Negotiation is an everyday activity. Children negotiate with parents about doing chores; adults negotiate with the company about salary. When it comes to purchasing, negotiation is always there. Although it is not a skill that comes naturally. Fortunately, everyone can learn the skill and practice makes it better. Just like other skills, good preparation can increase the success rate and make the negotiation process effectively.
The Specific Features of the Hospitality Industry
If you are serious about the hospitality business, you will know that negotiation plays a huge part in the business. Customers negotiate with hotels about room prices, room types and special upgrade every single minute. Speaking from the business perspective, for many years, it is always an evolving topic in the hospitality area – what is the best business model? Services-oriented model and customer-oriented model are the two most popular ones recently. Moreover, according to a research article presented in 2015 International Scientific Conference Economics and Management, for the hospitality service industry, four essential factors influencing the success are: value creation, development of the relationship with partners, information and communication technologies, and customer relationship management. Take services, customers, and these four factors into consideration, it is reasonable to conclude the importance of negotiation skill for hospitality professionals. Instead of the individual level negotiation, the focus in this article will be on the negotiation between corporates F95zone .
The Case of Marriott-Starwood Consolidation
The recent Marriott-Starwood merger case is an excellent example to discuss about the importance of negotiation. The case itself can provide many different perspectives for discussing negotiation. Started from April 29th, 2015, Starwood first put up itself in the market. Since then, Starwood, Marriott and a Chinese Insurance company, Anbang, has begun a business negotiation battle. It took almost a year for Marriott to finally triumph with a total $13.6 billion deal on April 1st, 2016. But that was not the end of the story. Marriott has waited another six months for the clearance from the Chinese government. It was September 23rd, 2016, Marriott announced the merger with Starwood completed.
The whole story is negotiation among: Marriott, Starwood, the Chinese insurance company, Anbang, and even the Chinese government plays a role. Did Starwood prefer to merge with Marriott or start a whole new chapter with another company such as Anbang? From business perspective, the one who can have a better offer will win the battle. But an effective and successful negotiation will bring in the corporate more than money!
Key Points to Prepare for Negotiation
Speaking of the goal for investing in the hospitality business, acquiring the best ROI (return of investment) effectively is critical. To achieve that, investors will want to do well preparation for the foreseen negotiation activity. Here are the key points:
A. Price is number one but not the ONLY one
Yes, profitability is definitely a priority for all hotel investors and profits come from high room occupancy and average daily rate. Profitability also comes when getting the best timing for selling the property. When it comes to negotiate with your potential partner (maybe that is your current competitor), the number appears on the offer is not the only benefit to put into consideration. Other possible benefits such as the reputation of the brand, the likely new market, or even the possible marketing effects along with the business activity are all valuable.
I. Positive Negotiation Attitudes and Intention
Preparation will start from knowing your potential opponents as much as you can. The information will cover but not limited to financial status, operational skills, and legal aspects about the company. In addition to the “data” you can gather, the attitudes towards the negotiation is even more important. You need to keep a positive attitude and intention towards the process, at the same time, you will hope the opponents are also positive. Positive about the possible results as well as intention towards the process can be helpful for the mutual benefit.