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[Sheldon Gooi]

Hi,

Interested to see how you guys handle this - One of the local hotels we work in regularly with our clients is now considering implementing a 20% surcharge on outside AV vendors if clients bring us in as opposed to using the hotel AV. Over and above that, clients have to pay a daily fee for a hotel tech to 'shadow' us.

They are asking me to sign an agreement to accept these charges, and I say this is between the hotel & the client, not me! They say an agreement between us to agree to this policy would help us work together to 'enhance the conferencing environment for the client'. I say to hell with that! You're now my competitor, why should I be working with you when you create a policy to disadvantage us with the 20% surcharge?

I understand this 3rd party AV surcharge is quite common in the US. How do you independent AV providers deal with this?

I also hear another hotel is considering doing this soon...

Interested to hear your side of the story.

sheldon

[E. Lee Dickinson]

Depends on the client. We have some loyal, long-term clients. We simply advise them to use a different venue. Other clients are able to negotiate out of that.

In other situations, we'll get a portion of the production from the in-house guys, so they get their part of the pie. Sometimes they're willing to waive the surcharge in consideration of that.

All that said - our most expensive pricing (line item for every cord and adaptor, no discount packages, etc) still usually beats in-house prices by 20%.  $75 for an outlet strip?????

[Brad Weber]

Sheldon, what percentage do you think they are getting from their in-house people?  Probably more than 20% as well as getting free services for their events, etc.  It's probably more an issue of supporting their 'in house' provider who they have saddled with some large profit margin for the hotel on their services than it is intended to put you at a disadvantage.

I do agree that it seems like any charge for 'third party' services should be something between the hotel and Client, your agreements are with the Client and not the hotel.  Are they asking you to bill 20% more or to pay 20% of your billings to them?  Are they offering anything in return if you sign such an agreement or going to ban you if you don't?

[Sheldon Gooi]

Hi Brad,

Well, they started this out by asking me to bill 20% extra, and not tell the client, then they said they'd charge us 20% on our billing. Now the policy is 20% of their published rate for similar equipment.

Not sure about the perks/ban, I'm seeing them this week to discuss this whole issue with a manager.

Worry is if they pull this off, other hotels might then decide to follow suit. At this point, no one we know of has such a policy. There have been some AV companies with in-house contracts, but they get first knowledge of events at the hotel, but never a charge on clients for outside vendors.

sheldon

[Ken Freeman]

Hey Sheldon,

The Hotel is trying to protect the in house vendor that provided them a commission on all rentals they do.  I would have a frank conversation with your client about this.  Hotels are now getting desperate in attempts to make money any way they can and loading up BS fees to make their business model work after the clients have signed a contract is one of them.  We put this is the same category as airlines and baggage fees.  

If you are doing good work and your client is a repeat customer in the hotel, this may be a very short conversation, which is them telling the hotel NO.  It really is the hotel modifying the terms of the contract afterwards.  I have seen this go to arbitration (One step before a lawsuit) and they lose every time.  Getting you to pay this is a way around this.  If you are confident about your ability and relationship with your client, push back.  If you agree to pay, the first this that the hotel will do, is throw you under the bus so that they start using the in house vendor.  The hotel industry has been trying to balance the books on the backs of the AV industry for some time and they harder they try, the worse it gets.

We have one local vendor where 55% of the AV gross goes to the hotel.  I tell it to my best clients like this:  "Imagine that you gave me a a dollar and I gave you 45 cents worth of show...."

Ken

[Collin Donohue]

Ken Freeman wrote on Mon, 31 August 2009 08:52

We have one local vendor where 55% of the AV gross goes to the hotel.  I tell it to my best clients like this:  "Imagine that you gave me a a dollar and I gave you 45 cents worth of show...." Ken

I don't think this could have been phrased any better.

[Greg Bass]

I've been a hotel AV manager and a US national Project Manager. So I've dealt with it from both sides.

I wouldn't sign any agreement with the hotel AV folks. You don't want to take a 20% haircut every time you work in that building. You'd be giving away your competitive advantage on pricing. What consideration would you receive in return for giving away 20%?  

That surcharge is between the client and the hotel.  The client can usually negotiate and make that fee go away.  

"Production Guidelines" and " Outside Vendor Stipulations" are all, for the most part, meant to protect the house's income.  "Exclusivity Fees", "Right To Use Fees", "Patching Fees" all income protectors. I like the  "Load-In Supervisor" - full-day fee for a guy that gives you a punch list of existing damage in the meeting space then disappears.  "Shadow Tech" - unless there is a collective bargaining agreement (Union) in place with AV workers, that policy is just that a policy that can be waived/negotiated.

Throw the in-house guys a bone. It's all about the relationship. Have them provide the screens and podium mics in the breakout rooms. Saves you having to truck bulky screens and small sound systems. Negotiate a discount that makes it work for both parties and go with it.  

If you won this show by bidding against in-house, they may not be so eager to discount. But if it's your client and they never had a chance at getting ANY of the show, point out the fact that you're willing to give them some revenue and they should be willing to deal.

The hotels demand a lot from the in-house providers and have to do something to protect the revenue stream. 50-55% off the top  to the hotel across the board (including labour and sub-rentals) is common place.  

Greg

[Sheldon Gooi]

Thanks for all the responses. Really an eye-opener for me.

Had the meeting with the hotel, and apparently they don't have an in-house vendor, the hotel owns the AV. And this policy is not a blanket policy on all events. They're not really bothered about small events, but rather larger events, where a sub-standard outside vendor affects the image of the hotel. They say this 20% is to cover them having to provide drapes, skirting for control, even uniforms for outside vendors.

And as I brought up, this charge should be negotiated between the client & them. Different story if we were dealing with the hotel on behalf of a client. Of course, if the hotel refers a guest to us, we have to mark-up 20% for them. That's a sales commission, no objection there.

At the end of the day, we agreed to take this forward on a case-by-case basis, so I guess we're good so far. Let's see how this develops over time.

sheldon

[Ken Freeman]

Best of Luck!

Hopefully you can build a working relationship with the hotel, but do it on your terms.

[john tulsa]

One of the local hotels you work in regularly with your clients is considering implementing a 20% surcharge on outside AV vendors so that is a good advantage for that...


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Tulsa oklahoma