The Pottery Barn Factor
By Christy Lamagna, CMP, CMM, CTSM
Why discounted hotel rates may not be such a good thing
I used to shop at Pottery Barn twice a month. It was an expensive habit, but I shopped happily and considered the company’s products worth the price. I admit I was delighted when I got something on sale, as it was a double win: a new treasure and on sale to boot!
To subsidize my Pottery Barn habit, I eventually decided to take a part-time job there, scoring the ultimate victory: employee discounts! The savings were formidable and the spending continued while I worked there.
I ultimately quit, however — and have not bought a thing there since. Why? I got accustomed to getting everything on sale and suddenly the regularly priced items lost their value. I call this the “Pottery Barn Factor.” And as I see hotels drastically slashing rates and planners making demands that some would consider unreasonable, that story comes to mind.
Are Lower Rates Better Rates?
Recently, I had a hotel quote a rate that was considerably less than I had budgeted. I called my sales rep and said we needed to discuss the rate. He told me he would do better. I told him to raise the rate. Silence ensued. He heard me, and you read this correctly. I needed him to raise the rate.
Here’s my reasoning: If I gave my client a quote that was that much lower than customary market value, I would never consistently be able to meet that expectation again. I also knew that going forward, the hotel would forever be off the client’s consideration list — once the rate was cut, the product would be devalued and it would be hard to justify paying more for the same thing once prices returned to normal levels.
Our solution? The hotel and I worked out a wonderful package of concessions that were greater than the room discount they initially offered. Explaining that it was reflective of the economy, I shared the concessions with my client, who was appreciative. We upgraded food, had more suites to offer their VIPs, received formidable discounts on all services charged to the master account and more.
Ultimately, attendees enjoyed one of the best events they have ever had, as they were the beneficiary of some of these negotiated benefits. The hotel appreciated being allowed to maintain their rate integrity. And the client kept their housing budget in line for 2010.
I told the client what I did and they appreciated my creativity and foresight, as their housing budget would indeed have been cut to respect the 2009 rate had we taken the initial, deeply discounted rate. That would have spelled trouble for next year. Fortunately, I have taken the time to educate my client’s executive teams on what is happening in the industry and how to navigate it. It is easy for the inexperienced to get caught up in the belief that the $69 room rate being advertised online at a discount site is obtainable for your block of 500. It’s not.
Educating the Client
We need to educate our executives and our peers on the realities of what we do, how we do it and why we do things. If you pay $199 for a room that was $469 last year, there is no going back. It’s hard to rationalize how the same room can command so much more than the discounted rate, once that’s been set.
If your executives ask why your already signed contracts are not renegotiated now that rates have gone down, ask what would happen if the hotel called to renegotiate the screaming deals you signed earlier this year when the rates go up again.
Those of us who are experienced enough to still be planning programs find ourselves being offered fantastic discounts. I’m all in favor of saving money and taking advantage of great deals. What I am against is taking advantage of the venues offering them. Intoxicating as this rate decline is, we need to be mindful that the rate pendulum swings both ways. The way we treat our vendors when we are in a buyer’s market is the way we will be treated when the seller’s market swings back. I’ve been in this industry for almost 20 years and can sincerely say that I treat my vendors the same way in both markets and am usually treated the same way in return. I have a reputation for being fair, never asking for more than I can feel good about receiving and fortunate making sure my vendors are my partners. Conversely, when vendors try to take advantage of me in a seller’s market, they’re off my list. Partnership is a two-way street.
When I go to Pottery Barn these days, I can no longer enjoy one of my favorite shopping experiences. I had assumed the party would last forever, but when it ended, I couldn’t adjust to the rates that I once gladly paid. It was a good lesson. Now when I need throw pillows, I buy them elsewhere. For those of us who allow that mistake to creep into our professional lives, the adjustment will be much more painful.
Give your hotel rep a call and ask how you can creatively maximize the value of your meeting and the concessions they can offer. You will make a professional friend for life.
Tags: The Pottery Barn Factor, Pottery Barn, Event Planning, Strategic Events, Strategic Planners, Event Planners, Corporate Meetings, Corporate Events, Strategic Events, Event Solutions
