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Travel Insider: Setting Up the Budget
May 28, 2008
By Brian Martenis
Some incentive travel planners have the luxury of dictating what the budget on a program needs to be. I hear legends of people who are actually able to tell clients or boards of directors what a trip will cost, then book Barbados's The Sandy Lane in early February and cry, "Budget be damned!" That dream has never been a part of my reality.
It has always been my experience that I was given a price (say, $1,700), and it was my responsibility to bring in a glamorous program for 6 days, 5 nights with breakfast and dinner daily (at least), which includes all taxes, events and airfare. I naturally could never afford such financial freedoms—and I am sure the majority of you can't either. But with a careful budget and a little hotel know-how, you'll still be able to offer your travel participants a great trip.
Travel Planning Smarts
• Hotel 101. A hotel room basically has no "value" at all—at least not the "rack rate" published behind the door. In order to make money, a hotel has to fill as many rooms as possible 365 nights a year. Space is money and every room in the hotel is simply a matter of "doors." It doesn't matter if the door has a brass plaque that says Presidential Suite on it or if the suite has four doors. Each door of that suite has the same value as the dreary little single room in the corner with no view.
Use this knowledge to plan your ideal timeslot. If you pick a time—like Christmas week—when the hotel will be booked and can basically name its own price, you will not have much room to negotiate. Think and study about when the slower periods are in different destinations. For example, a Caribbean destination in February is very pricey, but the first and second week in January is quite a different story as the hotels are pretty much empty. Plan Caribbean programs from the major Northeast gates around Jan. 8. After mid-month is when rates really tend to climb again. But not always! Again flexibility is your best friend.
 • The Art of Negotiation. Establishing good relationships and being personable with the hotel can help you negotiate down already reduced prices. I generally tell hotel sales managers on a telephone negotiation that "my legs are currently locked behind my neck." Humor always helps. But the real key is to be confident and know what you want. Never ask, "What is your best rate in early January?" Always say, "I need a rate of X in January." Let them tell you what they can offer. Don't ever forget that you are the customer and they need you to fill rooms. If you are flexible and can work with the hotel sales manager they will be happy to tell you when the most attractive prices available. Sometimes a "soft spot"—a phenomenon where two very large groups check in and out several days apart and leave a delicious "hole" to fill—can be found.
Success is within your reach when the sales managers say they will ask their GM—that's when you now know you are in pretty good shape. Listen to their offer and say you will consider it. Call them within two days and tell them, with a concession, you'll be able to close the deal. Concessions are generally another $10.00 off the rate, a reception (usually not really good) or an upgraded or free breakfast.
• Time to Wine and Dine. In general, food and beverage rates are not very negotiable. It's not just the price of the food—it's the service as well. And many times with larger properties, some of the food outlets are franchised and therefore of no concern of the hotel sales manager.
Your greatest success for budgeting F&B is to tell your convention services manager or F&B manager what your budget is. Tell your manager exactly what your needs are and what your budget is. Their job is to make it fit. To most people beef is beef on a buffet. They are not aware of the price differential of all the different cuts, which makes selection a little easier for you. Liquor packages, however, will never be in your favor. My budgeting formula for a full open bar (on consumption) is one mixed drink, one beer, one wine and one soft drink per person—always less than a bar package and always under budget. Save the expense of a full open bar on the last night. Always "spend at the end."
• Entertainment and Excursions. Tours and transfers provided by your chosen DMC are somewhat negotaionable. If my company is providing transfers and some tours for participants as part of the program and we allow the DMC to sell optional tours for days at leisure, I ask for 15% off all tours sold. This can come in the form of a reduction of the final bill. It has never been refused, but very seldom offered. If the costs seem high, say it. They will generally knock it down. If you allow them to sell optional tours, why would you pay more?
Budgeting Success
Never lose sight of the fact that incentive travel is handled as a cost of doing business. Incentive travel is designed to motivate and increase sales, productivity or behavior. Whatever the desired result, in order to run a successful program, a budget must be set and met. As I said, if you have never had the luxury of unlimited spending, you can still always bring them in on budget.
After 10 years as Sales Promotion Director for one company and 19 years as Sales Incentives Manager for another, INCENTIVE online columnist Brian Martenis is currently managing director of Boutique Incentive Travel, a division of Philidelphia-based Gil Travel. Brian brings to this company nearly 30 years of designing and implementing very successful incentive travel programs all over the world. Brian is passionate about every aspect of his programs and is often asked to write and speak about incentives, incentive travel and motivation.
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