Negotiating effectively in the hotel business can mean the difference between a sales manager making or loosing hundreds of thousand of dollars every year. Multiply that number by 7 or more sales and catering professionals and it could mean earning an extra half a million dollars per year, or unfortunately, leaving that revenue on the table.
How do we know if our sales and catering teams are negotiating effectively? Unfortunately, most hotel executives don’t know if their teams are negotiating the most profitable deal for their hotel. Most sales teams are given minimum average rates and meeting room rentals to sell, and then asked to go sell them. The sales representatives then work with customers and report back what they sold at weekly sales meetings. Nobody really knows how the negotiating process developed, and if the sales person negotiated successfully. Perhaps the sales person could have negotiated $20.00 or more dollars per room night and an extra $500.00 per day room rental. Effective negotiating techniques can net your sales managers a tremendous amount of incremental revenue.
Let’s take a typical scenario: How much revenue could this hotel be leaving on the table? Or better yet, how much money could this hotel be earning by using sound negotiating principals.
Scenario:
The client requires 100 rooms for three nights and meeting space for 100 people classroom style. The client has a budget to pay up to $189.00 for guest rooms and $2,000 per day for meeting space. The Sales Manager’s goal is to sell guest room rates of $129.00. The sales manager does not have a meeting room rental goal.
Sales Manager: Mr. Gibbons, I can offer you our group rate of $169.00 for your conference and your room rental is $1,000 per day.
Client: I only have a budget for $139.00 and I can’t pay any room rental.
Sales Manager: OK, I can make that work. How about if we draw up the paperwork for $139.00 and I’ll go ahead and waive your room rental?
Client: Sounds good.
The sales manager in the above scenario left over $24,000 on the table. The customer could have paid a lot more, but the sales representative did not know how to negotiate. By implementing sound negotiating principles, the sales manager could have captured a tremendous amount of additional revenue. See Aprinda’s online training solutions to learn, among other things, how to negotiate better deals in the hospitality business.