The Final BillJanuary 1, 2015

Don't Get Blindsided by Extra Charges That Inflate Meeting Costs By
January 1, 2015

The Final Bill

Don't Get Blindsided by Extra Charges That Inflate Meeting Costs


There’s no denying it. We’re in a seller’s market when it comes to hotels and convention centers. And following the lead of the airlines, which have perfected the practice of nickel-and-diming their way into the black, hotels are not only driving negotiations, but they’re increasingly making planners check and double-check contracts and bills for extra fees that were once included.

“As long as they tell you ahead of time and you can prepare for those costs in your budget or have a solution or workaround, it’s okay,” says Heather Cleveland, CMP, senior meeting and event planner for CSP Business Media LLC in Mesa, Arizona. “When it’s post-event and you suddenly get a bill, that’s worse.”

While many fees, particularly when it comes to labor and technology, seem like ever-moving targets impossible to properly set your sights on, savvy planners are finding that finely tuned contract processes and working their network helps them keep their meeting costs in check.

Beyond the Room Rental

In addition to what you know you’ll pay for the physical space in your rentals, many planners are finding unexpected charges related to their meeting space popping up on their final bill — often without being mentioned in the contract or earlier negotiation and correspondence.

“There’s one thing that I don’t often see, as it depends on what type of program we’re doing, but it can hit hard: electrical costs that were never discussed before and show up on your bill,” explains Cleveland. “They charge an arm and a leg just to plug in something in the conference room.”

Equipment rental charges are more traditional and easier to understand, because the venue had to pay for the piece initially and cover wear and tear, but planners are finding even these prices taking on surprising proportions. “Normally we don’t get charged to use easels, and some properties are now charging for them, maybe even $20 per easel, but one of my coworkers had a $45 charge for one once,” says Cleveland. “That’s absurd, especially if they have one in stock. I understand if they rent it from another company and pass on the charge, but that’s something I would expect to be a discussion in advance. If I’m ordering 20 or 50, they should say, ‘We only have 10, so you’ll have rental fees.’ ”

One of the space rental-related charges that can be the most difficult to prepare for is labor costs. “Comparing back to the old days — though it also depends on whether it is a union property or not — staff charges in terms of labor fees can be exorbitant,” Cleveland continues. “We’re in a non-union state, so that’s something that we’re not so cognizant of or thinking of beforehand, so we have to try to adjust our contracts accordingly because their labor rate is higher. Because we have so many special product placements where we need hotels to assist, we can run into a lot of labor fees, and in the last 10 years, they’re just soaring through the roof.”

Dawn Sadler, CMP, senior congress planner for Minneapolis, Minnesota-based Medtronic Inc., has a system to forestall getting surprised by most additional fees and charges, but still runs into issues getting venues to clarify labor charges upfront, particularly for AV. “In terms of some of the labor charges, they quote you the cost over the phone, and then you get the bill and there are four hours of labor because that’s the minimum,” she says.

“Some labor minimums are only an hour; for others, it’s four hours. If you have a real short set or if it’s just for a dinner or a board meeting that’s just an hour, it doesn’t make sense,” she continues. “They’re not doing four hours of labor, so I see what I can negotiate, but it depends on the property, unions and supplier. If it’s a really basic set, you have more flexibility than if you have a soundboard.

“I try to get a full advance AV quote, not just something in a phone call or about how much it costs to rent an AV projector,” Sadler says. “I try to get the full exposure and map it out in terms of what I have going on, like if it’s a dinner versus a full day of meetings with different rooms at the same time. I want to get the full quote so I can go through line item by line item and flag large expenses. I ask myself, ‘Do I really need two techs to do that or can we just bring in one for the actual event and not the rehearsal?’ I try to minimize the exposure on that and just bring in the tech for the actual event.”

Getting the accurate future charges before your meeting or event is only half the battle for planners, however, because the taxes and fees that pile up on top of them can still upend your budget.

Taxes and Fees Take Their Toll

“There are certainly flags that I see on contracts of things that I watch for on billing,” says Sadler. “I try to get service fees, gratuities and taxes at the time that I sign the contract,” she continues. “A lot of times they don’t list them in the contract because obviously the city or state reserves the right to change them at any time so they don’t like to publish them, but they can add as much as an additional 33 percent to an event, and that’s a significant amount of money.

“I try to get service fees, gratuities and taxes at the time that I sign the contract. …they can add as much as an additional 33 percent to an event, and that’s a significant amount of money.” — Dawn Sadler

“It’s common to see the line ‘services, fees and taxes as applicable at the time of application’ without those being spelled out, but I have to report back to my team at the time, and I can’t do that if I don’t have all the fees,” she continues. “Being a medical device company, there’s a certain amount we’re allowed to spend on physicians, so we’re trying to monitor those costs very closely. For a wild ballpark, I pull in 22 percent gratuities, and tax in the 9 (percent) range, though New York City and some West Coast cities are higher, and there are obviously some cities that are lower.”

In particular, Sadler keeps herself updated on the fee landscape in different cities, as in some cases state taxes and city taxes layer in with fees that can be called by other names, such as hospitality service fees, which also can be called administrative or resort fees. “There are things I’ve learned to look for over the years. In certain cities they tend to add a certain fee. In DC, there is something called a convenience fee for when you use a venue and you have to bring in catering. Then you have to pay 10 percent of the catering bill to the hotel as a convenience fee,” she says.

“Resort fees are negotiable, because, well what does that include?” she continues. “Is it towels at the pool? This is a business meeting; we’re not using the pool. It can also be called a recreation fee or charge, though I haven’t run into one of these in a while, that says pool use and a towel fee. In those cases, I tell them that I’m doing business meetings and we’re not anticipating that they’re going to use the pool or we’re there such a short time that they might have 30 free minutes the entire time, and I try to negotiate out of it.”

“I hate material and handling fees,” says Lauree Simes, CMP, senior corporate event planner for Plano, Texas-based Tyler Technologies Inc. “I really do. I struggle with the fact that it can cost $150 to bring a pallet one way and I can get it myself in 10 minutes. Like parking, where if the parking structure is owned by a third party, there’s not as much leeway; handling fees are harder to negotiate if the provider is a third party like FedEx or UPS. Most of your major brands are going to do third-party shipping.

“Their hands are tied somewhat, because they can’t give discounts on third party because they have to agree,” she explains. “I’ve been in the industry for 15 years, and the negotiations that happen are hand-in-hand with your relationship and the honesty they give you and you can give them. One thing that new planners need to realize is that there are some concessions they can give and some they can’t.”

Finagling Food and Beverage

Unlike room rentals, food and beverage has a near infinite number of permutations of packages. It’s one of the areas that planners try to find the most wiggle room yet it’s an area that is difficult for hotels to discount. “Hotels’ biggest money is made on sleeping rooms. F&B is a wash. They don’t typically make money,” explains Simes. “On the other hand, the sleeping room rate is very negotiable.”

Because of the narrow profit margin for hotels, they typically try to structure the pricing to make sure their costs are covered as best as possible, but planners often find these charges out of line. “Coffee à la carte can be $60 per gallon at convention centers but $90 per gallon at hotels,” says Simes. “It can be an indicator of how expensive a venue is, so I try hard not to do à la carte because of that, but the larger the group you have, the harder it is to determine how much they’ll drink.”

Simes finds that she avoids unexpected charges and accommodates her attendees best with a per-person package for drinks. But Sadler has found a compromised approach to à la carte that takes a little more effort for her team, but provides substantial savings. “Especially if I have rolling beverages going all day, I will do an initial setting in the morning for X number of gallons of coffee and tea, and I set up a refresh time, but I ask that they check with me before they supply replenishments. So rather than say at 10 a.m. I need five more gallons of coffee, we can only refill what we need,” Sadler says.

Per-person pricing for meals, whether buffet or seated, is preferred by many planners for keeping meal costs in check, but it requires finding a menu option that everyone is happy with. Cleveland says, “I haven’t had anybody give me an issue with a per-person rate, but I have had people push back regarding customizing menus for me. Usually they make it work, but sometimes it’s about the chef. Sometimes they like to think out of the box and sometimes they are very protective of their menu.”

Paying to Connect

With company broadband requirements and hotel technology capability frequently at odds and always changing, it’s natural that the Internet fee field is in a state of constant flux. But the highly irregular Internet fee landscape has made it something many planners love to hate. A meeting planner, who preferred to keep this comment anonymous, says, “If you get enough meeting planners in a room with some drinks, the conversation always turns to Internet charges.”

Says Cleveland, “Internet charges are the hot topic right now. In many places, for the in-room Internet, they are finally switching over. It’s free, and everybody gets it. But when it’s not, they’re not as flexible about giving in-room Internet away free as they used to be. They just won’t throw it in, and we’re like, ‘It’s already on. It’s already there. We just need to access it.’ ”

Simes agrees, “It’s the largest pet peeve of mine in any hotel that I book and do a program in. One of the first concessions that I get is complimentary Wi-Fi in the guest rooms, but the meeting space is a whole other story. They charge you up the wazoo, and you know it has been paid for a million times over since they put it in their building. You expect the Wi-Fi to be one thing, and then they say the instances were more. But instances can be devices to an IP, not just IP address. If a person has an iPad, a phone and a computer, it’s still the same person accessing just at the different times. The instance-based rate is increasingly common.”

“For events, the fee structure is all over the place. It’s basically up to the properties. I’ve seen all different arrangements,” Cleveland explains. Planners looking to budget ahead of time for their bandwidth are stymied by these inconsistencies in Wi-Fi charges, even with the same hotel brand. While getting enough bandwidth to run an event at the appropriate speed for attendee needs is less of a problem, many enterprising hotels have switched from charging a lump sum for a certain amount of bandwidth to the instance-pricing model, which charges either a fixed or bandwidth-related fee for each time a device connects to the network.

In the face of such a complex and ever-changing fee structure, some planners, like Cleveland, have stopped trying to plan their Wi-Fi charges ahead of time. “Sometimes we don’t calculate it in advance, and we rely on the reports from the hotel on how much is being utilized then,” she says. “It depends on the type of event you’re doing. We have a tech conference that we’re putting on, and we’re going to need a lot more bandwidth and details on the type of Wi-Fi the event can accommodate. It’s different with training. If you have a tech program, you want to make sure you have higher bandwidth if you know you’re going to have 1,000 people and people will have multiple devices as opposed to at educational where maybe only 40 percent of people will have a device.”

Simes has found it best to avoid any sort of instance-based or bandwidth-metered rate and agrees on a lump sum upfront. Somewhat surprisingly, many hotels are amenable to this approach if you set it up in advance, she says. “In the negotiating, we’re starting to negotiate a package where it doesn’t matter how many instances, 100,000 or whatever, and we get to pay what we want in one lump sum,” she says.

“Very rarely do we lose on that as a planner,” Simes continues. “They are generally receptive to negotiating a lump sum, but it depends, because, like all things in this industry, its all about relationship, whether it’s because of history with a brand or with a certain salesperson. Whatever relationship has been built, you’re better off.”

Final Thoughts

Simes adds, “In all things hotels, it’s all negotiable; it’s just that some areas are more so than others.” But planners can only negotiate upfront, not once the bill comes, and savvy planners have found that no matter how long it takes — Cleveland finds some new relationships take a month to get everything ironed out — getting all the details discussed and in writing ahead of time can save both money and your relationship down the line.

“I think a lot of planners, especially association or new planners, have been given a morbid picture that hotels are out to get you no matter what,” Simes continues. “But they’re not the bad guys. They’re in business to make money, but so are we. Honest to goodness, it’s about the relationships you’ve built that help you get through your contract and get through your meeting.” C&IT

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