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From clarifying tasks to negotiating pricing, to complying with local laws and regulations, contract negotiations within the meeting and events industry play an important part in identifying parameters, roles and responsibilities on the part of organizations, venues, suppliers and planners.

Dana Ellis, president & CEO of Ellis International, has worked with associations and other organizations when establishing contracts with vendors and other entities in the field. Ellis says the industry has seen a huge swing over the last five years or so regarding contract negotiations within the meetings and events industry.

Pre-pandemic, it was very rare for any planners to negotiate or need to invoke the force majeure clause in a contract. Suddenly planners all had a need to postpone, rebook or cancel events.

“How venues handled these changes has helped shape where we are today — and some handled them much better than others,” Ellis says. “This is probably one of the largest factors in the last few years that has caused all of us to look more closely at all of the ‘standard’ clauses in contracts going forward.” Post-pandemic, the industry is seeing several other changes. As Ellis explains, it used to be more of a “buyer’s market” where a client could call up and book a venue for a large event two or three months before the event. Now that everyone is back to meeting in person, it’s more of a “seller’s market” in that the venue is booked up and organizations now need to be booking a year or more in advance.

As such, venues are increasing fees for rental, food and beverage. as well as audio-visual elements.

“They also are sneaking in new clauses and new rules which may cost you money. And, they have lost their long-time sales manager and the new person (who has no background in events, and possibly new to sales too) tells you, ‘It’s not possible’ to do something that you have been doing at that venue for years,’” Ellis says. “Therefore, the need for qualified meeting planners and producers, who know how to negotiate a good contract for a client, is needed more today than ever before.”

Shannon Mickelberg, event and meeting planner/producer at Mickelberg Event Group, also feels that contract negotiations have become very complex, especially since COVID began in 2020. Hotel contracts seem to be particularly difficult to negotiate and there are less concessions offered than in the past. Attrition, food and beverage minimums, and flexibility with AV pricing are particularly challenging to negotiate as hotels look to protect themselves in the post-pandemic world.

“This can be very difficult for planners to navigate on behalf of their clients,” Mickelberg says. Vendor contracts also now have very stringent cancellation clauses and often require larger deposits than in the past. Planners need to be more skilled in contract negotiations and understand legal ramifications more than ever.

“Creating equitable negotiations has been a sharp learning curve for many planners,” Mickelberg says. “We have to be more willing to give and take than ever before.” In the past, the association or organization has been in the driver’s seat with requesting concessions, discounted pricing, etc. That seems to have shifted and deadlines are firm and offerings are fewer.

“Contracting with hotels and negotiations has become a critical skill post-COVID. Ask any planner and they will tell you that hotel contracts have all sorts of new and ‘interesting’ clauses now and have become more challenging to negotiate with. Even the more savvy and experienced planners have been put to the test lately,” says Amy-Marie Lemanski, owner and senior meeting and event manager at AML Events.

Jake Buchheit, global account executive at Conference Direct, is an experienced negotiator. He says that over time, contract negotiations within the meetings and events industry have evolved significantly. Today, event planners seek comprehensive agreements that address every facet of event execution, from venue selection and room blocks to catering arrangements, AV equipment specifications and transportation logistics.

“This shift underscores the industry’s growing recognition of the importance of detailed contracts in navigating the complexities and uncertainties inherent in modern event planning,” Buchheit says. “As events become increasingly elaborate and multifaceted, the need for customization and flexibility in contracts has become more apparent. By negotiating adaptable agreements that can accommodate evolving requirements and unforeseen circumstances, event planners can mitigate risks, ensure regulatory compliance and deliver exceptional experiences for their clients and attendees.”

Key Areas of Concern

In today’s dynamic environment, planners must focus on critical contract areas when negotiating with vendors. Traditional elements like pricing and terms remain important, but Buchheit points to recent global events that have underscored the need for robust risk management strategies.

The biggest areas of a contract that planners need to pay attention to and potentially negotiate with a vendor and supplier include:

Financial Terms: Pricing structures, payment schedules and cancellation policies. Also, Ellis often actually does the math to ensure that cancellation fees are removing the allowable attrition before figuring out the fees due.

Force Majeure: Addressing unforeseen circumstances such as natural disasters or pandemics and their impact on the contract.

Due Dates: Planners have to make sure that the due dates are reasonable and close to your event date so that any negotiated concessions or attrition allowances do not expire too far in advance.

Audiovisual Clause: Most hotels have an in-house audio-visual provider and many put in a clause that you are required to use this in-house provider. Ellis always strikes out this clause or edits it to allow her company the ability to bring in their own AV team without penalty or fee.

Concessions: This is your chance to add requested concessions into the contract.

Additionally, emerging issues like cybersecurity threats and sustainability considerations are gaining prominence. Buchheit says that by addressing these factors proactively and engaging in transparent negotiations, planners can safeguard the success of their events in an ever-changing landscape.

Lemanski further points out that some additional areas to focus on include attrition clauses changing from cumulative to daily, bringing in an outside AV company and not being charged or having to pay the on-site AV company any fees, F&B minimums have also become unrealistically high even when the hotel has been given the groups history of F&B and room pick up.

“It is really the art of the give and take and finding the mutual ‘win-win’ for everyone,” Lemanski says. “Hotels and venues are becoming selective in what they choose for business in order to maximize revenue. If I am looking for space for a group that is doing an annual event, I ask for their history from the previous hotels and venues to provide as a benchmark for revenue the group could provide.”

In addition, fully understanding cancellation clauses, insurance requirements and payment deadlines is imperative to executing a successful contract. Mickelberg advises other planners that the cancellation clauses have become very complex and unforgiving.

“In the past, you might have been able to work with a vendor to offset losses on one project with a guarantee of future work. That may not be the case now,” Mickelberg says. “Liability and mutual indemnification also are areas that have emerged as more important than ever. These often require more detailed negotiations, and legal counsel, in most cases.”

Strategies to Take

Also remember that old technique of “all or nothing” is no longer going to work. “If you tell the hotel you are going to walk if you don’t get what you want, they may just hold the door open for you,” Lemanski says.

In addition, all negotiations are driven by dates, rates and location. You usually can’t get all three of these things if you are looking at going to a prime destination over peak time.

“If you want to go to Florida in March or April, your rates are going to be higher,” Lemanski says. “Plan your budget accordingly or be willing to compromise on one of those things.”

When planning events, Jenny Prosser, vice president of events, education and experiences at LeadingAge Minnesota, is always looking at meeting-related details to make sure they are accurate (dates, rates, group needs, etc.) along with concessions. She pays particular attention to cancelation, attrition, and force majeure clauses to make sure there are protections in place for both parties.

“There are always clauses that I like to add to contracts that are rarely included in the initial contract: lowest group rate, resale, rebooking, additional charges, economic conditions/downturn, change in management, bankruptcy provision, relocation, cancelation by hotel, and room block allowance (if multi-year contracts are in place),” Prosser says.

Prosser adds that planners should supply all the group’s information upfront, so the supplier knows your group’s expectations on the front end. Know your group’s top priorities and negotiate based on these. Planners and suppliers also must remember that contracting is a two-way street.

“We are entering into a partnership to produce revenue for the supplier and a great event experience for the planner/group — it must work for both parties. If you are asking for something, what are you willing to give up or modify? As a planner, can you sign a multi-year agreement or look at a different pattern/date with the venue to get a better room rate or more/different concessions? As a supplier, can you modify the concessions to address what is most important to the group? And remember it never hurts to ask and always come prepared with data and research to back your negotiations.”

For Mickelberg, coming to negotiations with flexibility and the willingness to give and take is important. Recently, she had a vendor who had challenging terms. It was not going to be possible for her client to move forward with the existing terms.

“I asked a number of questions to try and understand what their bottom line was and how we could meet in the middle. I proposed a few scenarios that I thought could work,” Mickelberg says. “There were some concessions on both sides, but we were eventually able to come to agreement. It took longer than I had hoped, but was worth it in the end.”

Being comfortable with the fact that you may not get everything requested is the new normal. As Mickelberg says, there are times when you will not be able to come to an agreement, and that is also okay.

“Sometimes, you have to walk away and start over in the best interest of your client.”

And remember that threatening, not being truthful, trying to put one vendor against another or being rude never works and undermines your credibility. You always want to be professional, truthful and calm if negotiations become challenging.

In negotiating contracts, Buchheit has found that creating leverage through strategic positioning is key, particularly in high-demand scenarios. This involves leveraging competition effectively by ensuring multiple options are on the table, compelling the negotiating party to offer more favorable terms.

“Moreover, understanding the nuances of your business opportunity is paramount. Identifying strengths and weaknesses allows for a targeted negotiation approach. Sometimes, certain concessions may need to be made in the negotiation process,” Buchheit says. “This requires careful consideration and planning, including preemptively discussing potential compromise scenarios. Beginning negotiations with a clear plan, starting with ideal terms and being prepared to adjust if necessary, ensures a more effective and successful outcome.”

Rather than relying on manipulation or coercion, Buchheit says successful negotiations are built on trust and mutual understanding. By focusing on building and nurturing these relationships, association meeting planners can create a foundation for long-term success.

Embracing Challenges

In many instances, hotels or other vendors are still not fully staffed following the pandemic. Contract negotiations and responses are generally much slower and this needs to be incorporated into schedules and deadlines.

“Hotel staff also may be working on more events and meetings and simply don’t have time to respond as quickly as in the past. This can be frustrating to planners who are working on tight turn arounds and budgets. Production companies and other vendors may have smaller staff who travel more frequently, making short response times difficult.

Inventory may also be a challenge. During COVID, many vendors needed to sell inventory, so selections may be limited and pricing may be higher. Vendors may have to source equipment from another part of the country, which adds costs.

It’s clear that effective contract negotiation in the meetings and events industry requires a multifaceted approach. Beyond mastering negotiation techniques and understanding contract intricacies, a few additional pieces of advice can enhance success.

“Stay informed about industry trends and regulatory changes, cultivate strong relationships with stakeholders, meticulously document all communication, remain flexible and creative in negotiations, and continuously seek opportunities for improvement,” Buchheit says. By incorporating these strategies, planners can navigate challenges more effectively, build stronger relationships and achieve better outcomes for their events and clients.

“Above all, I would suggest patience and grace,” Mickelberg says. “I work with my vendors as partners and try to reach a mutually beneficial solution. Following conversations, I send a quick recap email to ensure that we are all on the same page and correct any miscommunication that may have occurred. In the end, we all want a successful partnership, so how do we get there together?” | AC&F |