1. Tips for best-in-class procurement approach
Hotel Purchasing
Tips for best-in-class procurement approach

2. Agenda 1. Hotel revenue 2. Deciding factors 3. Housing bureau
hotel purchasing
1. Hotel
revenue
2. Deciding
factors
3. Housing
bureau
4. Key tips for
negotiation
5. A negotiation
check list
6. Conclusions

3. How a hotel generates its revenues?
A hotel makes its revenue based on:
- bedrooms
- food & beverage
- optimisation of meeting space revenue
- incidential charges or
- discretionary spend.
hotel revenues
RevPAR
Financial success measurement: (Revenue per available room)
Revenue Generating Sectors
Corporate transient contracts
Leisure contracts
Online leisure sales
Walk-in business
Leisure Groups
Corporate groups MICE
Association business
Meeting space or f&b events

4. Revenue Displacement: it’s about what you move!
Deciding factors
Revenue Displacement:
It’s not what you book,
it’s about what you move!
Bedroom capacity
in the city
Risk and reward (Cancellation versus Profit)
RevPAR
Achievement of
financial KPIs
Background information
(taking correct decision)
Transparency
Competition
(what they do)
- Economic climate
(changes)
- MICE revenue
(growing importance)
deciding factors

5. Involvement of a housing bureau
Hotel´s point of view
Delegate´s point of view
Sophisticated software from a HB – allocations pick up and better risk management
Fair competition - alignment of terms and conditions
Forecast AverageRate -guaranteed volume
Sell “distressed” inventory during the run-up to the congress - not the most price competitive solution for dynamic pricing
Centralisation of power in the hands of the housing bureau - making money encouraging direct booking or not attend

6. Key Tips for negotiation
PRICE
PAYMENTS
Are dates flexible and what are the day patterns?
Conference dates often seem to be chosen before a good understanding of the low and shoulder seasons of the hotels in the destination are understood
Can you demonstrate a good track record for payment
On-time or before-time payments improve a hotel’s cash flow and can be extremely attractive
COMMITMENT
REVENUE VALUE
Can booking history be provided so that there is transparency relating to cancellation and attrition?
If the hotel has capacity negotiate a free-sale opportunity for some of the rooms at the same rate
Negotiate a guarantee minimum room block and manage the rest with better conditions
Is there any chance of repeat business?
What is the value of any food & beverage consumption – even with breakfast and a cocktail party, this premium revenue can have a very positive influence on the negotiation
Can you include pre- and post convention stays to increase room night uptake
Could to offer promotional rates for individual delegates to return on their own privately?

7. Key Tips for negotiation
HONESTY & KNOW-HOW
Consumption history (room nights, revenue possibilities)
Highlight the potential of business materialisation (how many hotels competing, how many destinations?

8. A negotiation check list
accommodation
meeting space
Win-win situation - Total Revenue + Average Rate.
Comp Policy (ie. 1/40)
Comp Concierge Level - Suite Upgrade
Negotiated Group - sleeping room rate
Reduced Staff Rooms - comp or reduced rate
Comp site inspection and planning trip - up to 6 rooms
Comp guestroom amenities (ie. Mini bar)
Comp local calls and 800 access fees for sleeping rooms
Comp high speed internet access in sleeping rooms
Comp or reduced portage fees
Comp limousine transfers for VIP's
Discounted transfers for
meeting attendees
Discount on total Audio Visual
Internet connection - Meeting Rooms
Discount on total F&B
Comp bartenders, bar-setups, carvers or chefs
Comp coat check
Comp or upgraded coffee break
Comp wine with dinner
Comp room set up fees
Comp meeting space
Comp 800 and local phone calls for command center/office
Comp or reduced rate for self parking

9. A negotiation check list
Miscellaneous
Comp Office/Comms/Syndicate Rooms
Comp breakdown charges
Comp Mineral Water upgrade
Meeting Space Modifications (mtg space breakdowns)
Complimentary flipcharts
Complimentary meeting package
Complimentary use of spas, pools and other paid for leisure facilities
Group meeting loyalty cards to be used for future events with the same chain
What can the hotel offer in terms of discounts or savings in the city
Contractual Approach
Negotiate based on historical occupancy rates

10. Key Tips for negotiation
conclusions
NEGOTIATION PROCESS
Start the negotiation process early
HISTORY TO SUPPORT YOUR POSITION
Ensure that you have consumption history to support your position
DON’T BE A SPICE-HOGGER!
Meeting space must be in line with bedroom update
GLOBAL VIEW
Understand the revenue streams of the hotel and present a global view
LONG-TERM RELATIONSHIP
Establish how a longer-term, more strategic relationship can be created
SALES ACTIVITIES
On-property sales staff have to demonstrate to their management their sales activities – hence a hotel’s logo on the website or in the communications campaign is valuable. Access to individual delegates as future customers important.