Part 1: Workshop – The Art of SuccessfulNegotiationsBrussels, February 24th, 2014

Your moderators :Pascal Jungfer CEO Areka ConsultingJean-Michel Kadaner CEO Key Corporate Solutions

We will split in two groups.

Each group will be given a case study and asked to define their approach to thenegotiation cycle: identify objectives and drivers, and pinpoint areas of potentialconflict in both internal and/or external priorities.

After assessing obstacles and operational constraints, each group will outline the mosteffective way to organise the negotiation process for the best outcome: methodology,key arguments and levers to compromise for a win/win outcome.

During the second half of the workshop, the groups will merge together again and a(team of) volunteer(s) will be nominated from both the buyer and supplier groups fora live negotiation with audience feedback.

Note 1 :Although it may claim otherwise, this presentation does not offer legal, medical, psychiatric, veterinary,gynecological, archaeological, astronomical, astrological, ontological, paleontological, philosophical, axiological,audiological, bacteriological, mineralogical, criminological, terminological, dermatological, ecclesiastical, campanological,phrenological, phonological, technological, hematological, campanological, neurological, psychobiological, urological,ufological, typological,, mythological, hydrological, xylological, zoological, logical or any other kind of professional advice.Nothing on this presentation should be construed as professional advice including, but not limited to, the above list.Note 2 : All trademarks, service marks, collective marks, design rights, personality rights, copyrights, registered names,mottos, logos, avatars, insignias and marks used or cited in this presentation are the property of their respective ownersand this presentation in no way accepts any responsibility for an infringement on one of the above.Note 3 : The information provided on this presentation is of a general, broad, sweeping, large, wide-ranging, wide-reaching and wide-spread nature and cannot substitute for the advice of a licensed professional. A competent authoritywith specialized knowledge is the only one who can address the specific circumstances of your problems. We can try, butthis disclaimer frees us of any liability if negative consequences result from our efforts.Note 4 : The views expressed by the authors on this presentation do not necessarily reflect the views of ACTE and BATM,the Associations Members, the author's mother, father, sister, brother, uncle, aunt, grandparents, cousins, step relations,any other blood relative and the authors themselves, template designer, or any other organization, service, motto, logo,insignia or avatar in any way connected with this presentation.Note 5 : By reading, or hearing, any member of the audience provide its consents that s/he is familiar with, understandsand absolutely accepts the above disclaimer and renounce any litigations against the authors who are excessively paranoidabout being dragged into court….

HotelPricingModel

HotelPricingFuture

TMCFee notbundled

BestIn classPricing

Buyers arehere, and

they want togo to thenext level

Sellers wantsto increase

the ADR, theREVPAR andthe OCC ofthe Chain

YouAre

Here

Hotel pricing distribution is multi chanel, and guesswhat: Buyer hotel booking behaviour is multi chaneltoo…Hotel program coverage is only 55 %... Leakage is 45 %.

GDS = TMC &OBTc

Hotel chainbooking mix

You must perfom both :1) A strength and weaknesses analysis2) Define your negotiation game plan following 3 scenarios as follows:

a) LAA (Least Acceptable Agreement)b) MDO (Most Desirable Outcome)c) BATNA ( Best Alternative to a Negotiated Agreement)

3) Identify initial negotiating levers for use with the supplier/alternatively with the Buyer4) Identify your representation (Nego) Team with a definition of the roles they will play5) Propose the negotiation process to the other party and the rules of engagement that you

expect and define your ZOPA (see glossary)6) Present your negotiation objectives to the other party and the key questions you still have7) Describe your potential concessions strategy and the limits of your authority on these

topics8) Conclude the session, building the bridge (one way or the other)

1) Case presentation 10h30 till 10h 45

2) Case preparation separately 10h45 till 11h45

3) Case playground 11h50 till 12h30

4) Case debrief and Q&A 12h30 till 12h40

5) Lunch & Network 12h45

Sponsor Seller : Pascal Jungfer (Main Conference Room)Sponsor Buyer : Jean-Michel Kadaner (Secondary Conference Room)

You can go a long way with a smile.You can go a lot farther with asmile and a gunAl Capone

You can go a long way with a smile.You can go a lot farther with asmile and a gunAl Capone

Aspiration Base: This is a realistic view of setting the highest achievablestandard in terms of goals or objectives in concluding a negotiatedagreement.Common Ground: This term refers to the area of agreement or a basis for anunderstanding, that is mutually agreed upon by all parties to a negotiationConcession Strategy: Your concession strategy is a plan of the goals /positions and sometimes the underlying interests that you will be tradingwith the other party. Before you enter the negotiations, at the very least youshould have clarity on your and the other party's goals, and an sequence ofwhich goals you want to trade or exchange.Lose-Lose Negotiation: A negotiation result where all parties to a negotiationleave resources or gold on the table at the conclusion of a negotiation andfail to recognize or exploit more creative options that would lead to a ‘win-win’ negotiated outcome.Negotiation Styles: The most popular way to divide the typical negotiationstyles or approaches are: Competing (or Aggressive), Collaborating (orCooperative), Avoiding, Compromise, Accommodating (Conceding). Mostnegotiators have one or two preferred negotiation styles. Ideal is to be ableto choose to apply the most appropriate negotiation style to each type ofnegotiation, and to be able to switch negotiating style depending on who youare negotiating with and other important elements of your negotiationcontextZOPA: An acronym which means a negotiation Zone of Possible Agreement.It is the range or area in which an agreement is satisfactory to both partiesinvolved in the negotiation process. Often also referred to as the"Contracting Zone". Negotiation ZOPA or the Contracting Zone is the rangebetween each parties Walk Away or Real Base or Bottom Lines, and is theoverlap area that each party is willing to pay or find acceptable in anegotiation.

Average Daily Rate (commonly referred to as ADR) is a statistical unit thatare often used in the lodging industry. The number represents the averagerental income per paid occupied room in a given time period. ADR along withthe property's occupancy are the foundations for the property's financialperformance.Best Available Rate (BAR) The lowest non-restricted rate bookable by allguests. This rate can change several times a week up to several times a day.Channel Management Controlling the allocation of hotel inventory and ratesacross all distribution channels including website, third parties, and the GDS.Effective channel management solutions should reduce labor costs andimprove efficiency by providing a centralize way to control multiple channels.Demand Based Pricing Applying revenue management principles to moverate based upon demand within the marketplace and what the market willbear.Fair Market Share A hotels individual percentage of the market they shouldreasonably expect to capture all things being equal based upon theircompetitive set. Calculated by dividing the number of rooms at the hotel bythe total number of rooms in the competitive set (inclusive of the subjecthotel).Occupancy "Fill" measure of a hotel calculated by dividing the total numberof rooms occupied by the total number of rooms available times 100, e.g.75% occupancy.Rate Parity The strategy that all distribution channels of a hotel shouldreflect the same rate for the same conditions for a particular room type.Revenue Per Available Room (RevPAR)Calculated by taking the daily roomrevenue of a hotel and dividing it by the total rooms available at that hotel.

On hotels On nego

Company : The Big Spender Group Inc, Delaware USA part of the Fortune 500 Club.Situation : 2nd round of negotiations with The Comme Chez Soi Group, you have already accepted BAR pricing for Tier

2 and Tier 3 properties, now you must finalize the Key properties with net fixed prices and decrease yourpricing, or at least maintain status quo. In your strategic analysis The Comme Chez Soi Group is a Preferredsupplier for a number of Years, as a matter of fact, your CEO is also on the board of the Comme Chez SoiGroup, like on many others…Comme Chez Soi Group represent 20 % of your estimated Hotel spend. Mice spend not under control yet.

Objectives : Price improvement, LRA at BAR, uniform know show conditions, improved reporting, obtain tangiblebusiness ancillaries benefits for the travelers.

Challenge : Market slowly moving to a supplier market, few properties do not increase pricing.Maturity : Mature program with excellent cooperation between Travel Management and Sourcing.Tools : Single TMC WW, one switch for Tier 2 and 3 Hotels in a Best Buy modus, Best of Breed OBT by Region,

multiple GDS’s, Expense management tool deployed 60 %, Card program covers only 55 % of yourtravelers.

Travel Policy : Clear changes due to a few court cases against the Company, CSR orientated, safety, security are a mustimproved employee’s well being and productivity are a consequence…together with a tighter spendcontrol.

Annual Hotel Spend : Estimated at 20 M €, known data at 11 M €, leakage increasing due to mobility program,smartphones and tablets and increasing number of Generation Y in your travelers mix…

Data : Contract Period June 2014 till June 2015 See next page

Buyer Key Properties Seller 1 Intermediate Lux2014 YTD all other sources 2013 Seller 1 Seller 1 Strategic Alternate 2013

IT City Proposed Net Rate Highest Lowest Average price offered Contract price paid RN/Year Importance Sources Seller 1 Highest Lowest Spend ActualProperties € % € € N° 1 to 5 N° € €

1 Berlin 92,00 95,89 90,61 92,37 87,97 1000 4 3 92001 95887 90609 879702 Budapest 68,04 70,31 66,44 67,73 64,50 1500 4 2 102060 105458 99653 967503 Cairo 80,82 87,51 82,69 84,29 80,28 590 5 2 47683 51628 48786 473654 Cape Town 92,90 74,75 70,64 72,01 68,58 250 2 2 23226 18688 17659 171455 Copenhagen 117,63 111,41 105,28 107,32 102,21 650 3 3 76460 72416 68430 664376 Dubai 194,46 194,25 183,56 187,12 178,21 800 4 3 155568 155399 146845 1425687 Dublin 94,58 93,30 88,17 89,88 85,60 600 5 2 56750 55982 52901 513608 Edinburgh 101,42 105,77 99,95 101,89 97,04 520 4 2 52738 55002 51975 504619 Helsinki 105,19 110,82 104,72 106,75 101,67 250 2 3 26297 27705 26180 25418

10 Istanbul 156,15 166,74 157,56 160,62 152,97 200 2 2 31229 33347 31512 3059411 London 170,35 188,85 178,46 181,92 173,26 980 5 4 166945 185076 174889 16979512 Madrid 87,28 94,24 89,05 90,78 86,46 350 3 4 30547 32984 31169 3026113 Milan 135,59 139,43 131,76 134,32 127,92 680 4 3 92199 94814 89595 8698614 Moscow 140,11 160,55 151,71 154,65 147,29 800 4 2 112090 128437 121367 11783215 Muscat 170,74 176,90 167,16 170,40 162,29 250 3 3 42685 44224 41790 4057316 Paris 254,67 262,17 247,74 252,55 240,52 2300 5 4 585734 602984 569792 55319617 Prague 75,16 79,29 74,92 76,38 72,74 600 2 3 45095 47572 44953 4364418 Riyadh 198,64 213,01 201,28 205,19 195,42 250 2 2 49660 53252 50321 4885519 Rome 153,01 157,68 149,00 151,89 144,66 450 2 4 68853 70956 67050 6509720 Vienna 99,55 106,78 100,90 102,86 97,96 250 2 4 24888 26694 25225 2449021 Warsaw 76,00 79,81 75,42 76,88 73,22 650 4 3 49399 51876 49021 4759322 Zurich 204,37 203,57 192,36 196,10 186,76 1200 5 4 245246 244282 230835 224112

Average 130,39 135,14 127,70 130,18 123,98 687,27Ancilaries as % of Sales 1,09 1,03 1,05 ?? ?? ?? ??Price increase/decrease 108 853,81 € 186 164,99 € 62 055,00 €Ratio 5,26% 9,00% 3,00%

Total: 2 177 353,71 € 2 254 664,89 € 2 130 554,90 € 2 068 499,90 €Notes :Addtional revenues Tier

2 & 3 properties in 2014is forecasted at morethan 2300000 €

Addtional revenuesTier 2 & 3 properties in2013 is estimated at2000000 €

2014-2015 Target 2014 Spend Forecast

Company : The Comme Chez Soi Group Hotel Company, HQ in Brussels (not Chez Leon….).Situation : 2nd round of negotiations with The Big Spender Company, they have already accepted BAR pricing for Tier 2

and Tier 3 properties, now you must finalize the Key properties with net fixed prices and increase yourmarket share. In your portfolio analysis, Big Spender is a very desirable Customer for already 5 Years, assuch they benefit from improved reporting and follow-up.

Objectives : Maintain the corporate sales at 30 %, and boosting the Brand Image to further develop the other segments(Corporate leakages) trough other sales channels with BAR pricing, develop Mice.Pricing for Key properties has to increase at least 3 % (Revenue Management Target).

Challenge : Develop sales to support investments in Far & Middle East.Maturity : Has implemented Big Data concept for client profiling, has channel management and revenue

management, very active on Social Networks with a strong Green Policy.Tools : Many, in addition to the above, multiple distribution channels, Rate parity, AIM & Sabre Spotlight, Reward

programs, Cvent and others for MICE, Strong CRM etc.Travel Partnerships : Many with TMC’s, Switches, OTA’s, Social Networks, Google, Airlines, Advisors, some Travel

Consulting Companies, Telco operators and major OBT providers, in total a segregated approach over 65Channeled partnerships…

Sales per Year : 150 M € Room and F&B revenues 50 M € Mice.Data : Contract Period June 2014 till June 2015 See next page/

Seller Key Properties Client : Buyer 1 Category : Intermediate LuxBuyer 1 2014 2013

IT City Proposed Net Rate Occ RevPAR ADR Occ RevPAR Contract Rate Occ RevPAR Property type Segment alloc Cap RN/Year Revenue Contract RevenueProperties € % € € % € € % € % N° € €

1 Berlin 92,00 74,78 67,16 87,62 72,6 63,65 87,97 72,5 63,81 Corporate 35% 1000 92001 879702 Budapest 68,04 67,77 49,67 64,8 65,8 42,62 64,50 63,6 41,03 Managed 25% 1500 102060 967503 Cairo 80,82 36,77 59,00 76,97 35,7 27,4 80,28 46,0 36,91 Managed 25% 590 47683 473654 Cape Town 92,90 66,44 67,82 88,48 64,5 57,05 68,58 61,0 58,27 Managed 25% 250 23226 171455 Copenhagen 117,63 72,51 85,87 112,03 70,4 78,92 102,21 67,2 68,71 Corporate 35% 650 76460 664376 Dubai 194,46 82,09 141,96 185,2 79,7 147,9 178,21 77,4 137,86 Managed 35% 800 155568 1425687 Dublin 94,58 81,16 69,05 90,08 78,8 70,69 85,60 74,6 63,85 Corporate 35% 600 56750 513608 Edinburgh 101,42 82,09 74,04 96,59 79,7 76,67 97,04 77,3 75,04 Corporate 30% 520 52738 504619 Helsinki 105,19 66,85 76,79 100,18 64,9 64,98 101,67 67,1 68,21 Corporate 35% 250 26297 25418

10 Istanbul 156,15 69,53 113,99 148,71 67,5 100,33 152,97 72,4 110,74 Managed 25% 200 31229 3059411 London 170,35 84,87 124,36 162,24 82,4 133,7 173,26 80,6 139,70 Corporate 40% 980 166945 16979512 Madrid 87,28 63,24 63,71 83,12 61,4 50,99 86,46 63,9 55,28 Franchised 35% 350 30547 3026113 Milan 135,59 65,30 98,98 129,13 63,4 81,84 127,92 61,0 77,99 Franchised 35% 680 92199 8698614 Moscow 140,11 69,53 102,28 133,44 67,5 94,15 147,29 66,7 98,17 Franchised 40% 800 112090 11783215 Muscat 170,74 68,50 124,64 162,61 66,5 108,9 162,29 60,2 97,68 Managed 35% 250 42685 4057316 Paris 254,67 82,50 185,91 242,54 80,1 194,5 240,52 79,4 190,87 Corporate 40% 2300 585734 55319617 Prague 75,16 71,59 54,87 71,58 69,5 49,72 72,74 68,5 49,82 Managed 35% 600 45095 4364418 Riyadh 198,64 57,27 145,01 189,18 55,6 105,2 195,42 55,5 108,50 Managed 30% 250 49660 4885519 Rome 153,01 69,11 111,69 145,72 67,1 97,71 144,66 66,6 96,31 Franchised 30% 450 68853 6509720 Vienna 99,55 72,92 72,67 94,81 70,8 67,15 97,96 71,8 70,33 Managed 35% 250 24888 2449021 Warsaw 76,00 73,95 55,48 72,38 71,8 51,97 73,22 69,3 57,63 Franchised 35% 650 49399 4759322 Zurich 204,37 74,57 149,19 194,64 72,4 140,87 186,76 71,3 133,08 Corporate 40% 1200 245246 224112

Average 130,39 70,61 95,19 124,18 68,55 86,68 123,98 67,9 86,35 687,27Ancilaries as % of Sales 5% 0,73 3% 2% 108 867,69 € 41 370,00 €

Total: 2 286 221,40 € 2 109 869,90 €Notes : The Middle East saw overall

RevPAR increase by 3.9%,driven mainly by occupancy(+3.4%) and a small increasein ADR (+0.5%). Instability inNorth Africa continues toimpact performance, whereRevPAR declined (-12.3%)resulting principally fromfalling occupancy (-10.5%).In contrast, Southern Africasaw occupancy grow(+2.4%).

During 2013, the UKachieved one of thehighest occupancy levelsin Europe (75%), withIreland following closely(72.8%). Both countriescontributed towardsNorthern Europe’s yearend occupancy of 72,8 %one of the highest of thefour Sub regions inEurope

In Europe, hotelperformanceremained on thepath to recovery,with only slightincreases inoccupancy(reaching 67.4%).Of the fourEuropean sub-regions, SouthernEurope reportedstrongestRevPAR growth(+6.0%), driven byboth occupancyand ADRincreases in Spain,Portugal, Greeceand Italy.

Notes : Addtional revenuesTier 2 & 3 propertiesin 2013 is forecastedat more than 4000000€, commisionsdeducted to TMC &OTA (10 & 18 %)

Addtional revenuesTier 2 & 3 properties in2013 was 3256800 €,commisions deductedto TMC & OTA (10 &16 %)

2013 all Data2014 YTD all sources2014-2015 Target

Buyer and Sellers on stage please !

Part 1: Workshop – The Art of SuccessfulNegotiationsBrussels, February 24th, 2014

Seller Buyer

You must perform :1) A strength and weaknesses analysis2) Define your negotiation game plan following 3 scenarios as follows:

a) LAA (Least Acceptable Agreement)b) MDO (Most Desirable Outcome)c) BATNA ( Best Alternative to a Negotiated Agreement)

3) Identify initial negotiating levers for use with the supplier/alternatively with the Buyer4) Identify your representation (Nego) Team with a definition of the roles they will play5) Propose the negotiation process to the other party and the rules of engagement that you

expect and define your ZOPA (see glossary)6) Present your negotiation objectives to the other party and the key questions you still have7) Describe your potential concessions strategy and the limits of your authority on these

topics8) Conclude the session, building the bridge (one way or the other)

Seller

1) Strengths• Reporting• Market recovery(16 out of 23 cities)• Agreement for tier 2 and 3• 14 out of 22 over 500 room nights• Global presence – single point of contact• 5 years relationship and booking habits of travelers

2) Weaknesses• Lack of smart data• Can’t identify the potential• 6 cities need to increase as prices down• No hotels in Noram which is a growth market• Potential for client growth not known

3) Opportunities• Producing in mea• Investment• MICE

1) Threats• xx

Seller

4) Opportunities• Producing in mea• Investment• MICE

Threats• Rate increase target to jeopardize relationship• Other destinations ?• Instability in Africa• Pricing targets against market trends• Lack of visibility of market share

Seller

1) A strength and weaknesses analysis

Buyer

Strengths:

Opportunities: Threats

Other

Maturity

Competitive

Position

Processes

Knowledge

Attractivity

DataAvailabilit

y

Organization

Ressources

Competitive

Market

ProcessImprovem

ent

Supplier

Relationship

Management

Financial

Benefits

Knowledgebase

&Data

Management

ContractualSituation

Timing

Complexity

WorldEconomyDisruptio

ns

Weaknesses:

1) A strength and weaknesses analysis

Seller

Strengths:

Opportunities:

Threats

Other

MaturityCompetitive

Position

Processes

Knowledge

Attractivity

DataAvailabilityOrganization

Ressources

Complexity

CompetitiveMarket

ProcessImprovement

SupplierRelations

hipManagem

ent

FinancialBenefits

Knowledgebase

&Data

Management

ContractualSituation

Timing

ComplexityWorld

EconomyDisruptions

Weaknesses:

1) Define your negotiation game plan following 3 scenarios as follows:a) LAA (Least Acceptable Agreement)• 3% above 500• 4 to 5% below 500

a) MDO (Most Desirable Outcome)• 5%

a) BATNA ( Best Alternative to a Negotiated Agreement)• Mice business as incremental• Chain discount (of BAR)

Seller

1) Define your negotiation game plan following 3 scenarios as follows:a) LAA (Least Acceptable Agreement)

a) Flat pricing for a given time, with reevaluation after 6 monthsb) LRA at BAR pricingc) Uniform no show rules and term & conditions

b) MDO (Most Desirable Outcome)a) Price decrease and additional benefits target 5 %b) Data Quality improvementc) LRA at BAR pricingd) Uniform no show rules and term & conditions

c) BATNA ( Best Alternative to a Negotiated Agreement)a) Flat pricingb) LRA at BAR pricing

Buyer

1) Identify initial negotiating levers for use with the Supplier/alternatively with the Buyer

• Reporting• Market recovery(16 out of 23 cities)• Agreement for tier 2 and 3• 14 out of 22 over 500 room nights• Global presence – single point of contact• 5 years relationship and booking habits of travelers• Mice offer as a give/take• Contract duration• Loyalty through social medias• Green policy• Reward program

Seller

1) Identify initial negotiating levers for use with the Supplier/alternatively with the Buyer

1) Market share allocation2) Tools3) Business development trough MICE4) Portfolio Company (Prestige)5) Mature company with an efficient program (TMC/SWITCH/OBT)

Buyer

1) Identify your representation (Nego) Team with a definition of the roles they will play2 pax :• commercial director• Account Manager

Seller

1) Present your negotiation objectives to the other party and the key questions you still have

1) Ceo decision to cut overall cost by 10 % across the Board2) Supplier rationalisation3) Either by less travel of Price decrease4) Benefit package for the Travellers5) What are Seller’s objective6) What is the willingness to develop further business7) What investments are they willing to make ?

Buyer

1) Present your negotiation objectives to the other party and the key questions you still have

• Appreciation of past 5 years collaboration• Potential increase of the market• Did not increase the rates last year• Ask how to move forward

• if asked, explain the value added services (+ green policy / CSR) behind the rates• Innovation and investments plans of the hotel group• Offer upgrades• Cancelation policy• Rate conditions (LRA? Black out dates)• Breakfast included ?• Security?• Feedback on offer?Mice spend?

Seller

1) Describe your potential concessions strategy and the limits of your authority on thesetopics

1) Freebies and perks2) Pricing review after 6 months “probe”3) Influencial marketing approach towards company travellers4) Improved hotel coverage (other properties)5) Sharing visibility of Mice spend and opportunity to bid6) Limits : Financials and Policy

Buyer

1) Describe your potential concessions strategy and the limits of your authority on thesetopics

2) One hand to give, one hand to take (commitment)3) Ancilary4) Discount on room service

Seller

1) Take time to discover your counterpart (background, experience, goals, power, personality, level of engagement inthe negotiation, type of motivation…)

2) Take time to discover his or her employer (decision circuits, organization, strategy,…)..due diligence

3) Determine in advance what you want ideally, can reasonably obtain, will make you walk away

4) Imagine the same for your counterpart.

5) Build in advance your what if scenarios

6) Do not manage the process alone

7) Start with high requests

8) Engage your counterpart in the conversation to make sure everything is put on the table from start

9) Do not negotiate straight away and rather reply with a counterargument when asked for a concession

10) Propose other services instead when asked for a price drop

11) Request a compensation for any concession you make

12) If you have to yield, do it step by step

13) Help your counterpart to “sell” internally the compromise you have reached with him or her

14) Make sure you leave no door open behind you when reaching a compromise

15) Come across as humble and low key

Thank you for your participation !Pascal & Jean-Michel

What isyour Truecolour ?

www.areka-consulting.com & www.keycorporatesolutions.co