When you see the road sign with those three ominous words – Proceed with Caution – instinctively you ease off the gas, scan your dashboard, and put that second hand on the wheel. Same thing’s happening with Meetings & Events professionals these days …
Just when you thought the coast was clear after a tumultuous several years driven by a pandemic and its fallout, there’s still no rest for the weary — those weary ones being meetings and events professionals and the clients they serve.
Securing preferred dates and ideal destinations, along with a fair room rate, value-added concessions, and minimal attrition penalties, have long been the bane of a planner’s [and ultimately their client’s] existence. And now in 2024, those potential landmines are more acute and challenging than ever with all indications the tougher trends are here to stay.
Specifically, the “gotchas” in contracts, soaring meeting & event costs, and personal safety concerns are more prevalent than ever along with the added encroachment of hot-button social issues that were seldom a thing in the past. The challenges [budget especially] can be monumental. Let’s take a closer look at some of these concerns …
WELCOME TO THE BRAVE NEW WORLD OF CONTRACTS
If you’ve long prided yourself on being a skilled contract negotiator, do not rest on your laurels because the current state of affairs is significantly different than it was just 2-3 years ago. Fees in particular have become more problematic than ever, especially resort fees, and “hidden” or “junk” fees that aren’t always disclosed unless you’re on your game and ask about them prior to ink hitting paper. The problem is magnified in the current seller’s market in which “wiggle room” in negotiation is tighter than ever.
Fees, fees and more fees
Resort fees have long been a hot-button with reports of some properties charging individual guests as much as $65-$90 per day. For a 4-day, 3-night program with 150 attendees, that’s a financial hit of $29,000-$40,500 to your budget. There are numerous legal cases challenging disclosure [or rather, non-disclosure] tactics currently being litigated. In California, Senate Bill 478, called the “Junk Fee Law”, went into effect July 1, stating that all pricing must be advertised.
To justify the high daily cost, resort fees now include line items that weren’t included previously, including daily housekeeping, internet access, porterage, “Employee Wellbeing Fees” [I don’t know either], use of gym and/or pool facilities, and mandatory gratuities.
Attrition just grew a second set of teeth!
In another instance, attrition fees which can already be hefty if not skillfully negotiated, are suddenly having service charges tacked onto the penalty itself. Same is true when paying program cancellation fees. You’re being penalized not once but twice.
To make matters worse, some properties are charging daily attrition fees, even food and beverage attrition, per day versus calculating cumulatively over the course of your program room block and F&B guarantees.
Conceding concessions …?
Properties have long been pulling back agreed-upon concessions if you fall short of your room block total. Again, you’re penalized twice. Given the number of more recent hidden fees or junk fees, this move stings more now than ever before.
The only way to avoid falling victim is to be doubly [if not triply] diligent and fully informed throughout the negotiation process. Ask questions. Request all promises and commitments be put in writing. Make sure anything numerical is clearly spelled out and that specific key dates are noted. Invite other sets of trained eyes to review your contract before signing anything.
Lock in service charges!
Make sure all conditions and clauses are clearly delineated in the contract language. For instance, if a hotel’s service charge is a flat 25%, do what you can to ensure the contract reads precisely that way. If you see “service charge of 25% [subject to change]” in the language, wave your red flag until a firm commitment is either put in writing with your program dates assigned, or introduce a ceiling on how much that flat rate can rise between now and the onset of your program.
“Can I get a little help, please …?”
Another thing to keep in mind is a Service Guarantee Clause, whereby the hotel agrees to adequately staff for all program segments. Labor issues continue to be an industry problem but it shouldn’t be your problem. It belongs to the property. Ask that specific staffing totals be assigned and delineated for each program segment – business sessions, meal functions, activities, etc.
Fair is fair …
Finally, what’s good for the goose is good for the gander. Many industry professionals are calling for “Cancellation by Hotel” clauses to have an equal amount of “bite” as clauses assigned to “Cancellation by Client”. Hotels cancelling programs in favor of a bigger, more lucrative fish on the line was seldom a thing in the past. These days, it’s becoming more and more prevalent. If the proverbial rug is yanked out from under you, make sure you’re being adequately compensated for the loss of dates.
“Thou doth protest …”
Finally, in an emotionally charged world with politics and social issues swirling about, make sure your Client’s Right to Cancel language is written in such a way that if a particularly vocal, potentially offensive and/or disruptive group is booked at the property at the same time as your program, so you have an “out”.
Also, demand the property inform you if such a group is booked after you’ve gone to contract so you can make a decision: stick with the property or bail? Do you really want your guests walking through common areas jammed with placard-carrying throngs with bullhorns protesting this social injustice or that overseas war? Make sure this pertains to both indoor and outdoor portions of the property. One solution is to book all event space onsite though that’s a pricey proposition.
Remember: A contract is a contract … until it is not. Protect yourself and your investment!
DOLLARS & SENSE
If it seems everything costs more, that’s because it does. A lot more! A recent survey of industry professionals across North America revealed:
- 39% of respondents indicated costs had significantly increased while only 16% [the lucky ones] felt costs had softened a bit.
- The majority of respondents indicated meeting/event-related costs have increased 10-30% across-the-board … in just one year [2023 to 2024].
- Meanwhile meeting and event budgets have risen 10-20% which, on one hand, sounds promising but not when you compare it to the escalating cost of goods and services. Bottom-line: The increases in available budget only allow you to keep pace with soaring costs versus allowing you to enhance your program design or offerings. Inflation affects us all.
The solution is to seek ways to trim costs whether that means reducing the number of annual programs; reducing duration of individual programs thereby saving on rooms, A-V, F&B and labor; offering more unstructured free time; or booking years in advance to lock in favorable pricing.
WELL, THERE IS SOME GOOD NEWS …
Another recent survey indicated program lead times seem to be improving. Though lead times are still on the shorter side compared to historical patterns, 43% say they typically have 4-9 months to plan a program while only 9% have 90 days or less. Meanwhile, 26% of respondents typically enjoy a 10-12-month lead time, which is a 15% improvement from 2023.
Our world is changing and it’s incumbent upon you to stay on top of these changes to avoid unnecessary headaches, financial or otherwise.
Remember, Proceed with Caution.
Happy Negotiating!
Julie Thompson-Whelan
