TURNING THE TABLES
PART1:

7 NEGOTIATING TIPS FOR MEETING PLANNERS IN A SELLER'S MARKET

John S. Foster, Esq., CHME

Although all negotiations and contract terms are driven by market conditions, better negotiating skills may mean the difference between making a deal you can live with versus a bad deal or no deal at all. There is no magic solution to get the other side to accept all of your terms. There are, however, negotiating tips and strategies that can be learned and used to improve a weak position.

Negotiating really means compromising. Successful negotiators know they have to be ready to give something up - even if they never actually have to. When your position is weak, you may have to give up more than you want. You may feel that negotiating with the other side is a waste of time, but that doesn't mean you shouldn't try. You may have to give up less or gain more than you thought you could. Experienced negotiators know that their efforts can be beneficial even when their position is weak.

Here are tips that will enhance your ability to negotiate when you have a weak position.

1)Clarify your objectives.

Make a written list of your "needs," "wants," and "nice-to-have" items. Needs are your deal-breakers. These are the items and issues that have to be in your favor in order for a facility to be even considered for your meeting. Needs might include specific dates, a flat single/double rate that your attendees can afford, specific terms and methodology for calculating attrition and cancellation (if applicable), and no meeting room rental. Wants aren't deal-breakers, but are still important. These might include deposit dates, discounts in catering prices, and upgrades for officers and VIPs. Nice-to-have items still rate, but are at the bottom of your priority list. These might include special check-in, check-out times, server and bartender ratios, no corkage fee for alcohol the group brings into suites, free storage of supplies a certain number of days before the meeting, and meeting room locations. After the three lists have been made, compare the items and issues on the list and rate them in order of importance.

2)Gather information about the other side.

Many professional negotiators believe that educating yourself about the other party with whom you want to do business is the No. 1 requirement to a successful negotiation, particularly when you are in a weak position. Information gathering happens before and during negotiations - the earlier, the better. The basic negotiating strategy is to replace concessions you are asked to make with trade-offs. The sooner you understand the other party's objectives, demands, and requests, the more profitably you can energize the negotiating trade-off process. The more you can find out about the other side, the better your chances of influencing them successfully. It's important that you rank your needs, wants, and nice-to-have items so that you trade off the items of less importance first.

Adhere to the 80/20 rule: A critical point in getting information about the sales manager and the facility s/he represents is to use the 80/20 rule. Listen 80 percent of the time and talk 20 percent of the time. The more you get the other side to talk, the more you will find out their strengths, weaknesses, and how much your business means to them. By listening closely you may discover that the sales person has a problem; s/he may be short of her/his booking goals and really needs your business to reach goal for the month or quarter. You might be able to find out that the week you want is totally booked but the hotel just got a group cancellation the week after your preferred dates and is willing to make a lot of concessions to get fill-in business right away.

3)Use the Vise early and often.

The purpose of the Vise is to squeeze the price range (or terms) up or down in your favor. The Vise is eight simple words: "You will have to do better than that." The Vise is used in place of making a counteroffer to the other side's initial offer. You keep using it until the other side stops making concessions, then you make your first offer or counterproposal. Use of the Vise is followed by silence. The other side feels compelled to fill in the silence with something, usually a revised price or concession.

If you are the recipient of the Vise the proper response is: "How much better do I have to do?" This response is effective to pin down the other side to a specific price or term. The Vise is one of the most successful tools in negotiating because it works. Every concession has a price, but the Vise costs nothing.

4)Develop your position of power.

Power in this context is the ability to exert influence over other people to do things your way. In any negotiation, the party with the most power or influence will gain the most concessions. Even if you are in a perceived weak position you have more power than you realize. Those with perceived weak power can actually enhance their appearance of power by being creative in the way they present themselves.

Here are some examples of power and how to enhance it:

Legitimacy power: Titles imply power in business. If you have a title, make sure you use it on your stationary and business card, i.e. Director of Meetings and Events, Meetings Manager. If you are self-employed, you can still be the CEO of your company.

Reward Power: Any time someone has the power to reward another person with something, they have reward power. Meeting managers should approach every negotiation with a vendor with the attitude that they have the power to reward that vendor with business. That power is not lost on vendors even though they may be in a position to choose with whom to do business.

Expertise Power: The more you know your job, the more others will respect you. If you approach every negotiation with a solid reputation for being a consummate professional, others will defer to you in many situations.

Competition Power: Whenever you create competition for what you possess, what you have moves up in value. Smart meeting managers can create competition for their business by using Requests for Proposals (RFPs) and negotiating with more than one vendor. By making it clear that other vendors are interested in their business, they create more desire for their business in each vendor with whom they negotiate. This emphasizes another point: Never enter a negotiation without options.

Investment Power: Investments don't just involve money. Successful negotiators make sure their counterparts invest a certain amount of time and energy in the negotiation. This is done by spreading out the negotiation process over several sessions, if possible. A site inspection followed by successive phone conversations is an example. The more you get the other side to invest their time and energy into the negotiation the more flexible they will become in giving away concessions. No one wants a negotiation to deadlock or fall apart if they have invested a lot of time and energy in making it work.

Persistence Power: Most people aren't persistent enough when they negotiate. Remember, if you hit a nail on its head enough times the nail will eventually go in the wood. Give yourself a chance for success before you give in too quickly.

5)Make time work for you, not against you.

Successful negotiations aren't done quickly. The quicker the deal, the greater the risk.

Here are some guidelines:

a) Time always works against the party that doesn't have it. This is because people always become more flexible under time pressure and tend to give away more concessions.

b) Don't let the other side know your true deadline. When your counterpart knows your deadline, they can delay the serious negotiations until the last possible minute. They know you will be more flexible the closer you get to your deadline so that you can have something to show for your efforts.

c) The other side always has a deadline; find out what it is. Sure, meeting managers need to get their meeting booked quickly and move on to other issues. Sales people have deadlines too. Hotel sales managers usually have monthly, quarterly, and annual booking goals. It's no secret that the best time to negotiate with a hotel sales person is close to the end of these deadlines.

d) Ninety percent of the concessions will be made in the last 10 percent of the time allocated. If you have a deadline, it's always best to stay as far ahead of it as possible so that time pressure doesn't work against you. If your counterpart asks you to reveal your deadline, the best response is, "I have as much time as is necessary to make a mutually agreeable deal that we both can live with." Also, beware of false deadlines set by your counterpart. Most deadlines are negotiable. At least attempt to move the deadline if meeting the deadline is a disadvantage to your organization. When all else fails and you can't get the deadline moved, downplay its importance when you are negotiating. Don't let the fact that you are under pressure to meet a deadline become the focus of negotiations. Try to keep the focus on the terms of the deal itself.

e) Don't negotiate when you are in a hurry. If you have a meeting to get to in 10 minutes and someone calls you on the phone and wants to negotiate something, postpone the call to a later time when you won't be rushed. The last thing you want to do is make a serious blunder because you're short on time.

6)Never assume an issue is non-negotiable just because the other side says it is.

"That's my bottom line" is the biggest lie in negotiating. Just because someone says that their side won't budge doesn't mean they won't. It may mean that you haven't given them enough information about your business, or enough explanation of the terms you are requesting, to motivate them to be more flexible. It could mean that they are in a hurry to book the business and they hope you just give in and do it their way.

I once worked with an association to negotiate a license agreement with a convention center in a first-tier city. We revised most of the terms in the license and returned a counterproposal with our preferred terms. The director of sales at the facility took his time in responding. After several months, he finally returned our counterproposal with the word "No" written next to 45 of the 51 revisions we had made. My suggestion to the association's meeting manager was to schedule a telephone conference call with the director of sales and anyone else on the facility side that needed to sign off on our requested revisions. The call ultimately included the director of sales, the general manager, the vice president of operations, and a representative from the mayor's office. Although it took several scheduled phone sessions spread out over six weeks to discuss the details of each revised term, we were able to get the facility to agree to include 42 of the 51 (84 percent) revisions in the license (with minor changes) that the sales director originally nixed.

The above strategy worked because we didn't accept the first offer, we used the Vise technique, we negotiated with the person(s) who had the highest authority, we had time on our side, we developed our position of power by making it clear that we weren't going to accept a blanket "no" easily.

It became clear to us early on - in the first conversation we had with the director of sales after the multiple "no" response - that the real strategy we needed was persistence. The director of sales reluctantly revealed that he hadn't even read our revisions to the license, much less understood them. The subsequent phone calls involved only the director of sales. The other three "authority" individuals stated flat out that the director of sales could agree to whatever terms he thought prudent to make the deal without coming to them for approval. During the subsequent phone calls the director of sales was forced to read the revisions. We encouraged him to tell us if he didn't understand something or if he still had concerns. After he was convinced that his concerns and the concerns of the facility were being met, we had a deal, except for two items. The two items dealt with premise's liability and certain levels of responsibility for damage and personal injury we wanted the facility to accept. The director of sales deferred resolution of these issues to the facility's outside legal counsel and a representative from the risk management department. Additional discussions with those two people helped them understand our concerns and they agreed to work out contract terms that met them. The effort we put forth to get past the director of sales' initial "no" response was worth it. Both parties got what they wanted. The facility got the booking, which was a citywide event with 8,000 room nights, and the association got a license agreement with terms and conditions they could live with.

7)Never accept the other side's first offer.

First, it frustrates the negotiation process and second, the other side might be holding something better behind their back that they are willing to put on the table under the right circumstances.

Accepting the other side's first offer (or counter-offer) can actually sour the deal in the long run because people put a much higher value on terms that are negotiated over terms that fall in their lap.

Suppose the sales manager with whom you are negotiating says the hotel's best group rate for your meeting dates is $300 per night. If you jump at this offer and say "yes" right away the sales person will be thinking they could have done better and that something must be wrong.

This is just human nature. If you jump to accept someone's initial price and/or terms they are going to think it was too easy and wonder if they should have offered something higher or lower, depending on which side of the transaction they are on. Even if you agree with the price and/or terms offered you should counter with a price or terms that are a little better for your side. If your response to the sales manager had been something like, "The rate sounds good but our members have never paid more than $275 for a room," the sales manager might counter with $285. You would still have saved $15 per room for your members.

Because of your quick "yes" response to the initial prices and terms the sales manager may be thinking that there must be something wrong with you, your meeting, or your organization. Maybe the sales manager will conclude that your meeting has a high no-show factor or your organization doesn't pay its bills on time. Even though you can disprove those beliefs with solid information, the sales manager might remain suspicious nevertheless. I've actually seen potential bookings go down the drain even though success was in reach just because one side became suspicious of the other and mistrusted them because they agreed too quickly to the initial offer. The party with the suspicions started making outrageous demands just to kill the deal and get the other side to go away.

The corollary to this tip is that successful negotiators never put their best offer on the table first. They understand that if their best offer is rejected, they have nowhere to go. They have been boxed into a corner. Successful negotiators always hold something back from their initial offer or counteroffer so that they have something to trade when its time for them to make concessions.

Editor's Note: John Foster shares six more tips on negotiating from a position of weakness in the June issue of Convene.

° John Foster, Esq., CHME is an attorney and counsel whose firm Foster, Jensen and Gulley, LLC specializes in the legal aspects of meetings and conventions, trade shows and events, and association management. He is an associate counsel for over four hundred national and regional associations and companies. PCMA named him Author of the Year in 2003. The legal columnist for Convene, he is the author of Meeting & Facility Contracts, Meetings & Liability, Independent Meeting Planners & the Law, and What Every Hotelier Must know about Legal Affairs Management.

DISCLAIMER: This article is not intended to take the place of advice given by an attorney familiar with the specific circumstances and needs of your meeting and the sponsoring organization.

© 2007 John S. Foster, Esq., CHME, Atlanta, Georgia, All rights reserved, John.Foster@FJGLaw.net.