the value of eachmeeting, assessing your leverage, and having a negotiations plan basedonmanyrev- enue-management criteria, including room- block/peak-night pattern, F&B contribution, rooms-to-space ratio, and season.Of course, this requires deep dialogue and analysis with your hotel partners andvalidating themany negotiated cost-savings/risk-reduction components. Onceyou have completed contract negotiations
with the hotel, create a cost-savings report that includes thecomponents listed in the tableonp. 38. There are virtually dozens of cost-savings categories, and the key is to calculate accurate numbers that you can easily defend if a seniormanager questions yourmath.Don’t focusonthe total savings; concen- trate instead on the accuracy of yourmetrics.
Risk Reductionand Cost Containment Your negotiation plan also must address all hotel- performance clauses, mutual accountability, and company legal liability language. The focus here is on defining your negotiated risk reduction/cost
Attrition Guarantee percentage of room block/no sliding-scale fees/damages based on lost profit not revenue.
Cancellation Sliding-scale damages on lost profit not revenue/resell if damages apply to future meetings.
F&B guarantee Allowable attrition percentage.
Hotel fees and surcharges Eliminate or reduce.
Published rate clause No lower group rates via website after contract signing.
Construction/remodeling No construction or renovations over meeting dates that affect meeting in terms of image, logis- tics, and guest experience.
Change in management/ ownership/brand If any of the above occurs, group has option to terminate meeting without damages.
containment in the event of potential future non-per- formance. (See the table below.) By creating and distributing a custom hotel
contract (ready for signature), you can add more meetingvalue, generate real cost savings,andensure risk reduction/cost containment. The custom con- tract—notanaddendum—should address allcon- tract components, including value-added conces- sions, hotel fees and surcharges, performance clauses, and specific company liability language. It is critical not just to talk savings and risk
reduction,but alsotobreakdownandreportonall meeting results, values, and outcomes.When you deliver credible cost-savingsandrisk-reduction/cost- containment reports to stakeholders,you’re helping validateyourorganization’scommitmentandinvest- mentin theSMMP,andensuring that everyone will continue to followthis business plan as you imple- ment additionalSMMPcomponents. Meetings are big investments,anddrivingrealmeetingvalue will haveasignificantimpactonyourorganization—and buildyour brand in the process.
Risk Reduction/Cost Containment
Resell/audit Resell/credit accountability, percentage of dam- ages applied to future meeting.
Capture rooms booked around your block/omit rooms out of service/under renovation.
Unauthorized changes Hotel not to change or alter contracted room block, meeting space, support services without written approval.
Meeting and event space Complimentary/no sliding-scale fees.
Force majeure Termination without damages.
Relocation Accountability when attendee is “walked.”
Breach by hotel Failure to provide services as agreed render hotel liable for direct and indirect damages.
Legal department language Indemnification insurance, dispute resolu- tion/arbitration, bankruptcy, successors and assigns, etc.
ON_THE_WEB: Read online or download “SMMP Implementation and Idea Guide,” a free white paper by Corbin Ball Associates, at www.corbinball.com/assets/SMMPWhitePaper.pdf.
www.pcma.org ILLUSTRATION BY GREG MABLY
JenniferW. Brown, CMP, is president of Meeting Sites Resource, a global specialist in meeting-site research and hotel-contract negotiations. For a complimentary copy of her sample “Cost Savings/Risk Reduction” report, contact her at jbrown@meeting sites.net.
At What Cost? Cost reduction is achieved on two dif- ferent levels: direct cost savings and cost avoidance. Cost sav- ings are realized via two different avenues: productivity gains, which are realized through process effi- ciencies; and improved sourcing and negotiation expertise, which (when combined with consolidated spend leverage) help reduce the actual costs for purchased goods and services. Cost avoid- ance, by contrast, results from improved risk-management controls over the potential costs associ- ated with contract performance obliga- tions and mitigation, cancellation fees, and other excess contrac- tual liabilities. —Professional Meeting
Management, Fifth Edition