Added Big Apple Fees Incite Mtg. Planners
<B>Added Big Apple Fees Incite Mtg. Planners</B>
By Frank Rosci
New York has long been a national and international trendsetter in just about every facet of personal pastime and professional pursuit. And the added hotel meeting costs wrinkle that seems to have originated at hotels in the city--and rapidly spread far and wide--is no exception to this rule.
The controversial practice in question is becoming almost standard in New York, with many hotels charging ancillary fees--such as additional meeting room and banquet hall fees, as well as charging for meeting elements that used to be complimentary (Meetings Today, Oct. 25, 1999)--and it's got most meeting planners at least bewildered and many seeing red.
"These days, everything is extra in Manhattan hotels, including fees for telephone use, banquet halls and meeting space," said Karla Gantt, senior meeting planner at McKinsey and Co. in New York. "I have to negotiate hotel room rates and meeting room rates and food and beverage, and the rates are not CMP rates," she said. "I use high-end hotels and I expect them to work with me, but they are a lot less willing to do that today," Gantt said.
The constantly changing meeting and business travel market in New York does not surprise Dr. Chekitan S. Dev, hotel industry researcher and consultant, and associate professor of strategic marketing and fellow at the Cornell University's Center for Hospitality Research, School of Hotel Administration in Ithaca, N.Y.
"There is more pressure than ever for hotels to deliver a profit, because many of them are now publicly owned companies," said Dev. "Hotels are now considering every conceivable way to put up the best bottom line, to enhance revenue for their shareholders and increase profit by 15 or 20 percent annually. They are reassessing the freebies, with fees now being attached to things that used to be complimentary. The meeting room, for example, was always thrown in. It's not anymore."
Because of the healthy economies--nationally, regionally and locally--and the dramatic increase in meeting business and business travel related to them, Dev said, control of the market now rests with suppliers who are wielding their considerable power to influence higher meeting and travel costs.
"Anything goes at New York hotels now, because they are feeling so good about themselves in terms of how strong their meeting and convention business is, and just how high their occupancies are," said Marsha Block, CMP and CEO of the American Group Psychotherapy Association. In her 30 years of meeting planning experience in the city of New York, Block has seen numerous and varied shifts in the meeting market and its direction vis-a-vis hotels. She has encountered all manner of changes and charges, including surprise fees added to bills at the end of a meeting or function.
"Whether or not a planner should do something about additional charges depends on several factors, such as the dollar amount, the number of times the charges appear and the relationship between planner and hotel," Block said. To avoid being raked over the meeting coals, Block recommended being assertive, even aggressive, in dealing with hotels, questioning every item, every issue that is part of negotiating a meeting or other function.
"Have the contract written so it specifies all charges--nowadays, these can include everything from coat check to use of the health club--and have it written to reflect that it's the responsibility of the hotel to inform the meeting planner of any and all charges up front, well before your people arrive," she said. "Always ask for a labor and service charge list to be appended to the contract anywhere from six months to a year from your meeting date," Block added.
Strategies to handle additional or excessive charges include going over the director of sales and general manager's head--if they won't work with a planner--directly to corporate headquarters to discuss contracts and charges, Block advised. To protect a valued working relationship with a hotel, planners also should compromise, as long as that doesn't weaken their position or threaten to undermine the efficiency and effectiveness of the group and its meeting.
Melissa S. Hollander, director of meetings and conferences at Executive Enterprises in New Rochelle, N.Y., said, "I have seen New York hotels try to assess fees occasionally, but I refuse to pay them for a lunch room, for example, that's already been booked."
In dealing with the charges, planners can try to negotiate around them and if that doesn't work, they can consider other hotels, Hollander said. Though, how successful this approach is depends on the kind of working relationship the planner has with a particular hotel. Even though the charges are a source of consternation and worry, said Hollander, she has no plans to boycott the hotels. "We simply can't boycott hotels, because we need them, we need their meeting and banquet space," she said.
One cost that is a continual concern to planners is food and beverage, Hollander said. Adding a food and beverage attrition clause--an idea travel industry attorneys strongly suggest--can help control costs in the event fewer attendees show up than expected. "With the protection the clause offers, a planner is only responsible for the dollar amount of the people actually served," Hollander acknowledged. A planner then has the flexibility of working with the hotel to put the difference, say $1,500, back into some other area of the meeting.
Laura M. Dunn, director of sales and marketing at the SoHo Grand Hotel in Manhattan, identified that, yes, ancillary fees are "a trend in New York City." An attitude prevalent among hotel management these days in New York, said Dunn, is one of "help me to cover my costs and I'll help you have the best meeting you've ever had."
Hotel space is at a premium in New York, Dunn said, so hotels are getting top dollar. Also, food and beverage margins aren't as good as they used to be for hotels in the city, so that too costs groups more. As a stated policy understood and accepted by planners, the SoHo Grand has charged a meeting room rental fee from the time it opened in 1996, added Dunn.
An option explored by some planners, but not a truly viable alternative, Dunn said, is the use of all-inclusive conference centers, which when broken down meeting element by meeting element actually may be more expensive than hotels in the city. To prevent hidden and extra charges, planners should simply ask the hotel what's included and what costs what, and make their group's needs as clear as possible, she advised.
As new hotels open this year and over the next several years in the city, making guest rooms more plentiful and easing the meeting space crunch, there may be a shift away from some of the meeting charges groups now incur, said Sharon Telesca, director of sales and marketing at The St. Regis New York, which hosts corporate meetings for 150 to 200 attendees and a number of board meetings.
<B>Fee, Fie, Foe</B>
Some observers have suggested that only an economic downturn will level the playing field. What lies ahead? "If there is a downturn," Dev said, "those who were charged can and should exercise their negotiating leverage and bargain, or switch. Those for whom fees were waived should reciprocate by staying loyal."
For now, the only plausible solution is to become a better negotiator. According to a spokesman for the New York Convention & Visitors Bureau, a planner's ultimate negotiating power with a New York hotel may rest on the status of a room block. A general rule of thumb is that if a planner's group meets 80 percent of its room block, certain hotel fees may be waived, the spokesman said.
Because space is at a premium right now, planners have to pay to play. To deal with this, one win-win negotiating strategy--rather than simply trying to reduce fees--is to consider requesting additional services, such as upgrades in the type of services provided. Hotels, in turn, might consider waiving fees in exchange for a longer, multiple-term contract.
"This requires both parties to take a longer term relationship-oriented view," Dev said, "rather than a short-term transaction-oriented one--something that is not easy to do in a business that has high turnover on both sides.