Contract negotiation

The BNC Networking Breakfast

on Contract Negotiation

with Fiona Paterson, MD of Event Operandi

Special thanks to our Event Partners: Central Hall Westminster, Event Operandi, KUDOS and White Light

Q: Under tight budgets, I am always asking for the absolute lowest venues are able to go to re minimum spends/ hire. Is there a logical or best way to get the their actual lowest price out of them at the beginning?

  • Target venues – target the right ones – and don’t waste time by asking for things if their DDR is £110, for instance. This is where a venue agency should have the expertise

  • Do your research

  • It’s easier to get good prices with short lead times

  • One strategy doesn’t fit all scenarios

  • Ask yourself: do you want a ‘churn or burn’? i.e. do you want a hard and fast deal or do you want to use the venue for a long time?

  • Think about what you are asking for. Using the venue just once? Go for a big deal

Q: How do you push for a better deal?

• Understand dates and be flexible on them if you can

• Find out where can you get softer rates

• Mondays or Fridays are often good - see if they are free

• Ask what other events are going on at the same time

• If another event has all the beds and you just need the conference room, is there a deal that can be worked out?

• Try asking for a tiered pricing structure. Example: if you are booking two big rooms in a venue that has a DDR of £110 but you are bringing in 350 pax – ask to have the DDR reduced

• Concessions for waving room hire: block booking bedrooms (they do this more in the USA but you can ask here)

• Are your lunch numbers likely to spike? Instead of a DDR ask for a lunch rate

Q: When your event has small numbers – can you still negotiate?

Yes – the numbers can be zero to infinite!

You must always understand where the venue is coming from. They have targets – what are they? To sell x amount of rooms and achieve x amount of revenue

If you increase the catering spend it brings the room hire down

Just ask them: what is your threshold? What do you need? They will often ask you what is your budget so why not ask them things like “can you be creative on price?”


Q: Scenario: you have an awards dinner for 1000 in May and you have to use Grosvenor House (as there are so few venues for this type of event). If you get the first option do you think that they will negotiate?

The answer is probably no, as there is not a lot of margin with this. So, how do you get the price down? Are there other ways of adding value? What about concessions – ways of saving elsewhere in the budget:

  • Is the AV already built-in?

  • Ask for things like staging blocks to be included

  • Is there an option for a free bedroom for the event manager

  • Ask for free drinks or an upgrade on lunch menus

  • Can you get the cloakrooms for free?

  • Ask for free WIFI (some venues still charge you for WIFI)

  • Ask for free flowing breaks

  • Can they add-on security?

THESE ARE ALL ‘SOFT VALUE’ THINGS TO NEGOTIATE?

Q: Hotels vs venue

With venues you have to bring everything in; you are essentially paying per seat. What’s the best approach when starting negotiations with venues?

If you are going to use a unique venue, it is going to cost. Add all the costs before you start negotiations. They may charge you:

- AV

- layout

- cloakroom staff

- partitions

- moving furniture

Sometimes it is really difficult to get around these.

Just be open, don’t always give budgets away, I say: “What are you offering?” and then ask them to give me a figure and I’ll reply “Now where near. I’d need another 10% off”

With some venues you have to cut losses and move on. Saying that, unique venues are getting better. One group of venues (not hotels) but purpose-built venues don’t charge exhibition breakdown, or overnight hire, but other charges do sneak in like putting up breakout walls and cloakroom charges.

Q: Can you use a high profile speaker as leverage?

Good point – and it all adds to the ‘trading system’. You can say to them: “I am bringing you a big-name celebrity, which is great PR for the hotel.”

Mention if you have any big blue chip sponsors and tell them a bit about your company. Say something like: “We are a big organisation that can get you lots of international referrals.”

You can also say things about you that will help you in negotiations:

  1. We are a reputable firm that pays quickly

  2. Mention something prestigious about your company

  3. Mention that you are member of The BNC

Q: How do you enter into post-event talks? For instance, at one event I asked for free-flowing coffee and a cloakroom and I didn’t get them even though I had paid upfront

In my experience you never pay upfront. You pay a deposit and when they ask for the rest (pre-event) say to them: “I have no recourse if I pay you and it’s awful.” This is very pertinent overseas if you can’t establish credit it is harder for small groups but you can stagger payments or pay 80% upfront

It’s a difficult one to fix if you have paid upfront and you are unhappy. I am a great believer in sharing feedback so tell them what was good and be constructive. Be diplomatic and say: “We’re here to help you to not make the same mistakes again.” If you’ve had good experiences with venues tell others. Once, a GM visited me to discuss my event and he brought along the executive chef. That was an incredible level of service and I tell everyone about it

But if you genuinely aren’t happy then take your complaint further up the ladder and always mention your plans for future events and that you will take them elsewhere

Q: Overnight holds: can venues charge a fee even if you aren’t using it?

Most venues will charge you an overnight rental fee, it’s pretty standard. But this is something you could ask to negotiate down. Say things like: “I’m bringing you a big exhibition, lots of footfall etc.” Or, suggest that they sell the space for a dinner in the evening

Or, think about things differently: is it cheaper to put your AV and crew up in a nearby hotel – and get in early – than pay a day and evening charge? You could encourage stand holders to bring in pop-ups that take minutes to set-up and breakdown. This isn’t the ideal (and it may not be convenient) but if it helps the budget then do it. Just manage the expectations of all involved, especially sponsors.

If you DO leave your set-up overnight and the venue sells the space as suggested don’t forget to add-in a waiver/consent form for all stand holders to sign in case of damage

Q: Venue caterers vs using external caterers – best approach?

Some venues have preferred suppliers and they will only work with them. They may have top tier and lower tier. So first check if you can bringing your own suppliers (and what extra charges may be because of that)

Give all of the caterers your tender template, then everyone is quoting on the same basis

They may each have a set of hidden costs which can be: Uniform, delivery, cutlery, etc.

Give a comprehensive brief as possible and then you can compare like for like

Q: We were forced to use PSAV (at a Marriott). Is this common?

It is in places like the USA and the rates are extortionate. Sometimes you can’t get around it. I had a client with an event there that had a small budget and PSAV were charging three times the amount that they could afford but I eventually got them down

NOTE: the AV industry is unionised in the States and if you do take your own AV in you have to pay a ‘shadow’ fee plus a power fee

If in a non-unionised country then refuse to sign the contract until they take out the part stating that you must use their AV supplier. If you aren’t getting any joy from that person then escalate it to the national sales manager. This doesn’t always bring results but it is worth a try

If you do have to use the onsite AV supplier don’t be afraid to ask for other things. My team in New York for example, once negotiated for free WiFi for all of their events for the year, saving thousands. If you are booking multiple events throughout the year try to get five events for the price of four, that sort of thing

Q: Can you release booked (unused) bedrooms for resale?

Always have a resale clause in your contract so that the venue can resell rooms if you can’t fill them. If they are successful in selling any rooms then a resale value can be credited against your bill

If I have let go of rooms and the hotel says they won’t resell them, I sneakily call up and ask to book a room and see what the say

Q: Tipping – do you give cash?

Main reason: because some hotels add it on to the bill regardless

If you see a % on a contract, say 12% in Chile, what do you do? Challenge upfront. Tips are discretionary. [A person in the room validates this and said that at an event in Santiago 15% was add to the bill and they had it removed]

Q: Joint First Options

This is an increasingly bad practice. It happened to me where I argued the case and the general manager of a Zurich hotel told me where to go

When the traffic light system went in I contributed to an industry report and the opportunity arose to highlight the great initiative The BNC has with the Transparency Action Group.

I provide an agnostic service and work for the client. My advice to you is be up front with the agent and ask what are they being paid for?

Comments:

“Venues are crazy to do joint first options with people."

"We are all on social media."

"We are all members of The BNC."

"People talk.”

Q: With agencies I wonder: am I getting the best rate?

Small agencies will work on a commission threshold. Read reports from the HBAA - unique venues are feeling at a disadvantage on commission

I believe in finding the best deal for a client. I offer a free service and the commission shouldn’t make an impact on price.

Having booked events as a client and an agent, I have not seen a disparity

In my experience they can get you a good deal then at contract stage you can take it further

As an agent I am working in the best interest of the client but some agents are not used to working like that as they are focusing on the end figure

Big agencies really don’t understand your business and have to add things on

Comments:

“The time saved [using an agent] is a big advantage. Agents are so knowledgeable.”

“It’s bad practice to have an agent negotiate for you then go direct to the venue.”

Q: We are currently looking at a 3-year package should we budget for a 3% increase?

No – if you’re doing a 3-year deal I’d look at a flat rate with a slight increase at the end to see what they are incentivising you to lock-in

Comments:

“We do a 2-year deal and no increase”

“Always go in with the best possible scenario”

Q: Added Cost Examples

  • Electricity

  • Porterage (I was once so incensed that a USA hotel was going to charge $6 a box porterage from the taxi to the conference room that I carried them myself)

  • Cloakroom (bring your own rail and ask for this cost to be removed)

Q: Conversation Starter

Here is the opening stance you should take.

If the DDR is £90 just ask straight away:

“Can you do it for £70?"

BE BOLD, BE A LITTLE BIT CHEEKY AND GIVE YOURSELF A LITTLE BIT OF A BUFFER

TIPS

  1. Prioritise what you want out of a deal however large or small your event is

  2. Be realistic in what you:

  • Must have

  • Could have

  • Should have

  1. Venue Sales people are expecting you to negotiate so go in straight away. If they come down on DDR – that’s great – but don’t be afraid to push for further reductions elsewhere

  2. A venue will have their bottom line revenue try and find that out. Whether they get that through catering or room hire – they may be able to tell you this

  3. Use competitor knowledge to your advantage and get quotes from them

  4. Don’t go so ridiculously low that you insult the person but don’t go beyond what you want

  5. Go direct to a venue and ask to have the agency commission back or taken off your bill

  6. Don’t forget to sign-up to hotel loyalty points and air miles schemes

  7. Look at the Ts&Cs as early as possible – don’t leave it too late

  8. If you see a strange term or clause in a contract don’t be afraid to ask what it means. If they don’t’ know then it shouldn’t be in there and you shouldn’t sign

  9. CAY ‘Cover Your Arse’ at all times

  10. Preferred suppliers ask for top tier and lower tier

  11. Always finish talks with two important questions:

‘What haven’t I asked’

‘What charges haven’t been made aware to me?’