Understanding Hotel & Venue Terminology for Effective Negotiation
Horacio Ramirez
Program & Event Director, Conference Producer @ Opal Group | Bringing Leaders Together
When it comes to planning and executing successful events, the venue plays a critical role. Whether it’s a corporate meeting, a large conference, or a gala dinner, the venue sets the tone for the entire event. As an event producer, knowing how to negotiate effectively with hotels and other venues is crucial. However, successful negotiation isn't just about getting the best price—it's about understanding the specific language and terminology used in the industry. Here's a basic guide to the hotel and venue terminology you need to understand to ensure you negotiate effectively and secure the best deals.
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1. ADR (Average Daily Rate)
The ADR is a key metric in the hospitality industry, representing the average rental income per paid occupied room in a given period. For event producers, understanding the ADR can help when negotiating room blocks or accommodations for guests. A higher ADR can indicate a more premium property, while a lower ADR may signal a more budget-friendly option. When negotiating, understanding the hotel's ADR can provide insight into whether the rates you're being offered are competitive.
2. Room Block
A room block refers to a group of hotel rooms that are reserved for a specific event or group at a negotiated rate. As an event producer, you'll often need to negotiate a room block for your attendees. It's essential to understand the terms associated with room blocks, such as cut-off dates (the last date rooms can be booked under the block at the negotiated rate), and the attrition clause, which is the minimum number of rooms that must be booked to avoid penalties.
3. Attrition Rate
The attrition rate is the percentage of rooms or food and beverage services that must be used to avoid penalties. For example, if you book a block of 100 rooms with a 20% attrition rate, you must fill at least 80 rooms to avoid penalties. Negotiating a favorable attrition rate is essential, especially if there’s uncertainty about the final attendance numbers.
4. Banquet Event Order (BEO)
The BEO is a detailed document that outlines all the specifics of your event, including room set-up, food and beverage requirements, audiovisual needs, and other special requests. It serves as the blueprint for the event and is used by the hotel's staff to ensure everything is executed according to plan. Reviewing and agreeing on the BEO before the event is critical, as it helps avoid misunderstandings and ensures that all parties are aligned.
5. Force Majeure Clause
A force majeure clause is a common contract provision that frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control prevents one or both parties from fulfilling their contractual obligations. Events such as natural disasters, war, or pandemics could trigger a force majeure clause. Understanding and negotiating the specifics of this clause can protect you from financial penalties if the event needs to be canceled or rescheduled due to unforeseen circumstances.
6. F&B (Food and Beverage) Minimum
The F&B minimum is the minimum amount of money that must be spent on food and beverage services during your event. If your event's food and beverage costs do not meet this minimum, you may still be required to pay the difference. Negotiating a realistic F&B minimum that aligns with your event's needs is crucial, as it ensures you don’t face unexpected costs.
7. Load-in/Load-out
Load-in refers to the process of bringing in all the equipment, decorations, and other materials needed for the event. Load-out is the process of removing everything after the event concludes. Understanding the venue's policies on load-in and load-out, including the times allowed and any associated fees, is important for planning your event schedule and budgeting.
8. Breakout Rooms
Breakout rooms are smaller meeting spaces within the larger venue that are used for more intimate discussions or workshops during an event. Knowing the availability, capacity, and configuration options for breakout rooms is important when planning events that require multiple sessions or tracks. When negotiating, ensure that the cost and terms for using breakout rooms are clearly defined.
9. Resort Fee
A resort fee is an additional charge on top of the room rate that covers the cost of amenities such as Wi-Fi, gym access, and other facilities. While these fees are often mandatory, they can sometimes be negotiated, especially for large groups. It's essential to clarify what is included in the resort fee and whether it can be waived or reduced as part of your negotiation.
10. Concessions
Concessions are complimentary items or services that the venue offers as part of the contract. Common concessions include free Wi-Fi, complimentary meeting room rental, or upgrades to suites. When negotiating, it's beneficial to ask for concessions that will add value to your event, such as additional setup time, discounted parking, or reduced F&B minimums.
11. Cut-off Date
The cut-off date is the deadline by which attendees must book their hotel rooms under the event’s room block to receive the negotiated rate. After the cut-off date, any unbooked rooms are released back into the hotel’s inventory, and the rate is no longer guaranteed. Negotiating a reasonable cut-off date that gives your attendees ample time to book their rooms is important for maximizing room block utilization.
12. Deposit Schedule
The deposit schedule outlines the timeline and amounts for payments that need to be made to secure the venue. Typically, a percentage of the total cost is required upfront, with additional payments due at specific milestones leading up to the event. Understanding and negotiating a deposit schedule that aligns with your cash flow is essential for financial planning.
13. Run of House (ROH)
Run of House refers to a room type where the hotel reserves the right to assign a specific room based on availability at check-in. It’s a more cost-effective option than booking specific room types, as it provides flexibility for the hotel. When negotiating, understanding the difference between ROH and specific room types can help you make cost-effective decisions for your attendees' accommodations.
14. Set-Up and Strike Fees
Set-up fees cover the cost of preparing the venue for your event, including arranging tables, chairs, stages, and other elements. Strike fees are charged for dismantling and cleaning up after the event. These fees can sometimes be significant, so it’s important to discuss them during negotiations. Understanding these costs upfront will help you budget more accurately and avoid surprises.
15. House Count
The house count refers to the total number of guests staying at the hotel at a given time. A high house count may mean less flexibility in negotiations, as the hotel has higher occupancy and less need to offer discounts or concessions. Conversely, during low house count periods, hotels may be more willing to negotiate favorable terms to secure your business.
16. Site Visit
A site visit involves touring the venue before finalizing the contract. This allows you to assess the space, understand the logistics, and identify any potential issues. A site visit is crucial for ensuring the venue meets your event’s needs. During the visit, take note of the condition of the facilities, accessibility, and any unique features that could impact your event.
17. Exclusive Caterer
Some venues have an exclusive caterer, meaning you must use their services for any food and beverage needs. This can limit your options and potentially increase costs, so it's important to clarify this during negotiations. If the venue has an exclusive caterer, discuss menu options, pricing, and flexibility to ensure they can meet your event’s needs.
18. Cancellation Policy
The cancellation policy outlines the penalties you’ll incur if you cancel the event after signing the contract. These penalties often escalate as the event date approaches. Understanding the cancellation policy and negotiating terms that provide some flexibility can protect your financial interests, especially in cases of unforeseen changes.
19. Function Space
Function space refers to the rooms or areas within the venue that are designated for your event. This can include ballrooms, meeting rooms, outdoor spaces, etc. When negotiating, ensure you understand the specific function spaces included in your contract, their capacities, and any restrictions on their use.
20. Hold Harmless Agreement
A hold harmless agreement is a clause that limits liability by protecting one party from being held responsible for certain risks or damages that may occur during the event. This clause is important in protecting your organization from potential lawsuits or claims arising from accidents or incidents during the event. Make sure to review this agreement carefully and consider negotiating terms that fairly distribute liability.
21. Noise Ordinance
Many venues, especially those in residential areas, must comply with local noise ordinances that restrict sound levels at certain times. If your event includes music or other amplified sound, understanding these regulations is crucial. Negotiating a venue that can accommodate your sound needs within legal limits, or arranging for permits if necessary, can prevent issues on the day of the event.
22. Contingency Plan
A contingency plan outlines alternative arrangements in case the original plan cannot proceed as intended. This could include backup venues, alternative dates, or indoor options for outdoor events. When negotiating with venues, discuss their contingency plans, especially for factors like weather, and ensure these are included in the contract.
23. Corkage Fee
A corkage fee is a charge applied by the venue if you bring your alcohol instead of purchasing it through their service. This fee can significantly increase costs, so it's important to understand and negotiate it, especially if you plan on providing your beverages.
24. In-House AV
Some venues have in-house audiovisual (AV) teams and equipment that must be used for your event. While convenient, this can limit your flexibility in choosing AV providers and may come with higher costs. Clarify the terms of using in-house AV services during negotiations and compare them with external AV providers to ensure you're getting the best value.
25. Load-bearing Capacity
If your event involves heavy equipment, stages, or installations, it’s essential to understand the venue’s load-bearing capacity. This refers to the maximum weight the floors or structures can safely support. Ensure that the venue can accommodate your setup to avoid safety hazards or the need for last-minute adjustments.
26. The Fine Print
Always read the fine print of any contract carefully. This includes understanding all clauses, penalties, and terms that might affect your event. Don’t be afraid to ask for clarification or seek legal advice if necessary. It's better to spend time understanding the contract thoroughly upfront than to face challenges later due to overlooked details.
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Mastering hotel and venue terminology is a crucial skill for any event producer. Understanding these terms allows you to negotiate more effectively, ensuring that you secure the best possible terms for your event. By familiarizing yourself with the industry-specific language, you can avoid misunderstandings, anticipate potential challenges, and create events that are successful, memorable, and within budget.
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#letsnegotiate
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Horacio Ramírez / Event Production / Marketing
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