10 Hotel Contract & Procurement Negotiation Tips

1- Develop Your Own Contract -

The ideal starting point for contract negotiations is to write your own version of the hotel contract. Hector de Castro, FFE company General Manager and Sworn Translator, has developed different contract templates, which he sends to a hotel after he receives its proposal and contract. You might find yourself in the situation of a hotel tender deciding to include a list of items or brands, or you might be in an OTA, Furniture or Foodservice company supplying products to hotels. Whatever the case might be, he recommends working directly with a lawyer to write your own contract.

2- Get Everything in Writing -

If the hotel company doesn’t accept the contract, he sends the hotel a prioritized list of items/clauses he wants to be included in the hotel’s contract. These items should not surprise the hotel. By the contract-negotiation phase, the hotel should know the basic needs, based on the request for proposal (RFP) and subsequent conversations.

3- Read Every Word -

Mr De Castro suggests that you not only read every word of your hotel contract, but read it three times - carefully. “I approach each contract like I’m reading a detective story,” he says. “I like to figure out exactly what’s happening”. He´s learned to keep an eye out for hidden fees. Recently he was digging through a new contract for the opening of a hotel in Dominican Republic, and he saw that they were charging extra penalties” he says. “It wasn’t a deal-breaker, but it certainly alerted me to what else might be hidden.”

4- Negotiate For More Sales -

Do not loose the opportunity to think long term and seeding for a new project. You can negotiate for specific clauses for products to be included in a contract at discounted rates. Extra equipment, future needs for a second phase of the project, etc.

5- Specify Penalties -

Most hotel contracts include specific penalties if you fail to comply with the terms of the contract, but many do not include penalties for the hotel if it cancels your event or fails to meet other terms in the contract.

6- Sell Your Value to the Hotel Chain -

If a hotel recognizes the value of your business, it will be more willing to negotiate in your favor. The ideal path to follow is creating personal relations with the decision makers at the hotel chain headquarters. To help the hotel recognize this value, says Mr De Castro, “you have to know what the target is about and what it will bring to each facility; then ask the facility what its priorities are.”

7- Customize the Contract to Your Attendees -

Once negotiations begin, prioritize your negotiation points based on the specific needs of your attendees profiles: technical, financial, legal, etc.

8- Define Terms -

Mr De Castro used to work as legal interpreter in court cases regarding hotel contract disputes and international sales affairs. He finds that the majority of cases come down to how each side interprets the language in the contract.

9- Ask Questions -

Throughout the contract negotiation process, ask open-ended questions about the contract terms and how the hotel operates, such as one of Mr De Castro’s favorites, “Can you tell me what your quality KPI are?”.

10- Protect Yourself -

Hotel contracts almost always include clauses that protect the hotel if you cancel orders or fail to meet deadlines. These clauses are fair, in theory, because the hotel chain may forfeit other business to finalize your project. But pay a close attention, since they might be abusive.