After spending ten years working with clients on sourcing and contracting I find one mistake many make is the focus on negotiation of a hotel's room rate. Clients will push back on the room rate to help lower their cost. Reality is securing a large discount on room rate from the original proposal does not happen a majority of time but instead a $20-30 nightly rate improvement. Many times this rate negotiation needs approval from a sales director and then once approved the sales rep feels like they are meeting your main negotiation request.
After a two year hiatus from Presidents Clubs, the hotel industry is back and busier than ever. We are ecstatic that our clients are back traveling and more surprising adding more events than ever.
Picking the right hotel partner is more important than ever specifically given the market conditions discussed in our last blog post. You want to focus on hotels who have had the same CSM team throughout the pandemic or hotels who have hired strong sales reps who are responsive and flexible.
The hotel and airline industries have been a rollercoaster the last 6 months, leading to a volatile travel industry. After a 10% decrease in inflation for hotel room rates in 2020 we have seen a strong return in 2021 and 2022 is predicted to break hotel occupancy rates in locations such as Puerto Rico, St. Thomas, Florida, South Carolina, Colorado, and Georgia. Not only are occupancy rates higher than ever, but cost per hotel room night is reaching all time highs in these locations.
Here are the top four things I always look for before moving forward with a room block for corporate groups.
1. Cumulative attrition: Ideally 20% of estimated room revenue, if not picked up you pay the difference. Most fair for both companies and hotels is the 20% is up until cutoff date (30 days before). Then if you have not used all 20% attrition, you can cancel up to 3% until check in day for emergencies. Or specify exact number of rooms based on total room block.
2. Force Majeure: This one has been the most interesting coming out of COVID cancellations. I still haven’t seen a perfect compromise between clients and hotels. I don’t think it’s necessary for corporations to have force majeure that only results in refunds but instead I am open to shifting patterns for future travel up to 18 months. Obviously if the hotel is closed, like what happened in many situations during the past 2 years, then a refund should be offered. But if there is a CDC level 3 or 4 warning against travel or airport closedown due to weather, the hotels should offer an option to push dates for a future event due to partial force majeure. In negotiating this clause remember the more options you provide in terms of rebooking the more likely the hotel will accept your revisions to their force majeure or impossibility clause. Unfortunately now that COVID is here to stay we are seeing many of these clauses now exclude COVID since we know it exists and is present when contracts are being signed. It’s important to figure out how as a company you want to manage risk and make decisions off those risk levels. Keep in mind the CDC just recently updated how they are managing published risk levels so we are less likely to see Level 4 warnings and more likely to see Level 3 warnings in the future.
3. Rebooking clause: 50% of funds to be used for new event up to 18 months after original event date. If you cancel up to 45 days before event and pay full cancellation, you can use 50% for a new program or equal or larger size within 18 months.
4. Cancellation clause: 100% of cancellation is a crazy concept when including F&B minimums in the cancellation. I understand hotels are losing on an opportunity cost of group cancellations but they can resell all estimated bars costs (inventory). Hotels are still receiving 100% of estimated revenue and can still resell those rooms to leisure travel. Our push is up to 30 days before 80% of estimated rooms revenue and 40% of F&B minimum. 30 days until the event it should be 90% of estimated rooms revenue (not including the resort fee) and 50% of food and beverage minimum.
This is a quick blog post on some differences between how travel agents, corporate and/or leisure agents make money.
After an 18 month sabbatical it’s amazing to be back in the events game.
Our first events happened to be back to back events in Austin, Texas with companies headquartered in Sacramento, CA and Boston, MA. The employees were ready to travel and the companies were ready to implement safety precautions to help protect everyone attending. These events were followed by two domestic and four international Club trips where all of the group events were focused on outdoor venues. We are finding cancellations are happening less, clients are traveling more, and attritions are high within the group block.
After eight successful corporate events over the last two months I wanted to share a few lessons learned.
It’s year 5 of your annual President’s Club and it’s been nothing but a positive experience. Sales numbers have significantly increased in the 4th quarter since instituting the program and the percentage of employees hitting 15% higher quotas has doubled. Each year while on the trip you realize how successful the trip is in bringing together your employees and building excitement for the year ahead.
While this year in particular has been far from normal, you know that the incentive trips have worked well for your company in the past and hope to continue (and grow) these programs in the near future.
You’ve decided it’s time to host your company's first incentive trip. Revenue is growing, headcount is increasing each month, your brand is getting stronger, and your product is getting better.
Each year, thousands of companies host annual incentive trips to reward their employees for meeting or exceeding expectations. Companies will either organize these trips internally or use a third party to help with the planning, but at the end of the day there are a few important factors that apply to either scenario.
First, what is Incentive Travel?
Incentive Travel is a vacation paid for by employers, awarded to qualifying employees or salespeople to reward them for success in reaching certain goals. These trips are an additional bonus used to motivate employees and help the company reach organizational targets.