Hotel Contract Must-Haves . . . And A Tropical Storm That Can’t Read A Calendar – This Week in Business Continuity

Image: IPS MeteoStar via Eric Berger.

Image: IPS MeteoStar via Eric Berger. Click to enlarge.

You may have heard by now that a tropical storm may form near the Carolinas later this week.  Yes, it’s May and hurricane season doesn’t start for another 3 ½ weeks.  And never mind all the seasonal outlooks up to this point that predict the tropical Atlantic is supposed to remain fairly quiet this year.  Seriously – never mind those.  I like this early blooming storm because it reminds us that it’s not the season we prepare for, it’s the one storm.  Nonetheless, the chances for development are minimal and if it does develop, chances are that it will just be a rainmaker.  And, as my friend and Houston Chronicle Science Editor (and newly-minted certified meteorologist) Eric Berger points out, it’s still expected to be a quiet season.

Not that it’s the season that we prepare for . . .

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In other news, Happy Star Wars Day!  (“May the fourth.”  Get it?)  I know I’m a day late but it lets me tie in how Continuity Housing brings The Force to our clients by leveraging our alliance with ConferenceDirect to the benefit of those same clients.  For those of you who’ve never heard of ConferenceDirect (said Force), they’re the industry leader in providing “professional event management and meeting planning services that save you time and money, guaranteed.”  And if you’ve ever visited the Continuity Housing website you know that we work hand in hand with ConferenceDirect and their $700+ million in annual buying power with hotels, exclusive hotel contract terms and an impeccable reputation in the hospitality industry. End of commercial.  But read on.

A few weeks ago Conference Direct hosted their Annual Partnership Meeting (APM) in Dallas.  ConferenceDirect prides itself in being the one global source for its customers’ meeting needs.  As such, they place tremendous value on being consultative with their customers in matters that relate to meetings and travel.  Which is good because nearly the entire Continuity Housing staff attended the meeting. Their three different annual meetings – APM is the biggest – are part of ConferenceDirect’s commitment to the goal of educating their clients worldwide on industry trends, technology and other critical leadership and management skills that will support them in saving their organizations time and money while better serving the constituents their clients are responsible for.

And, like our webinars, they use interesting, educational and entertaining speakers to help their customers blossom.  This year, for instance, they brought in The ONE Thing co-authors Jay Papasan and Gary Keller, founder and chairman of the board for Keller Williams Realty, to talk about the idea to “Go Big” with your goals and ensure every day you are doing the one thing that gets you to your goal. With all the “noise” of the day, it is imperative to prioritize the things that are getting you towards your goal . . . not distracting you from achieving them.  Read more about their book and the concept overall at the1thing.com.  Conference Direct brought in several other outstanding speakers and I’ll talk about those in the next posting.  Because learning how other people do things really well helps us tighten up on continuity plans on a constant basis.  For now though, suffice it to say that it was time well spent at the APM in Dallas, as literally hundreds of hotels from across the globe came to meet, do business and nurture relationships with the ConferenceDirect, and thus the Continuity Housing, staff.  More on that later, too.

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Contracts are obnoxious and confusing because they contain terms like guaranteed no-shows, cancellation, early departure, attrition, comps, room block audits, direct billing, successors and assigns, force majeure, provision for and allowance of pets, indemnification, liquidated damages, hotel internet service details, first right of refusal and provisions to renegotiate.  In order to minimize the confusion, we’re starting a weekly series called Hotel Contract Must-Haves.  We’ll hit one topic a week and this week it’s the reality that a room night is a perishable good and why, as a business continuity planner, that concept is very, very important to you.

According to Continuity Housing principal Michelle Lowther, “If a hotel has 400 rooms and 30 of those go empty tonight, they lose forever the opportunity to make money on those 30 rooms.  As opposed to a manufacturing scenario, where a supplier’s production can fluctuate based on demand, hotels have the same number of rooms available every single night.  And once a given night passes, so does the hotel’s chance for revenue on any rooms that sit empty.  Because of that, hotels have perfected the art of bringing in the most profitable guests and group business [10+ rooms per night] to keep the hotel’s RevPAR [Revenue Per Available Room, which is the only way to truly compare hotels’ profitability] as high as possible. It’s like piecing together a puzzle for them.  Based on factors such as historical occupancy over a given period, arrival/departure pattern, current and forecasted occupancy at the time of the reservation request, market compression, client relationship with the hotel, number of days remaining during which the hotel could possibly book other business over the given period, and an analysis to quantify other business which they may turn away by “accepting” yours, hotels come up with length of stay and room rate restrictions to direct reservations into the most profitable buckets.  Which means that just because they tell you they’re sold out on a particular date or dates doesn’t necessarily mean they’re full.  It may just mean they aren’t taking reservations for that exact time period at the time of your request because they’re gambling that they can better optimize their revenue over those dates.  It’s possible that if you change your check-in or check-out date to a day earlier or a day later, voila, there might suddenly be a room available.

“From the business continuity standpoint,” she continues, “when you ask a hotel to hold a group of rooms for your company or even a single room for yourself, there’s no motivation for them to do so without a commitment on your part to pay for that room.  If you’re not going to pay for it, the hotel’s job is to find someone else who will.  So the concept of a room night being a perishable good is fundamental to negotiating any type of contingency arrangement with a hotel.  Once you have that down, there are more than 60 other negotiable terms in an average hotel contract, some of which can not only burn you financially but also impact the success of your overall deployment.  The most important thing you can do is make sure your contract covers ALL the what-ifs.”

Have you ever been denied a room block reservation or arrived to find your rooms aren’t available?  Tell us about it.  And feel free to ask any questions you have about guaranteeing the process so that you don’t have the same problems in the future.  We know a thing or two about it.

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Continuity Housing helps companies enhance their business continuity plans by pre-arranging guaranteed housing and providing logistical support for mission-critical employees during disasters.  Subscribe to the Continuity Housing blog (in sidebar at right) and follow us on Twitter, on YouTube, on LinkedIn and on Facebook.  To subscribe to our mailing list and/or if you’d like a free 30-minute planning session, let us know.

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