-and-out bellmen, per-day housekeeping, and water surcharges.”
Many, many years ago I was the victim of this exact scenario. The hotel added an “energy fee” because of soaring prices in California and that rocked my meeting budget. That’s when the little protective clause above was born. Feel free to lift and amend it as you see fit.
9. Once Onsite – Limit the number of people who are authorized signatories on the Master Account if you want to successfully manage your event budget. I feel strongly that, if it’s your neck on the line, you need to be the one ultimately approving overages and additions. Conduct a daily review of all charges to the Master with a member of the hotel staff. It’s much easier to spot discrepancies (or surprises) and address them each day than to challenge them a month later when the final, three-inch-thick hotel bill arrives and you’ve worked four meetings – and four more budgets – since then.
10. A Few Other “Gotchas!”
- Loading Dock Supervision Fees – Some hotels mandate a supervisor be present to simply sit and watch the hard-working crew unload and load at the dock. This cost can be negotiated away!
- Visqueen® – I’ve seen this several times, mostly for brand new properties trying to protect their digs. The cost of Visqueen®, a semi-sticky-bottomed carpet protector, can really add up if the hotel is insistent on covering the whole floor area with it. Bring your own and use your own labor to keep this sometimes mandatory, potentially runaway cost within reason.
- Storage Fees – Make sure those 42 boxes of inexpensive, $2 giveaway items don’t cost you three times that amount after storage fees at the hotel. It can happen.
- Loading Dock Location – If your crew must unload and go over the river and through the woods to merely get to your ballroom, you may end up facing overtime labor charges you didn’t anticipate.
So, there you have it – 10 surprises of the not-so-happy kind to try and avoid if you’re to successfully manage your event budget.
Keeping as tight a rein on the budget as you would a wild stallion will ultimately make you a hero in your company’s eyes and get you showered with extra love, vacation days, and Tory Burch gift certificates!
Well, a girl can dream, right ..?
CONCLUSION
You have to be on your toes throughout the process of contract negotiation and event budgeting. Understand where the contractual “landmines” might be buried – and protect yourself before signing anything!
Until next time.
P.S. – Another duh! As a self-proclaimed Microsoft Excel nerd – always, always, always double- and triple-check your Excel formulas prior to submitting your event budget for approval. A decimal here, a wonky sum-function there … after a while, it adds up to real money!
