[ Conferon Perspective: Structure the Contract ]Structure the
Contract to Cash
All Your Comps

by Brad Weaber
The economic recovery has created a pronounced "sellers" market. When asked at a recent seminar if they had noticed a different negotiation posture on the part of hotels, virtually every meeting manager's hand went up. It reinforced the quandary how to produce quality events with flat budgets... at the very same time that many of the concessions eagerly given two years ago had been taken off the table!

Concessions that used to be taken for granted now cost hard dollars. And, make no mistake, those dollars fall right to the bottom line. For example, in a city-wide convention using 10 to 12 hotels, 2,500 rooms peak night and a total room count of 8,750 rooms... based on a comp ratio of one per 50, 175 complimentary nights are earned.

If the negotiated room rate is $100, that's a bottom line saving of $17,500... if all the comps are used. And there's the rub. Comps in the headquarters and other nearby hotels are routinely picked up. But what about comps that are earned in overflow hotels? Consider these tips for comps that are earned but seemingly can't be used:

 Reinventing the
"Infamous" Head Table

Calculate Earned Comps
on 'Accumulated' Basis.
While most meeting managers will try to negotiate ratios better than the standard one per 50 rooms consumed, the hotel contract should also include a clause that states that comps will be calculated on an "accumulated" basis. This is imperative since some hotels' comp policies are worded so that the one per 50 applies to "peak nights only."

Another tip: For complimentary rooms that are not limited in length of stay, assign the person who will be at the hotel for the greatest number of nights. Those not staying as long should be assigned "staff-rated" rooms.
Negotiate that unused comps will be credited to the master account in all contracts. It is essential that this is written into the contract as an option instead of only assigning the comp rooms. (Note: Many hotels do not like to convert comp rooms into full dollars for the master account because it costs the hotel far less to have the organization simply use the rooms that may have gone unsold, rather than reimburse the account for them.)

If a hotel is concerned that they will be "sold out" over the dates of your meeting, you may find that they may be more willing to allow the credit to the master account. Additionally, some hotels may make the concession if they feel they may lose business over the issue. Ultimately, the hotel will determine their needs during your booking to ascertain whether or not to allow the credit.

If your group requires shuttling, stipulate that the value of the unsold comps will be credited to a "bussing" account. These funds will help offset costs of shuttling to the convention center. It is important that the hotels, especially the ones outermost from the center, understand that the special "bussing" account will actually enhance their ability to sell rooms.

If your organization has members who are on limited budgets, such as students, or government officials, offer unused comps in exchange for a designated price or donation. Granted, this may not produce a great deal of revenue, but you will have the ability to make a positive statement to an important segment of your membership.

If you find yourself stalled in negotiations over the issue of crediting comp rooms to the master account, negotiate for a percentage of the comp value, i.e. 75 percent. If you have exhausted other options, this is a possible compromise for use with hotels that are not near the convention center, especially if you cannot use the comps in any other way.

Use the comps for suppliers who do not need to be in the headquarters hotel, but who require housing, like show management, and audio visual. Negotiate to use unused comps at a later date within the next 12 months. This can prove especially beneficial if you have board or committee meetings that are generally paid for by the association.

Remember, comps should always be applied for people you would normally pay for. This is important because of state and room taxes you save as well.
Brad Weaber is senior account executive in the Washington, D.C. area office (Arlington, Va.) of Conferon, the nation's largest independent planning company meeting planning company.

First published in: Convene Magazine, December 1995