Industry Update
Opinion Article14 January 2015

The lost Art of Sales Negotiation

By Ahmed Mahmoud , Founder of Revenueyourhotel.com

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Mahmoud

In more than 15 -year "adult" career, I have often enjoyed the opportunity to speak with younger hoteliers about careers, finding some times specially in the slow dawn times and how much difficult to close a good deal .

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Wouldn't it be nice if business was thriving year-round? Unfortunately, with seasonality and market conditions, most businesses witness an inevitable slow period. For hotels, the dreaded slow period is evident when there are many more room vacancies than occupancies. Although the slow period will differ from hotel to hotel and reasons may vary, nearly every hotel is affected by it at some point. If you review your hotel's forecast for the year and identify times that occupancy is consistently low, you can carve out strategies to boost revenue and increase occupancy throughout that time of the year, with all efforts from sales team to generate demand by trying to close and materialized any business with any deal or rates. 

It is very common the expression of Deal is a Deal, but the point is how to make this deal a successful one, or how it goes during making a deal with a client.

Nevertheless, there seem to be a lot of young hoteliers in or around the hotel profession who like the idea of the "deal side" of the business and have sought my advice. (One advantage of growing older is that younger folks think I have something to say; you can fool some of the people some of the time . . .).

Smart buyers will always ask for a better price. Unfortunately, too many sales people and business owners automatically think that reducing their price is the most effective Way to respond to this request. However, in making negotiation is not always about price, although price is a factor in virtually.

Every sale, it is not usually the primary or motivating factor. Everything we say and do from the first contact with a prospect affects the value of our product or service in their mind. That's why we have to believe it is important to look at the negotiating process differently in order to achieve better results.

Some management likes hiring those with a solid back ground in math and calculation, indicating that numbers underlie all business decisions and the understanding of numbers enables us to make decisions based on instinct. I agree, but there is more.

What does a deal person in the hotel space need to understand? I offer the following few suggestions for the aspiring hotel transactions executive and others:

Learn about operations: How a hotel runs, the interplay of room count room types and other features of the hotel, food and beverages outlets, banquets, meeting rooms , ratios of staffing in operations, comparison of food and beverage performance, reservations, property management, front office systems. Each of these affects the value of a hotel. After almost 18 years in the business of hotels, I still has to confess this remains the biggest shortcoming in the industry and I am still learning.

Know the Uniform System of Accounts: The hotel industry has its own accounting system, so it behooves us to understand it (and, almost everyone uses it, so it is the industry "language"), learn more about the cost and order not to give a way.

Management agreements and franchise agreements: One or both of these elements are likely present in more than 40% (and might even increasing) elsewhere. They are the legal underpinnings for the relationships among hotel participants, but too many young people want to leave these to the lawyers, few basic ideas about it will help to be keener about the hotel owners, investors, and share holders.

Positioning ourselves (as a product) is the most important factor and will affect the price, putting into consideration that our customer is always willing to pay. We have to think also what pain does our product or service eliminate? How does it solve a problem the customers are experiencing? How do our products and service differ from our competitors?

Now what, you have done your researches about the customer needs, you decide what to negotiate, and finally you plan your negotiations strategy, but price is still an issue for our customer. What should we do now? Instead of conceding to their request and giving them a discount, we have to try focusing on creating a trade. This means we should ask for something in exchange for making a concession, if we do agreed to make it.

What can we trade or ask for? Almost anything, anything comes to our mind while negotiating the client, but it should be benefit wise for us, it could be in the same time for the business we are negotiate about, or it could be for future wise, We can ask for a long time contract, exclusive business, an introduction to another key decision-maker in the company, or payment terms. We can even negotiate for products or services that the other person or company offers such as equipment, theme nights, Gala Dinner ...... etc.

Come back to the main point, Here are a few ways you can effectively position this request while negotiating your deal.

  • "If I could do that price for you would you be willing to extend the length of the contract for an additional period?"
  • "If I could work that out would you be prepared to give me advertising space?"
  • "Let's put that aside for the time being. Would you be able to give a similar amount of...in exchange for that concession?" The key here is to think outside the box and explore other options available to you.

Just imagine yourself as a salesman, and you are in a negotiation with a prospective client about a group and were asked to make a concession that amounted to a XYZ percent % discount. You for sure might be not comfortable with this, so you can ask your prospect if he would be willing to give you a comparable amount for one of his product instead. For sure he might not have the authority to make such a decision but he can spoke to someone who did. Be sure that your request was eventually denied so your client conceded to your initial offer.

Most people will expect you to keep all the conditions "as is" but they will want the lower price.

By demonstrating how much the concession is worth you can reduce the effectiveness of their request.

Negotiation should start with understanding the customer. What makes them tick? What would make them enthusiastic about buying? What's the problem that they're trying to solve through buying from you? And how much value do they attach to that? The good news is that most customers are far more interested in talking about themselves than in hearing about you and your product - so use that human trait to your advantage.

But you should also be clear about your own position. What would be an acceptable compromise for you to close the sale? How important strategically would the sale be? And what would make it a bad deal for you and therefore be the point of no return?

If your customer believes that you're working with their interests at heart as well as your own, they're more likely to be more honest about what they view as their alternatives.

And this in turn allows you to do the same — making for a more positive environment to do good business.

Successful negotiation results in a coming together between buyer and seller — ideally both you and your customer should have a sense of achievement as you shake hands on the deal.

Remember that most business owners would view a good deal as one that meets all their requirements, but you should also consider other factors such as whether you want to do business with a particular firm again. Although getting the best possible deal in the short-term is important, a good relationship in the future may help you get even cheaper prices or other perks, such as priority delivery.

Ahmed Mahmoud

Ahmed Mahmoud has more than 18 years of international hospitality industry experience, specializing in revenue management implementation and execution. He began his career in 1992 holding a variety of management positions with such top hotel chains as Accor Hotels, Hyatt International and Starwood hotels.

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