Room Fees Are Spreading, But Negotiable
<B> Room Fees Are Spreading, But Negotiable</B>
By Chris Davis
Even the largest of meeting buyers are finding that hotels--especially hotels in big cities--increasingly are charging fees for the use of meeting facilities they once threw in for free. While the fees are often very negotiable, according to many corporate meetings buyers and hotel sales representatives, it has now become a standard practice to include meeting space rental fees in corporate bid proposals.
The change certainly has been driven by increasing demand in the continuing sellers' market. Another factor cited by meeting planners and sales reps is the gradual evolution of corporate meetings from simpler, oftentimes one-room affairs to much more complex events, with breakout sessions and other concurrent sessions in different spaces. These deals sap the hotel's ability to sell their secondary meeting space to other groups.
Still, insiders reported, experienced and thoughtful planners more often than not can work with the hotel to remove the fee or reduce another expense at a commensurate rate.
"It depends on how much you use the hotel, the size of the meeting, when it's held, which hotel it's in--all the factors of a meeting that you can negotiate. What some hotels can negotiate, others can't, but there's always something you can work with," said Margaret Moynihan, director of conferences and travel for Deloitte & Touche in Wilton, Conn. "Buyers need to take other benefits and translate them into dollars, and find ways to equate cash savings in other areas. There are a lot of things that can be translated into money."
In just about every case, buyers who know the true value of their meeting have a better chance of negotiating away meeting space charges than planners who do not consider the big picture--and that includes the hotel's point of view. "I've seen fees becoming more of a trend, but they're still negotiable," said P. Dean Altvater, national accounts director for Wyndham Hotels and Resorts in New York. "We look at the whole piece of business. If there's a good ratio of rooms to meeting space, or if the meal is in the same room as the event, for example, then things are negotiable and maybe even result in a comp."
Martin Wade, assistant sales and marketing director at the Crowne Plaza Houston/Galleria Area, agreed that "meeting space charges are definitely a trend, particularly in large metropolitan areas where meeting space is at such a premium. The days of free meeting space are gone."
Like many, though, he does not have a set rate for meeting space rental. "Some hotels use a standardized formula, but we look at the whole package--we look at their books and their previous usage," he said.
It also doesn't hurt if the planner has a solid working relationship with the hotel, and a history of fair negotiations and staging valuable events.
Finding the right sized property is important, too. While one hotel might have to charge a fee to a group gobbling up all of its meeting space without filling many sleeping rooms, another property may have a better ratio of meeting room space to guest rooms.
Meetings industry attorney and consultant John Foster noted that while meeting rooms traditionally were built to bring sleeping-room business into the hotel, they have become independent financial resources on their own.
"If you take 50 percent of a hotel's meeting space, for example, and only 2 percent of its sleeping rooms, you should have to pay meeting space rental fees," Foster said. "The hotels are entitled and the charges legitimately occur. If you don't want to be charged, you need to negotiate with a hotel that has a better ratio of meeting space to sleeping room space."
It's a sellers' market, Foster noted, "and hotels are getting stricter in performance. You didn't see things like early departure fees, for example, a few years ago."
Still, though, many planners have been successful in negotiating away the charges. "I'm still seeing contracts that have free meeting space when all other revenue requirements are met," said Rich Del Colle, meetings program manager for Hewlett-Packard in Burlington, Mass. "But even if you have a large meeting in a hotel, if there's an excessive amount of breakouts--a real labor-intensive organization--hotels may have to add meeting space charges."
Another consideration for planners looking to avoid meeting space charges is that the situation varies from city to city. While large cities currently are seeing overflow demand for meeting and sleeping rooms, which makes meeting space charges more likely, hotels in secondary and tertiary cities may be far more anxious for a company's business, and more willing to negotiate. Even a 75 percent occupancy rate in a city, some noted, means that a fourth of the available hotel rooms still are not sold.
"It varies from city to city," said Jill Cady, director of conference sales for Bass Hotels and Resorts. "It's just another element of the negotiation. If you try to get space in San Francisco or New York, demand is so high that they're charging more. But in smaller cities, like Albuquerque, demand is constant."
Talking to different chains can help, too, as not all hotels are charging fees, insiders said. The Ritz-Carlton, for example, tends to have higher room rates than many other chains and therefore doesn't have the same financial need to charge for meeting space.
"If we don't have to charge for meeting space, we won't," said Lisa Fisher, national sales manager for the Ritz Carlton San Francisco. "We're not out to kill people on meeting space revenue. But I've seen a lot of hotels charge--and they're getting the fees. I've seen anything from $5,000 to $20,000.