Essentials to Sourcing and Booking your Next Venue: Developing Requests for Proposals (RFP’s) & Contract Negotiation
One of the most important, if not, THE, most important responsibility of planning events, is managing the financial risk. RFP’s and contracts play vital roles in this. It is important when developing an RFP that you set realistic expectations with the venue, as, once the negotiations are complete, whatever is agreed upon gets translated into a legally binding contract.
Having a complete understanding of that contract is fundamental. Don’t be intimated by all the ‘legal jargon’. Ensure you understand the language of the contract and don’t be afraid to ask for clarification / simplification. Do not sign anything that you are not 100% comfortable with or fully understand.
When negotiating and reviewing requests for proposals and ultimately signing contracts, there are a number of important items to consider.
Developing the RFP:
When booking an event, it is important to know the history of the event. This will provide realistic expectations with respect to the number of rooms booked, estimated attendance as well as the behaviour of the guests – for example, do they like to socialise a lot and therefore can the venue expect high sales in their bars and other outlets? Knowing this will provide negotiating power and also make the venue more comfortable with what to expect.
Date: Are you set on your date or is there room to move? If so, this will allow for greater negotiating power. For example:
- Can you hold your event outside of peak times?
- Can you change the days of the week the event is held on?
Different venues / locations will have different off-peak and shoulder seasons as well as days of the week which are considered peak nights. Knowing when these periods are will give you a sense of how much negotiating power you have.
Be realistic with your expectations. Do not try to overestimate in an attempt to ‘wow’ the venue to receive a better deal. Venue’s use these figures to establish the viability of hosting your event and work their proposal around them. Setting unrealistic expectations may initially garner a better deal but may eventually lead to problems down the line with when these expectations are not going to be met.
Food & Beverage Minimum Spend:
Be realistic when estimating what your minimum Food & Beverage spend is likely to be. Ask yourself:
- Does your budget allow for a Steak Dinner .vs. a Chicken Dinner?
- Will the bar be hosted fully or will there be a limit to the number of drinks provided?
- Is breakfast being provided? If so, will it be continental or hot?
- How many breaks will you have? Will they be basic Tea / Coffee or will there be snacks as well?
- Will your lunches include basic soup and sandwiches or a more elaborate buffet or be plated?
Answering these questions will allow you to develop a more accurate estimate. When contracting, ensure this is lower than your estimate to allow yourself some wiggle room for the unexpected. While you would not include your actual food & beverage minimum figure in the RFP, you will identify your food & beverage requirements.
Room Block (if applicable):
When establishing how many rooms you may require and for how many nights, ask yourself:
- How many of my attendees are local .vs. travelling?
- Of the local attendees, how many will stay at the venue?
- When will those travelling arrive?
- Are attendees likely to come early / stay late?
- If so, should pre / post event dates be included in my room block?
- Will attendees want their own rooms or share with others?
- Do they bring partners?
- Should breakfast be included in the room rate or will there be breakfast provided at the event.
Answering these questions will allow you not only to establish an approximation of how many rooms may be required but also the types of rooms (for example: twins / doubles / kings) and the type of rate (for example: room only / bed and breakfast)
Once the above has been established, a venue has been selected and negotiations have been finalised you will receive your draft contract.
Reviewing the Contract:
Date & Location:
It is surprising how many times I have seen the wrong day / date / location on a contract.
It is important to have the date written out fully – i.e. Tuesday, June 21st 2016 versus just June 21st 2016.
This can be a way to catch errors in date’s as someone may spot the day of the week is wrong and think ‘my event is supposed to be on a Wednesday, not a Tuesday’ Ensure the locations are correct, not just the meeting space within the venue but also the actual venue. The venue’s name and address should be written out in full. Some venues have similar names and you wouldn’t want your guests / suppliers turning up at the wrong venue!
Ensure specific figures and dates are written into cancellation policies. For example: ‘30 days prior to the event date’, should read: ‘30 business (if applicable) days prior to the event date – Friday, May 22nd2016’.
- This helps eliminate the question of whether ‘days’ refers to actual days or business days. It also helps clarify what 30 days actual is – one might often assume it would have been, May 21st 2016 (if your event is June 21st), as people think 1 month prior, when in fact, 30 days in this instance is May 22nd 2016.
% of ‘estimated or anticipated’ revenue.
- Define what this actually is. Your idea of estimated revenue may be very different from the venues.
Attrition Clauses are crucial in managing financial risk. They indicate when and by how much you can reduce your room block / food & beverage minimum spend. This is critically important if your numbers are lower than anticipated and you are likely not going to reach the initial room block allocation or meet the Food & Beverage Minimum. This may impact your contract in other ways as contracts are often negotiated on a sliding scale – i.e. if you meet 80% of your room block / food & beverage minimum, meeting room rentals fees are waived. If you reach 70 – 80%, the rental is X amount, with the fees increasing the further you are away from your original figures as venue’s are attempting to recover the loss of anticipated revenue. These additional costs would likely not have been factored into your budget and thus have an adverse financial impact on your event.
Put upcoming important cancellation and attrition dates in your calendar with reminders set for 1 month / 1 week out etc. Deposits:
Where possible,try to tie the deposit due dates in with when you will be receiving money – eg: registration opening / closing, sponsor / exhibitor payments to help with managing the events cash flow.
Get it in writing:
Many people like to chat and negotiate over the phone, however, contracts should always be written documents as people can have very different recollections of conversations. Without a written contact, what would happen should the person with who you spoke leave the organisation? A ‘he said / she said’ situation may develop
This is true, not just during contract negotiations, but throughout the planning process. Always follow up every phone conversation with an email ‘Further to our conversation’… to ensure everything is documented accurately and contracts amended if applicable
While contracts may be daunting to negotiate and review, ultimately, they help keep you on track and provide a reference point for both you and the venue. Blog post written by Claire Leahy, CMP, Director of Events at Managing Matters Inc.