Feeling obligated to use a venue’s in-house vendor on their terms? Don’t be! Venues design their prewritten contracts with commissions and profit in mind, so it’s in the venue’s best interest for a meeting planner to unquestioningly sign on their dotted line. Read on for how to empower yourself throughout the venue selection process and during negotiations.
If you elect to use an in-house vendor, understand that the venue will make extra money. For example, in-house AV providers write monthly checks to their hotel for upwards of 50-65% of their top-line revenue. AV commissions are often the most profitable revenue stream in a hotel’s P&L statement.
Use this knowledge to your advantage. Request reduced rates or increased perks in other areas, such as a discount on sleeping rooms. You benefit the venue by choosing to use their vendors and pay a higher price; use this as leverage.
Not interested in using an in-house supplier? Preferred vendors offer several benefits, such as a dedicated and familiar team, cost-saving strategies, a broad range of technology, and more. You can always advocate to have your own trusted people work on your event. Here are three steps you can follow to make sure you have the upper hand.
1. Include a Preferred Vendor Clause in Your RFP
Consider adding a preferred vendor clause in your RFP, RFI, or RFQ documents. This starts the process on your terms; the venue will know going into negotiations that you want to pull from your established network. Below is example clause you can revise and add to your RFP. It is focused on AV providers, but you can use similar text for food, florists, DJs, etc.
• Requirements for supervisory labor to load in or out of the facility
• Fees to prepare rooms for use
• Charges for podiums, power, heating, air conditioning or lights within the meeting room
• Require the use of floor or wall coverings if this is not also practiced by the in-house AV company
• New labor/union contracts (if there were none at the submission of the proposal or when signing the contract)
• Fees or charges for similar services which in the past decade have not been standard practices in the industry
2. Review Suspicious Contract Line Items
Arm yourself with insider knowledge for the next hotel/venue contract negotiations. Know that you can always request to remove certain line items or include your own negating clauses so you're not stuck with extra charges and fees. Here's some examples of typical line items you can request the venue to cross out or modify:
- Charges, penalty, or fees for using your own preferred vendor instead of the hotel's in-house vendor
- Disputes with the hotel's in-house vendors for erroneous charges or other incidents can't be disputed through hotel management
- Pay to supplement your preferred vendor's staff with the hotel's in-house vendor's staff
- Pay a liaison or supervisor fee to monitor your preferred vendor's equipment load in and load out
- Pay a fee to plug into existing electrical outlets
- Prohibited from creating your own WiFi hotspots or using your preferred vendor for internet connectivity
- Deposit required by your preferred vendor in addition to your insurance requirements
- Inflated insurance coverage requirements
- Loading dock or freight elevator charges or fees
- Preferred vendor deposit required on top of insurance requirements
- Unattainable time requirements for submitting plan, diagrams, and production schedules
- Production guidelines designed to slow down and create additional costs to your preferred vendor but are not enforced with the hotel’s in-house vendor.
3. Add a Contract Addendum
You can negate terms you don't agree to by adding an addendum at the end of a hotel contract. This addendum can be in addition to, or in place of, modifying contract line items one by one. Below is an example addendum that gives the meeting planner the ability to use their preferred AV provider without incurring any fees. Again, this text can be modified to include other partners such as food, florists, DJs, etc.
Check out these great industry articles for more negotiation tips.