How to prepare for 2023 contract negotiations
Yes, we’re out of the pandemic shutdown, but it’s not back to “business as usual.” While corporate events are happening, they’re not the same and show no signs of returning to any kind of “normal” (if there is such a thing!). From workforce shortages to inflation worries, what should event planners be looking for when it comes to 2023 contracts?
Be Prepared to Adjust: Contract Pluses and Minuses
In 2023, you’ll need good balancing skills! Picture a seesaw with one side up in the air and one down on the ground. On one side you have less—flexibility, staff, access—and on the other, higher prices and more rigidity instead of the pre-pandemic give-and-take.
Read More: What Happens When Fear Majeure Is Used to Postpone or Cancel an Event?
On the “low” side:
- Fewer concessions.
- Less flexibility on ancillary spaces and load-in/set up access.
- Fewer services/staff.
On the “high” side:
- Larger deposits up-front for hotel contracts.
- More rigidity on amounts that can be charged to the master bill post-program.
- Increasing rates for staff/services.
You’ll also see hotels layering multiple groups in the same week to maximize group revenue while still capturing the leisure market on the weekends. That may mean your group doesn’t get the same focused attention as before or the same privacy.
What does all of that mean? Always have a plan B, not just in general, but for all aspects of your event. Extra rooms not available? Take a look at nearby venues. Can’t get enough staff for a seated dinner? Maybe a buffet option can do double as a networking event. Creativity and flexibility will help you keep your balance between the highs and lows.
“Always have a plan B, not just in general, but for all aspects of your event.”
Keep an Eye on Details
Timing: Be prepared for a tighter decision window. Hotels are offering a short hold time or none at all. There is still significant demand for space, and option windows are shorter or shared as a result. This helps balance the hesitation on the clients’ part for meetings that are farther ahead, but it means the team has to be ready to commit quickly.
Add-On Travel: Negotiate pre- and post-rates in the contracting stage. As the cost of travel rises, more attendees are adding vacation time to corporate travel. When including those nights into the contracted room block, ask that they count toward your attrition calculations and commissions.
Standard of Service: Due to continuing workforce shortages, look at the standard of service clause. With fewer team members and higher costs, you may need to get more creative about how to fulfill the clients’ needs (especially for group events).
Evaluate: Risks—Real or Not?
Inflation—Real Risk: We do see inflation affecting contracts. For example, we’re seeing higher food and beverage (F&B) costs with little to no discounts. We are also seeing more “hidden fees” for guest room rates. Instead of a “resort fee,” you may see a “service administrative fee” that can be as much as 10-15% of the room rate each night.
Health—Not a Risk: Fortunately when it comes to health risks, we’re not seeing any specific contract ramifications. People have learned to live with the challenges—at least for now. With ample access to testing and vaccinations, most companies are moving forward with in-person events and attendance numbers indicate that most people are comfortable traveling.
Climate—Real Risk: With shifting climate patterns, planners need to be prepared for severe weather conditions more so than before. According to the National Centers for Environmental Information, the rate has increased from an average of three per-year in the 1980s to 13 per year in the 2010s. Force majeure should reflect the flexibility you expect. While it is impossible to anticipate every situation, it’s imperative to set expectations at the contract stage so the client and the hotel are in sync.
Related to climate, overall hotel sustainability practices are becoming more important to clients. If they’re important to yours, look for contract terms such as donating leftover meals and décor, housekeeping policies that reduce water use, environmentally friendly products, and other factors that can help choose one venue over another for higher client satisfaction.
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Dana Jackson, HMCC, is Bishop-McCann senior global sourcing manager.
This article appears in the January/February 2023 issue. You can subscribe to the magazine here.
