Negotiation
Food and beverage negotiations should begin at the contract stage; waiting until six months or a year out will leave you with little to no bargaining leverage. The first step is to gather all your facts and figures. Using post-convention reports, calculate exactly how much your meeting is worth to the hotel in terms of food and beverage revenue. Don't forget to include "hidden" revenues from affiliated groups, hospitality suites, individual room service, exhibit floor concessions, and on-site restaurants and lounges.

Next, draft a list of your priorities. Although everything is technically negotiable, it makes sense to determine what you absolutely must have and what you can live without -because chances are, you won't get everything you ask for. Keep in mind the following guidelines.

• Ask for a copy of the facility's policies and procedures. Facilities frequently change policies, and if you aren't aware of the current ones, you can't negotiate as successfully. Even worse, you may get stuck with extra charges you didn't expect. For instance, some hotels charge extra for seating during a Continental breakfast - and if that charge is included in the property's policies and procedures and isn't negotiated in your contract, you'll have to pay it.
• Establish cost parameters. If you're booking five years out, you can't expect to negotiate menu prices at the time the contract is signed. But you can expect to establish cost parameters before signing on the dotted line. You may, for example, negotiate a fixed percentage off the printed menu prices in effect six months before the meeting date. Another technique is to negotiate to have the previous year's prices apply to your meeting. (Just remember to collect the menus a year in advance so you'll have these prices.) Or you could attach the current banquet menus to the contract and negotiate that the prices won't increase by more than a certain percentage each year (perhaps 5 percent or the Consumer Price Index, whichever is smaller). Catering managers usually don't like to establish firm menu prices until six months out, but you may be able to negotiate them as much as 12 months out by agreeing on a percentage ceiling above the current prices. If it turns out that prices drop in the interim, you can cover yourself by stipulating in the contract that you will pay whichever is less - current costs or the ceiling price you established.
• Consider menu flexibility. If the menu prices don't meet your budget, work with the chef to design menus in your price range. You may even be able to choose the same menu as another in-house group and thereby save the hotel time and money by not having to create an entirely different preparation. (If you do this, be sure to schedule your dinner to start just before the other group's dinner so that your function won't be affected if the kitchen runs out of food.) If you can commit to specific menus more than six months out for your larger, more expensive meals, the hotel may be willing to negotiate a discount off the prices. Knowing menus and tentative numbers far in advance can help a hotel in budgeting/forecasting and ultimately ordering.
• Don't be afraid to ask for complimentary items. While the days of complimentary receptions are pretty much over, you still may be able to negotiate a relatively low-cost comp or two. If your group is hosting a large or lavish dinner, for example, ask the hotel to provide complimentary hors d'oeuvres, a glass of wine, a dessert, or perhaps an upgrade of one of your courses. Other comps to consider negotiating include: a Continental breakfast for your board meeting, a reception or dinner for the executive board, complimentary or discounted staff meals, decorative items, one complimentary meal for every 50 to 75 covers, or a credit to your master account based on a fixed percentage of your total food and beverage revenue.
• Negotiate for agreeable guarantees and oversets. Most hotels have increased their guarantee deadline from 48 hours to 72 hours, meaning that you need to give the catering manager a final head count for all of your food and beverage functions three days before they're scheduled to take place. If you're ordering standard food and beverage items that are offered in the hotel restaurants, for example, the property may agree to a 48-hour guarantee. Or if you are having a ticket exchange for your final banquet, you may be able to negotiate a 24- or 48-hour guarantee just for this single event, thus allowing time to sell additional tickets. Most hotels also have decreased overset from 10 percent to 5 percent (or even 3 percent), meaning the property will set up seating for 5 percent more than the guaranteed number of guests at any given food and beverage function. For groups of more than 1,000, however, most hotels cap the number of extra seats at 50. Depending on the menu and style of service, you may be able to negotiate a higher overset percentage. You may be able to negotiate 10 percent on a standard buffet or Continental breakfast, for example, but you probably won't be able to make that kind of a deal for a custom-designed menu at a formal sit-down dinner. Note that the term "overset" typically refers to the setup of extra tables and chairs. It doesn't necessarily mean that the hotel will be prepared to serve food to the additional people who might show up. So unless you specify in the contract (and remind the catering manager) that the hotel will not only set the extra places, but also be prepared to serve, some of your guests might be left waiting for their meals - or find themselves eating a meal that's different than everyone else's.
• Be specific about service ratios. Payroll costs can account for as much as one-third or more of a meal function's total price. Consequently, some hotels are reducing the number of servers at group events. So be sure to negotiate service ratios and spell them out in your contract. For a sit-down or plated meal, there should be at least one waiter for every 25 guests at breakfast and one for every 20 at lunch and dinner. For a buffet meal, the preferred ratio is one to 40 for breakfast and one to 30 for lunch and dinner. Specify that there will be no extra labor or service charges for these ratios. If the menu is higher priced or has many courses, you want a higher level of service. Try to negotiate a service ratio of two waitstaff for every three tables. When wine is being served, you must have more servers; two waitstaff for every three tables will work. Since you will spend more by adding wine or extra courses, don't pay extra for better service ratios. Many properties apply a flat service charge to meal functions under a certain size (typically 25 people). It always makes sense to ask for the service charges, labor charges, and/or bartender fees to be waived altogether; to be waived for meals where you are ordering the same food for numerous smaller functions occurring at the same time; or to be based on the total dollar amount spen. If your group is large in number and bars are fully hosted, do not pay bartender fees. Be sure all of the specifics that you negotiate with the catering manager are spelled out in your contract. Guarantees For every food and beverage event you plan, you'll have to provide the facility with a guarantee, which is the minimum number of people for which you will pay. If more than your guaranteed number of attendees show up, you'll be charged for the extra people; if fewer people join you, you still have to pay for the guaranteed number because the facility will have prepared enough food for that many. While it may seem like a guessing game, establishing guarantees is really a matter of statistical analysis - a thorough, competent analysis of historical data combined with current conditions. The following tips can help you through the process.
• Analyze your history. When studying the history of your meeting, examine patterns of preregistrations, local ticket sales, arrival/departure patterns, number of cancellations, number of no-shows, number of attendees, guarantees, excess over guarantees and the percentage of total attendees at a particular meal function. Look back at several years in order to obtain the most accurate picture.
• Consider current conditions. When you have a handle on the statistical history of the meeting, examine how current conditions could affect attendance at meal functions. Consider variables such as location, extra bodies (exhibitors, speakers, spouses, staff), local attendance, changes in program format and scheduling.
• Err lower rather than higher. Keep in mind that while guarantees, once given to the hotel, can never be decreased, they can almost always be increased within a reasonable period of time. Experient recommends making any changes to the guarantee no less than 24 hours in advance.
• Weigh the risks. The ultimate objective of the function should determine how much risk you are willing to take on guarantees. Under-guaranteeing a function, for instance, could create a negative impression due to delays in service. Saving money may not be as important as flawless service.
• Consider a soft guarantee for multi-day events. When you have to give guarantees for more than one day, an effective tactic is to moderately undercut the second day's guarantee. The objective is to buy some time to see attendance at the previous day's function before giving a final guarantee for the next day. However, first discuss this with the catering manager to make sure he is comfortable with a soft guarantee and to determine how flexible he can be in terms of increasing the guarantee within 24 hours. Most facilities will work with you when you communicate openly and honestly.
• Be flexible. If you need a very large increase at the last minute, and your menu includes items that the hotel normally doesn't have in stock, you may not be able to serve the same meal to everyone. You may, for example, need to vary the entrée and dessert. If such a situation arises, instruct the waiters to serve the alternate items to entire tables in one section of the room - preferably to staff sitting at tables that aren't in the center of the room. Be aware that the hotel may not be able to secure the extra banquet staff to meet your negotiated service ratio.

°This article is excerpted with permission from the Experient Guide to the Food & Beverage Experience, sponsored by Hilton Hotels. The complete text of the 64-page guide is available at www.experient-inc.com.

Contracting F&B Performance
Performance clauses dealing with food and beverage functions have become commonplace in hotel contracts. Here's what to look for.

• F&B performance should be addressed in one separate clause. The terms are easier to understand and potential damages easier to compute if F&B is dealt with apart from other performance issues. The clause should be clear as to whether F&B attrition or cancellation or both are applicable, and it should include specific time frames as well as a specific method for determining the damages due.
• The hotel should recover lost profit only. If a dispute arising from a food and beverage performance clause were settled in court, the hotel would most likely be entitled to recover its lost profit in order to be made "whole." Most hotels are willing to agree to an overall profit percentage of between 30 percent to 40 percent for all functions.
• Define lost profit. Define profit both in terms of a percentage range (30 percent to 40 percent) and actual dollar amounts for each meal. For example, if the property's profit from F&B is 35 percent, a $15 breakfast would net the hotel about $5 profit per person; a $21 lunch would net $7 per person; a $36 dinner would net $12 per person, and so on. 
• Include only major functions. Smaller events like coffee breaks and committee luncheons should not be included in performance clauses. 
• F&B liability time frames should be close to the meeting. Try to negotiate to have the liability not become effective until two or three months prior to arrival. The hotel does not purchase food until a week before the meeting, so technically it does not suffer any lost profit from canceled or reduced functions until after the meeting. It does suffer a loss of profit for the canceled event. Remember, the closer a cancellation takes place to the meeting dates, the harder it is for a property to resell the banquet space. Everyone's goal should be that no party loses financially if a function is canceled. Give the hotel enough lead time to book another group.
• Get credit for resold functions. If the group cancels a function, and the property is able to replace it with another function, the resulting profit should be credited toward the damages owed by the group. In addition, if events are added in conjunction with the meeting, the resulting profit should be credited toward the damages owed by the group for reduction in attendance or cancellation of a function.
• Performance fees should be due after the meeting. This is when the hotel would receive revenue from rooms and F&B functions if the meeting had occurred. This allows you time to review the hotel's actual loss and adjust your fees should mitigation be in your contract.
• Do not use the term "penalty." Penalties constitute unfair, inequitable financial payment and are frowned upon by the courts. 
• Performance fees typically should not include tax. In many states, liquidated damages are not taxable. Ask the hotel to provide documentation of taxation of liquidated damages prior to including taxes with your payment.
• What if there is no F&B performance clause? If there isn't a clause, it may not mean you are free from liability if the hotel suffers a loss. Add a clause stating that the group will not be liable for any performance charges other than those specified in the contract.
• Use either a "per event" or an aggregate clause. A performance clause may be based on each event as scheduled, or it may be based on an aggregate dollar amount of your total meeting's anticipated F&B revenue.

Please keep in mind that the above information is not intended to be legal advice. Meeting planners and hotel managers should consult a qualified attorney to review all contract issues.