Introduction
Negotiation is a daily activity. Children negotiate with parents about household chores; the adults negotiate the salary with the company. When it comes to buying, the bargain is always there. Although it is not a skill that comes naturally. Fortunately, everyone can learn the skill, and practice makes it better. Like other skills, good preparation can increase the success rate and make the negotiation process effective.

The specific characteristics of the hospitality industry
If you are serious about the hospitality business, you know that negotiation plays a very important role in business. Clients negotiate with hotels for room prices, room types and special updates every minute. Speaking from a business perspective, for many years, it’s always an evolving topic in hospitality: what’s the best business model? The service-oriented model and the customer-oriented model are the two most popular recently. In addition, according to a research article presented at the 2015 International Scientific Conference Economics and Management, for the hotel services industry, four essential factors that influence success are: value creation, relationship development with partners, information and communication technologies and customer relationship management. . Considering services, customers, and these four factors, it is reasonable to conclude the importance of negotiation skill for hospitality professionals. Rather than bargaining at the individual level, the focus of this article will be bargaining between companies.

The case of the Marriott-Starwood consolidation
The recent merger case between Marriott and Starwood is an excellent example to discuss the importance of negotiation. The case itself can provide many different perspectives to discuss the negotiation. As of April 29, 2015, Starwood was introduced to the market for the first time. Since then, Starwood, Marriott and a Chinese insurance company, Anbang, have engaged in a trade negotiation battle. It took almost a year for Marriott to finally succeed with a total deal of $13.6 billion on April 1, 2016. But that wasn’t the end of the story. Marriott has waited another six months for authorization from the Chinese government. On September 23, 2016, Marriott announced that the merger with Starwood had been completed.

The whole story is a negotiation between: Marriott, Starwood, the Chinese insurance company, Anbang and even the Chinese government plays a role. Did Starwood choose to merge with Marriott or start a whole new chapter with another company like Anbang? From a business perspective, whoever can have a better offer will win the battle. But an effective and successful negotiation will bring the company more than money!

Key points to prepare for negotiation
Talking about the objective of investing in the hospitality business, it is essential to get the best ROI (return on investment) effectively. To achieve this, investors will want to prepare well for the anticipated trading activity. Here are the main points:

A. The price is the number one but not the ONLY one
Yes, profitability is definitely a priority for all hotel investors and the gains come from high room occupancy and average daily rate. Profitability also comes when you get the best time to sell the property. When it comes to negotiating with your potential partner (maybe that’s your current competitor), the number on the offer isn’t the only benefit to consider. Other potential benefits, such as brand reputation, likely new market, or even potential marketing effects along with business activity, are all valuable.

I. Positive negotiation attitudes and intentions
Preparation will begin by knowing your potential opponents as much as you can. The information will cover, among others, the financial status, operational skills and legal aspects of the company. In addition to the “data” you can collect, attitudes toward trading are even more important. You must maintain a positive attitude and intention towards the process, at the same time, you will expect the opponents to be positive as well. Positive about the possible results as well as the intention towards the process can be helpful for mutual benefit.

According to a Chinese media report, the Anbang insurance company did not maintain sufficient financial standing to meet Chinese legal criteria for investing in foreign markets. (A Chinese insurance company is not allowed to invest more than 15% of net assets in foreign markets. At the time Anbang negotiated with Starwood, the offer was more than 15% of Anbang’s net assets.) The attitudes of the three companies and the preparation can be improved under the circumstances.

II. Long-term relationship
Besides the offer of money, what else can you get from a business negotiation? This is also part of the preparation. Many times the company focuses solely on the money supply. The party may consider a long-term cooperative relationship. With enough research on the opponents, establish the bottom line of what the company must secure after the negotiation. For example, opponents may pursue technical innovation ideas; there’s a creative executive team on your side. Opponents may need advice to improve guest services, the firm you belong to can offer excellent consultation on this aspect. These are things that could be offered in the process instead of adjusting the money supply. In preparing for a win-win situation, maintaining or even creating hotel value is also crucial.

Starting with the Marriott case, a common business consolidation occurred between two experienced hotel groups. Both groups have unique trading systems. One thing that will be worth watching in the near future is how Marriott will embed the value of Starwood or create a new value system in the united company.

B. Scheduling the trading process
In addition to gathering as much information as possible and deciding on your end result for the negotiation, the time required should also be planned in advance, especially when you want the process to be effective. Estimating the time frame reasonably will also help you to evaluate the process thoroughly. In the case of the Marriott-Starwood merger, after April 1, 2016 for the two to sign the contract, Marriott still waited another six months for the Chinese government to agree. However, when Anbang started its action from the beginning, it is not difficult to predict the next interruption by the government if one observes and studies the political environment in China from the beginning. Time is money!

C. Culture, culture and culture
There are many cross-cultural discussions and studies on cultural differences in business negotiation. Dr. Nancy Adler discussed the characteristics of American, Japanese, Chinese, and Brazilian negotiators. It is interesting to see how people from different cultural backgrounds rank negotiation characteristics so differently. Taking US and Chinese negotiators as an example, the ranking of key characteristics you listed for Americans are: preparation and planning ability, thinking under pressure, judgment and intelligence, verbal expressiveness, product knowledge, perception and exploitation of power and integrity. As for the Chinese negotiators, she exhibited the following characteristics: persistence and determination, earning respect and trust, preparation and planning ability, product knowledge, interest and judgment, and intelligence. The culture defines your opponent’s negotiation “definition”, the preparation process, and the variety of meanings for the upcoming conversations.

Dr. Chang also described the differences between Chinese and American trade negotiations in an article published in the Journal of Human Resource and Adult Learning in 2006. Generally speaking, Americans prefer to persuade other people based on logic. For this reason, if you are negotiating with a US company, providing data and statistics to support your proposal can easily convince your opponent. For the Chinese group, the key point is to establish the mutual relationship between the two parties and to know who is the crucial person. Trust is the core value of this type of relationship. Once the relationship is there, each subsequent discussion is a flow.

I. Non-verbal communication
In addition to learning about different communication styles based on culture, pay attention to nonverbal communication as well. About 70% of human communication occurs non-verbally. The preparation to observe and interpret nonverbal communication is sometimes ignored during the negotiation process. Body language such as facial expression and gestures can be focused on. Keep this in mind that whatever your company has prepared for the negotiation, it is mutual. The other party could arrange a similar observation.

II. Active listening, respect and search for specific meanings behind the conversation
American culture encourages clear and direct speaking. This does not apply to all other cultures. Unspoken language is common in some cultures, such as Chinese, British, and Japanese. Non-spoken language interpretation is part of the culture that is passed down from generation to generation and is not limited to commercial situations. As you prepare to negotiate with another culture-based organization, practice active listening skills. If possible, a person who comes from the culture would be perfect to be the interpreter. An interpreter not only for the spoken language but also for the “unspoken”.

It is impossible to decipher the entire process of negotiating the Marriott case for an outsider. However, it’s not hard to imagine the potential clues throughout the process. By learning from the case, with careful attention to latent vocabularies, it is conceivable to advance the case faster than it is now.

D. Dealing with potential conflicts
No matter how well the preparation has been, there is always the possibility of conflict. Smart trading preparation includes risk management. For a hotel business investor, remember that a successful business negotiation begins with respecting and understanding the cultural and cognitive backgrounds of your opponents. Keep in mind that the price is the priority but not everything. There is an old Chinese saying: “Money comes and goes, relationship is forever!” Here the “relationship” refers to the one we discussed above. Trust is the key.

Conclusion
On a larger scale, trading is not just a process of profit but also of other potential benefits. When you want to exchange and influence the thoughts or behaviors of the other party, a time negotiation is taking place. Mutual benefits and needs can come to a consensus if well prepared. In the end, you can still maintain the relationship for the long term.

References:
Adler, N. (2008). International Dimensions of Organizational Behavior, 5th ed. Cincinnati, OH: South-Western College Publishing, 2008.

Chang, L. C. (2006). Differences in business negotiations between different cultures. Journal of Human Resources and Adult Learning, 135 – 140.