Group Hotel Negotiations

In today's uncertain economy, hotels have experienced a couple of their leanest years, and thus have been far more adaptable to the needs and requirements of groups than before. They have offered additional concessions, reducing their profit margins in areas that best work for their hotels and their specific market conditions. Competent negotiators have been able to secure better than typical agreements with hotels during this period for that reason. The fourth quarter of 2010 showed somewhat of an upturn for many hotels and hotel chains, with both group bookings and hotel occupancy rates higher. While one quarter does not make a trend, and while an upturn from a low figure is still in most cases below normal averages, most chains are beginning to reexamine their group policies, and determining which concessions might no longer be necessary. Obviously, from the hotel's perspective, the fewer concessions they need to give to assure and secure business, the more profitable it is for them.

Since there has only been one quarter of pretty much across the board improvement in hotel's financial picture and, although most of the major chains are projecting continued overall improvement and an upturn in the latter part of 2011 or early 2012, there are still many unknowns. Rightly so, most hotels are still nervous about how conditions such as the economy, energy prices, etc., will impact them. They still worry about the high joblessness rates, as well as the cost of doing business. They still have not, in most cases, actually witnessed a continuous return to the occupancy rates of a few years ago. While some hotels may be starting to take a firmer negotiating stance, most would rather have a "bird in the hand," than lose potential revenue. This means that the top tier of negotiators will still be able to effectively get concessions from hotels, although the mediocre or average ones may have a far harder time. Better negotiators know what hotels want and expect, and understand the need to work with hotels as "partners," while still getting the most value for the organization or group he represents.

As someone with over three decades of hotel negotiating experience and expertise, having negotiated effectively for groups from forty to several thousand, I have been urging organizations to "take advantage" of the next few months to negotiate as far in advance as they are able to, because the negotiating position will probably be better than it will be next year. Obviously, nobody has a crystal ball, but if all the projections, and internal hotel policy discussions are correct, it is most likely that most properties will take a far tougher stand regarding concessions, etc., than they will now.

Indeed, most of the still tense situation in the hotel, such as economy, energy prices, will affect them. They are still worried about high unemployment, and the cost of doing business.