Multiyear contracts: Do your homework, plan ahead

Contract Negotiation

Multiyear contracts: Do your homework, plan ahead

By Idan Keren, CMM
Published: September 4, 2012

Idan Keren, CMM, is the senior director of OKT Meetings, a global event planning agency dedicated to organizing events at the best value while meeting clients’ budgets and needs. Idan joined the OKT Team in 2006, after seven years in the hospitality industry, receiving a BA in hotel management and a master's in business administration. His 13 years of experience in the industry has helped OKT establish a reputation of superior professionalism and outstanding customer service. In October 2011, Idan completed his Certification in Meeting Management designation, which resulted in his promotion to senior director. He is quite the world traveler, visiting and working with more than 45 cities in 15 countries. Understanding a variety of cultures, business practices and multiple languages is a part of what helped Idan build successful relationships with vendors and clients worldwide.

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Most companies are afraid to commit to a multiyear contract. I’m here to tell you that you shouldn’t be scared and, if the circumstances are right, the idea of a multiyear contract should be embraced. Planning ahead is vital to any company that wants to improve its efficiency, save money and build solid relationships with hotels. Multiyear contracts are a great way to do just that. Here are some best practices that can help you:

Negotiating rates. Understand that even though you are able to negotiate a great rate, the hotel also benefits. The hotel doesn’t have to spend the money and time to have a salesperson try to sell the additional space or go through a process of another contract with a new client. Remember, it’s always easier for them to serve a client they already know. Include a clause to renegotiate after your first event is complete. Calculate the percentage of discount you are receiving off the lowest published rate for your first event and be sure to have the same percentage discount or lower for the following event.

Cancellation and attrition. Make sure the hotel will apply 100 percent attrition and cancellation damages toward the next event. This doesn’t always work, but most hotels will apply about 50 percent, especially when they know they have your business the following year. Try to include a clause stating that you will have at least 21 days after the first event to decide on the following event. At the very most, cancellation penalties (no more than 10 percent) should be applied to the second or third event before completing your first. Having a solid relationship with the sales manager can make the difference. Just remember to always be honest and considerate.

Cutoff and deadline dates. Most hotels will request the rooming list 30 days out with anywhere from 10 percent to 20 percent attrition. Creating a schedule and breakdown of dates to lower guaranteed counts can be helpful. If the hotel is not willing to give you 20 percent attrition two weeks out, you can ask if it’s possible to reduce 10 percent of your room block by 30 days out and an additional 10 percent two weeks out. Be sure to revisit this clause for renegotiation after the first event is done.

Some friendly advice

Spell it out. Make 100 percent sure that you understand everything in the contract. If you don’t understand something, ask the sales manager to email you the explanation. This will help for clarification later, especially when a new manager works on your account.

Be aware of the future. You don’t need “The Doc” or “The DeLorean” to help you with this. If your company is planning to introduce a state-of-the-art product for computer technology, for example, many major hotel chains will arrange a multiyear contract that takes place in multiple locations. The website All Conferences can help you find out where your target market will be just by knowing where future conventions will take place.

Join the discussion

Trisha Says:

2012-09-04 18:31:19

This article is very helpful, having worked both on the hotel sales side as well as the meeting planning side I think that everyone could take away some valuable knowledge!