The Hidden Costs of Event Planning Part 1

by Mike on August 6, 2010

For the last 4 years I’ve been blessed with the opportunity to host a worship arts conference that continues to grow and amaze me! One item that I realized early on is that event planning can get expensive if you’re not careful.

Right now, I’m in the thick of wedding planning and conference planning which is why my posts are few and far between. But I figured I’d take a break from all that to share some things I’ve learned along the way!

Events at Hotels

event1. When planning an event at a hotel that requires a contract…read the fine print! There are some shady sales managers out there that are counting on your ignorance to seal the deal which can cost you a heap out of pocket in the long run.

2. While reading that contract, if there is something you don’t know…ask! Here are some terms you should familiarize yourself with if you are looking to host an event at a hotel:

a. F&B: That is food and beverage. Hotels make money on the F&B so if you are looking for a block of rooms and / or meeting room space at a discount, normally there is a minimum F&B in the contract. Notice that word minimum. For example, if you have a minimum F&B of $2,000 that means at least $2,000 must be spent on food. If you are hosting an event with 100 people and want to serve dinner at $30 per person, you will owe $3,000 F&B thus fulfilling your commitment. The confusion happens when people think they only owe $2,000 and they can fulfill their order. It sounds elementary, but those contracts are worded in such a way very intelligent people miss this.

b. Rooms vs Room Nights: When negotiating, hotels typically deal in room nights versus actual rooms. If you’re event spans 2 nights and you think you’ll night 10 rooms, they are going to block you for 20 room nights. Be sure you and your sales manager are speaking the same language.

c. Attrition: If you are negotiating with a hotel this is one area you need to pay attention to or it may end up costing you big time! Attrition is the difference between the amount of room nights contracted and those actually booked….you are responsible for the difference!

Example: You contract for 100 room nights and are obligated to fill out least 80%. The hotel is allowing for 20% slippage. Anything less than that 80%, you must pay for!

Let’s say your event is under attended, and only 60 room nights are booked. You fell short of the attrition cut off of 80 by a difference of 20. If the rooms are $100/night. That is $100 x 20 room nights or $2,000 you now owe the hotel.

Lesson: When blocking hotel rooms use realistic caution not optimistic ambition!

d. Slippage: This is the difference between the actual and contracted room nights. Hotels usually allow for some slippage before attrition begins. Also, be aware that typically slippage occurs once rooms are booked and before the actual events. Life happens, plans change, people cancel. So if you are right at your cut off before attrition, it is not time to breathe easy. Do everything you can to meet or exceed your contracted room block so slippage will not effect you.

e. Concessions: Finally the fun stuff! The is what the hotel is giving you for bringing your business to them. Remember, everything is negotiable! Typical concessions include a free room for the event organizer, free room nights per every set number of rooms booked, discount on food, etc.

Note: Concessions are dependent on meeting your contracted room night requirement, so if you fall short, not only will you have to pay attrition fees, you may lose some or all of your concessions….not fun!

This has gotten pretty long, so I think I’ll break it up into a series! The next portion will deal with tools to organize your event!

{ 1 trackback }

Tweets that mention The Hidden Costs of Event Planning Part 1 --
August 6, 2010 at 4:41 pm

{ 3 comments… read them below or add one }

1 event space NYC October 24, 2011 at 1:17 pm

its really important to plan everything well before starting an event to make sure that everything is going to be okay.

2 marsha breen August 12, 2010 at 3:56 pm

What happens though when the hotel changes something in your written contract? My son is getting married in 2 weeks at a hotel in New York where they have had a signed contract since last December 2009. The hotel is now telling them that the vendor that the hotel worked with for rental chairs is no longer working with them so my son and his fiance have to work directly with the chair vendor to rent the chairs. They claim it will cost them now 3x what the hotel contract originally specified. It seems to me that the hotel should pay the difference for the chair rentals since these kids signed this contract with the hotel in good faith and were given a certain price at the time of signing the original contract. What do you think?????

3 Jen Sako August 8, 2010 at 10:20 am

Great article! You covered all the tricky bits. I don’t necessarily think these clauses are “shady.” The contract is there to obligate the renter to a certain amount of revenue in exchange for the hotel to pull this space out of their inventory for the renters future event. Is the contract biased to the hotel? Absolutely! The hotel is the one writing it. But most hotel sales people want you to ask questions if you don’t understand the language. The good sales people are the ones calling you every other day after they send the contract to go over it with you. There is standard language to be sure, but outside of legal policies, everything is negotiable. Negotiating correctly means that all parties reach a satisfying agreement. As a professional meeting planner, part of my services include contract negotiation, which I believe is key to a successful event. Fulfilling contractual obligations can be a major source of stress if you don’t fully understand to what it is you have agreed. Thank you for outlining these points for those that want to go it alone!

Previous post:

Next post: