Meetings Budget & Cost Savings Strategies

Presented by

Robyn Mietkiewicz, CMP, CMMDirector, Global Meeting Management

Services

Meeting Sites Resource

Moderated by

Tyler DavidsonChief Content Director

Meetings Focus

Wednesday, January 29, 2014

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Today’s Speaker:

Robyn Mietkiewicz, CMP, CMMDirector, Global Meeting Management Services

Meeting Sites Resource

rmietkiewicz@meetingsites.net

www.meetingsites.net

@MSR_Global

Learning Objectives Understand industry issues and trends that impact value based

negotiations

Review key cost-savings strategies, including room rates,

concessions, F&B and audiovisual and Internet/technology

support services

Learn methods to create value formulas and metrics to define,

measure and report success

Discuss how to communicate real meeting value to senior

managers and stakeholders

Know the five key steps to assure measurable cost savings and

ROI

Budget & Cost Savings

Strategies

Breaking Barriers

Robyn Mietkiewicz, CMP, CMM

Director, Global Meeting Management Services

Meeting Sites Resource

Confidential and Proprietary Information

@MSR_Global Meeting Sites Resource

• Industry Issues & Trends

• Hotel Revenue Management

• Assess Your Leverage

• Cost Savings Strategies / Metrics

• Key Hotel Contract Clauses / Cost Containment

Topics

Industry Trends

• Increased demand in corporate & association meetings /

increased attendance

• Greatly reduced new hotel inventory / sleeping rooms in all brands

• Increases in hotel occupancy, average daily rate and RevPAR

• Individual meeting budgets remain flat / hotels incorporating

multitude of fees and surcharges

• Hotels refocus on revenue management to maximize profitability

• Planners focus on Strategic Meetings Management (SMM) to

assure accountability and measurable value

Understand Your Leverage For

Each Meeting

How Hotels Value Your Meetings

Variables That Influence Pricing & Availability

►Transient demand

►Arrival / departure pattern

►Rooms to space ratio

►Group food & beverage

revenue

►Lead time

►Season

►History

►Potential incremental revenue

►Value of total account

►Risk

# of rooms held vs. ability

to pick-up block

Cancellation/attrition

clauses in contract

►Other groups contracted over

same dates / revenue

contribution

Industry Profit Margins

(Average Hotel Chain & Independent)

0

10

20

30

40

50

60

70

80

Sleeping Rooms Group F&B F&B Outlets Recreation/Spa Retail/Misc Depts

ROOMS - 77%

GROUP F&B - 38%

F&B OUTLETS - 19%

RECREATION/SPA - 15%

RETAIL/MISC DEPTS - 15%

Meetings are

BIG investments:

have a

negotiations plan

for each meeting!

Assess Your Leverage

From your strategic RFP, evaluate the following:

• Season / demand over your date(s)

• Peak Night Pattern / Flexibility

• Sleeping Room Block / Revenue – multiply total room nights by

proposed room rate

• Group Food & Beverage / Revenue – all functions from RFP X

average menu prices X attendees

• Room To Space Ratio – total space on heaviest use day,

calculate as % of total space in hotel

• Ancillary Spending – projected revenue for business center, AV,

production, Internet, golf/spa, sponsored events / ICW revenue,

etc.

Sleeping room rates – starting proposal room rate $209, final negotiated rate $189 = $20 savings x contracted room block

Suite upgrades at group rate - benchmark against group rates, not rack rates (i.e., group rate for one bedroom suite $650, contracted at group rate of $189 ($650 - $189 =

$452 savings).

Staff rooms – generally 50% off group rate (i.e., $189 group rate = $94.50 staff room rate)

Complimentary rooms – total contracted room block ÷ negotiated comp policy (i.e. 360

contracted rooms ÷ 1/40 = 9 complimentary rooms at $189 group rate)

F&B Discount – total contracted F&B guarantee X percentage of negotiated discount (i.e., $65k F&B guarantee X 10% off catering menus = $6,500)

Waive In-Room Internet Fee – total contracted room nights X published in-room Internet rates (i.e., 360 contracted room nights X $12.95 = $4,662)

Waive Meeting Space Rental / Set-up Fees – do not report savings if space is complimentary based on room block pick-up percentage / F&B guarantee. Show as

cost savings if negotiated out of RFP proposal.

Cost Savings Components

A/V Discount – A/V budget X percentage discount (i.e., $17k A/V budget

X 15% negotiated discount = $2,550)

Hotel Fees & Surcharges – the goal is to eliminate or reduce fees /

calculate savings against published fee or surcharge rates (i.e. waive $20

resort fee X 360 rooms = $720)

Complimentary Pre-Planning Room Nights - total negotiated planning

room nights X negotiated room rate (i.e., 8 pre-planning comp rooms at

$189 = $1,512)

Complimentary Acceptance / Storage Meeting Materials – calculate

published rates / savings by box or pallet size, pound or storage duration

Preferred Supplier Volume Buying – calculate savings for meeting

support services, off-site venues, DMC’s, etc.

Cost Savings Components

Food & Beverage

• Piggy-back onto the menu of another group in-house

• Any open wine bottles are yours – claim them for VIP suite

• Cash bars credited towards your F&B minimum

• Work with chef to develop custom menus and pricing

• If hotel provides off-site catering capture for F&B minimum

• Negotiate complimentary continental breakfast and

breaks in staff room daily

Creative Cost Savings Tips

Food & Beverage

• Shorten receptions

• Consider plated meals over a buffet

• Pass hors d’oeuvres instead of placing at stations

• Create fruit or dessert centerpieces for consumption

• Determine what theme, décor and specialty linens the hotel

has in-house and negotiate at no charge

Creative Cost Savings Tips

Food & Beverage

• Water coolers are less expensive then water bottles / hotel water

pitchers are free

• Compare costs for smaller groups to dine in restaurant vs. catered

meal

• Ask hotel if they have a meal package plan

• Compare liquor purchasing methods by drink/bottle/per person cost

and control amount of pour with preselected brands

• Inventory bars before and after each event

• Seek sponsors to pay for breakfast, breaks, lunch, dinner, in-room

amenities, event signage, etc.

Creative Cost Savings Tips

Creative Cost Savings TipsAV / Production

• Negotiate AV discounts

• Bring AV equipment from your office

• Assign meetings to rooms with the same AV set-ups (when possible)

• Bid AV to multiple companies / negotiate no fee to bring outside

suppliers

• Meet AV specialist during site inspection to discuss cost savings tips

• Microphones are generally not required for groups of 50 people or

less

• Guaranteed pricing and costs when contract is signed

Creative Cost Savings TipsTechnology

• Complimentary or discounted internet access / lines in

meeting rooms

• Flat rate for phone lines / Internet in meeting rooms

• Negotiated rates for advanced technology set-up

• Bid technology services out to multiple companies

Concessions and Hotel Fees & Surcharges

• Determine if hotel or venue is union and if so, what are the hourly /

daily rates and charges

• Waive / reduce resort fee

• Waive in-room per day internet charges

• 1 per 40 complimentary room policy

• Complimentary or discounted parking

• Complimentary acceptance and storage of materials

• No early departure fees

• 5% - 10% off master account if paid upon departure or guaranteed

minimums

Creative Cost Savings Tips

Hotel Contract Negotiations

• Has become an important metric in SMM

landscape

• Focus on cost containment measures in case of

non-performance

Key Performance

Clause Analysis(SMM Focus)

Guestroom

Attrition

Cancellation

Published Rates

Breach By Hotel

Current Trends

In Attrition Performance Clauses

Sliding Scale attrition / use it or lose it (10% at 45 days / 5% at

30 days

Guaranteed room block in contract / no allowable attrition

No resell clause / only rebook clause

“Vertical” attrition / damages calculated on per night basis

Attrition damages based on average in-house room rate over meeting dates (generally higher than contracted group rate)

Solutions

Guestroom Attrition

ABC Corp agrees to guarantee 80% of their contracted room

block

In the event ABC Corp fails to utilize 80% of the total room nights

(200 total rooms), during the meeting, ABC Corp will pay XYZ Hotel

a “Guestroom Attrition Fee” equal to:

• Base calculations on profit, rather than revenue / less rooms

captured / credited via rooms audit

(Calculation: $189 x 75% = $141.75)

* Example based on 250 rooms contracted @ $189 room rate

XYZ Hotel to honor ABC Corp group rate after the cut off date

based on availability (group vs. prevailing)

XYZ Hotel shall use best efforts to resell any unused or cancelled

guestrooms.

All revenues derived from Hotel’s resale of such guestrooms will

be applied toward payment of any Guestroom Attrition Fee

payable hereunder. (Resell)

ABC Corp has option to apply 75% of attrition damages to a future

meeting at the XYZ Hotel within one year. (Rebook)

Solutions

Guestroom Attrition

~ continued ~

Current Trends

In Cancellation Clauses

Sole cancellation damages for group / no accountability if hotel

cancels

Liquidated damages – no obligation to resell and credit rooms to

group

Not applying paid cancellation fee to future meeting

100% damages due on sleeping rooms & guaranteed F&B

If Notice of Cancellation is given

by ABC Corp

Cancellation on Profit Cancellation on Revenue

From Signature – 120 days prior to arrival (August 6, 2012)

40% of Total Room Profit = $14,175 $18,900

119 days – 60 days prior to arrival(August 6, 2012 – October 1, 2012)

65% of Total Room Profit = $23,035 $30,713

59 days – 30 days prior to arrival(October 1, 2012 – November 5, 2012)

85% of Total Room Profit = $30,122 $40,163

29 days until arrival (November 6, 2012 – December 5, 2012)

100% of Room Profit ($35,438) + 35% of F&B ($18,200) = $53,638

$99,250

Solutions

Cancellation

If ABC Corp cancels the entire Meeting without cause, ABC Corp will

pay XYZ Hotel a “Cancellation Fee,” in accordance with the

following schedule:

Example based on 250 rooms contracted @ $189 room rate / F & B Guarantee $52,000

XYZ Hotel shall use best efforts to resell the cancelled

guestrooms and credit ABC Corp.

All deposits paid by ABC Corp and all revenues derived

from Hotel’s resale of such guestrooms will be applied

toward payment of any Cancellation Fee payable

hereunder.

XYZ Hotel will refund any amount due to ABC Corp within

thirty (30) days after cancellation.

ABC Corp has option to rebook meeting and apply 75% of

cancellation damages.

Solutions

Cancellation

~ continued ~

Solutions

Published Rates

If, at any time after signature of the contract, hotel publishes, issues

or promotes room rates via promotional web sites (during group

peak room nights) that is less than the contracted group’s rate, hotel

shall adjust the applicable group rate to equal the lower published

rate.

Note: The goal is to reduce the possibility of guests booking

direct at a lower rate.

Solutions

Breach By Hotel

Failure by hotel to provide the space and/or services as agreed, or

breach of any representation or warranty by hotel, shall render Hotel

liable to Group for all direct, indirect and consequential damages,

expenses, attorney’s fees, and costs incurred by group on account

of such breach. Exercise by group of any of its cancellation or

termination rights under this agreement shall not waive or otherwise

affect this provision.

Note: The goal is to have mutual accountability with damages due

the group in the event hotel does not perform as contracted.

Hotel Contract Addendum vs.

Custom Hotel Contract

► Addendums - generally include

concessions and select performance

clause language

► Addendums - often attached to hotel

contract / conflicting performance

language

► Addendums – generally do not address

hotel responsibilities and accountability

Custom Hotel Contract Process

Your custom hotel contract should address all contract

components, value added concessions, hotel fees and

surcharges (eliminate or reduce), hotel performance clauses

(based on profit, not revenue) and company liability language.

Key Risk Reduction /

Cost Containment Components

Sleeping Room Rates

Rate integrity process

Value Added Concessions

Prioritize for each meeting

Published Rate Clause

No lower group rates via website after contract signing

Attrition

Guarantee percentage of room block / no sliding scale fees / damages

based on profit not revenue

Cancellation

Sliding scale damages on profit not revenue / resell / if damages, apply

to future meetings

F&B Guarantee

Allowable attrition

Hotel Fees & Surcharges

Eliminate or reduce

Resell / AuditResell / credit accountability, percentage of damages applied to future meeting

RelocationAccountability when attendees “walked”

Construction / RemodelingNo construction or renovations over meeting dates that impact meeting, image,

logistics, guest experience

Unauthorized ChangesHotel not to change or alter contracted room block, meeting space, services

without written approval

Meeting & Event Space Complimentary / no sliding scale fees

Force Majeure Termination without damages

Breach By HotelFailure to provide services as agreed render Hotel liable for direct & indirect

damages

Legal Department Language Indemnification, insurance, dispute resolution / arbitration, bankruptcy, successors

& assigns, etc.

Key Risk Reduction /

Cost Containment Components

Six Steps To Value-Based Negotiations

• Utilize a strategic RFP / assess your leverage for each meeting

• Assess your revenue contributions / leverage from each RFP

• Track meeting activity and spend, by category (contracted

rooms vs. actual, F&B revenues & ancillary spending)

• Have a negotiations plan and goals for each meeting

• Create a custom hotel contract, ready for signature

• Generate a cost savings / risk reduction / cost containment report

for each meeting.

Robyn Mietkiewicz, CMP, CMM

Director, Global Meeting Management Services

rmietkiewicz@meetingsites.net

Meeting Sites Resourcewww.meetingsites.net

Complimentary Cost Savings Resource Upon Request

Robyn Mietkiewicz, CMP, CMM

Director, Global Meeting Management

Services

Meeting Sites Resourcermietkiewicz@meetingsites.net

Tyler Davidson

Chief Content Director

Meetings Focustyler.davidson@meetingsfocus.com

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