In more than 18-year “adult” career, I have often enjoyed the opportunity to speak with younger people about careers, finding sometimes, especially in the slow dawn times, very difficult to close a good deal. It is very common the expression of Deal is a Deal, but the point is how to make this deal a successful one, or what goes during making a deal with a client.
Nevertheless, there seem to be a lot of young people in or around the hotel profession who like the idea of the “deal side” of the business.
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, 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.
First of all, we should invest time in gathering information about our prospective customer, his needs, situation, and buying motives. Regardless of what we sell, and to whom, information will help us negotiate more effectively.
Unfortunately and it has always happened , many of our clients tell us that their customers only care about price. Uncovering the key issues our customer is facing, is critical to our negotiating success.
The second most important step is, we have to establish the value of our product or service to our customer. Some like 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 executives 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 have 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. Learn more about the cost.
• Management agreements and franchise agreements:One or both of these elements are likely to be present in more than 40% (and might even be 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, we have executed the above steps 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 agree 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.
- “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.
Finally, another strategy is to always ask for something in return for making a concession even if you don’t need it. Just remember your previous experience and you will be surprised how many times you have gotten something extra simply by asking. Plus, it often prevents the other person from asking for an additional concession because they know you will ask for something in return.
Remember, your ultimate goal is to give away as little as possible in order to close the Deal. Every time you discount your product or service you discount yourself and eat away your profits.