Service Level Agreements for Meetings and Events
By Debi Scholar President, The Scholar Consulting Group | April 15, 2012
With organizations' expectations high, Hotels are under scrutiny to deliver dates, rates, space and services without fail. Addendums, sometimes with more pages than the original contract, are added to protect the organization resulting in unwieldy contracts and convoluted clauses. Moreover, with procurement at the helm, Service Level Agreements (SLAs) are popping up as Exhibits in more and more contracts. An SLA formalizes arrangements between an organization and a supplier to deliver specific services, at specific levels, and at an agreed upon price. If the service is not met according to the agreement, the organization may be entitled to some form of compensation such as a payment or a credit.
The use of SLAs has increased with the involvement of procurement in the Hotel spend category. In many organizations, procurement professionals do not fully understand the complexities of buying hospitality services but have become quick studies. When meeting planners met with procurement professionals around the conference table, meeting planners shared their frustration that some hoteliers failed to deliver the superior services they promised. Moreover, errors in invoices and lack of reports were also voiced as concerns that many planners had with hotels. As a result, procurement has led the charge to use SLAs to hold Hotels accountable for services and promises. But, hotels are not taking this extra layer of contractual agreement lightly. Hotel leaders are pushing back claiming that their commitment to some services are at the mercy of numerous factors, such as the buyer's participatory efforts in holding up their end of the bargain. For example, a hotel may be held accountable by a SLA to deliver hot food on time yet the organization may release their attendees later than expected for lunch. Rather than hot, the food may be lukewarm. In this case, who is at fault? And therein lies one of the inherent challenges for the use of SLA. Because the hotel industry will begin to experience more use of SLAs as part of the contract, it is important to understand when to use them, how to construct them, and how to report on them.
The jury is out on how often to use SLAs. Some organizations are using SLAs for all meetings, small and large, while other organizations are only using SLAs for those meetings that are large, complex, highly important, or sensitive. When the business objective must be met and the hotel service is a critical supporting factor, it is time to put an SLA in place. Similar to the contract negotiation process, SLAs must be negotiated and jointly agreed upon. Because hotels usually want the organization's business, the SLA negotiations offer a win/win for both parties. Some hotels are even grateful to support the organization's SLAs so that they can show off their superior properties and services and be rated at the same time. The effect of meeting SLAs may result in more group business.
The first step in creating an SLA is to determine the performance categories. In one or more of the performance categories, a performance indicator will be written. Many organizations use categories such as: