Five Key Negotiation Skills Every Hospitality Leader Should Master

Negotiation skills are among the most underappreciated abilities in the hospitality industry, yet it shapes everything from supplier agreements to guest experiences. Understanding the nuanced art of negotiation can turn the average deal into an opportunity for value creation and a successful partnership. Here, we explore five basic rules to transform your confidence and results at the negotiating table.

Beyond the Myths of Negotiation

It would be a mistake to think that negotiation is just for boardrooms or high-stakes business deals. It’s actually something we do every day, often without even realizing it. In the fast and busy world of hospitality, the art of negotiation is everywhere: with guests, suppliers, partners, and even colleagues. Yet many people have a mistaken image of what negotiation is really about (imagine the scene from a dramatic film with raised voices and fists banging on the table).

The truth is far subtler. Negotiation is not about being the loudest person in the room; it’s about preparation, subtle strategy and the ability to read a situation. Think of it like chess. Chess is played in silence, yet every move is deliberate and anticipates what might come next. Successful negotiators work in a similar way: not by relying solely on charisma or the power of persuasion, but by coming to the table prepared, observant and, ideally, ready to create value for both sides. In fact, the greatest losses in negotiation rarely come from being “out-talked.” They come from a lack of preparation.

To avoid this trap, every future hospitality leader should know the basic rules of negotiation skills. 

1. BATNA (Best Alternative to a Negotiated Agreement)

What is BATNA? Your BATNA is your option if the current negotiation reaches a deadlock. It’s your backup plan in case you fail to reach an agreement. It can be a position to fall back on when talks get tricky. Credible alternatives give you significant leverage; the stronger the BATNA, the greater the negotiating power. Savvy negotiators never agree to terms that fall below their BATNA. Why? Because by definition, that would mean accepting less than what they already have waiting as an alternative.

Developing a clear BATNA before sitting at the negotiating table is like entering a chess game knowing you already have strong pieces in reserve. It keeps you calm and prevents you from being pressured into a corner.

2. Reservation Value

The reservation value is your red line, in other words, the point below which you would rather walk away than accept a deal. For a seller, it’s the lowest acceptable price; for a buyer, it’s the highest they are willing to pay. But it’s not always just about money. Your reservation value can also be defined by minimum conditions you’re willing to accept, such as a certain level of service or quality in a package. In short, it’s the least attractive deal you would still agree to. Anything below it is a no-go.

Important detail: Your reservation value should stay confidential. Make sure not to share it with your counterpart! If the other party knows your bottom line, they’ll push you right up against it, leaving you with only the bare minimum instead of a better outcome.

3. ZOPA (Zone of Possible Agreement)

What is ZOPA in Negotiation? The ZOPA is the “playing field” where both sides can find common ground. It represents the overlap between what each party is willing to accept. Negotiation experts often note: “Where there is a ZOPA, there is usually an agreement.” Understanding the ZOPA helps avoid two common mistakes: settling on an unworkable agreement or missing out on a mutually beneficial one because they didn’t recognize the overlap.

Imagine a hotel negotiating with an event agency over renting a conference room. The hotel’s reservation value is CHF 1,500 per day (the minimum it needs to cover costs). The agency’s budget ceiling is CHF 2,000. That means the ZOPA ranges from CHF 1,500 to CHF 2,000. Within this field of play, both sides can reach an acceptable agreement. If the agency offers CHF 1,800, it falls inside the ZOPA and can be accepted. If it offers CHF 1,400, the hotel manager should politely decline and activate their BATNA, such as renting to another client. Recognizing the ZOPA is like seeing the possible squares on the chessboard; it shows you where the game can be played and where it cannot.

4. Overcoming the Fixed Pie Mindset in Negotiation

Many beginners assume negotiation is a zero-sum game: whatever one party gains, the other must lose. This “fixed pie” mindset is one of the most damaging assumptions in negotiation since it limits creativity and breeds confrontation. In reality, there are often ways that the pie can be expanded. It becomes easier to access new opportunities for creating value once you let go of the winner-loser mindset.

Introducing additional aspects to the discussion is a good tactic for seeing what unforeseen details could benefit both sides. For example, a hotel and supplier might start by arguing over price, but when they broaden the conversation to include delivery schedules, quality guarantees and contract length, they can find ways to increase the overall value of the deal. Good negotiators understand that not every gain for the other party is a loss for them. They know how to turn negotiations from a tug-of-war into a problem-solving exercise that might well strengthen relationships rather than damage them.

5. Interests vs. Positions

In negotiation, a position means categorically stating what you want: “I won’t pay more than CHF 100” or “I need at least 10% off.” An interest, by contrast, reflects the deeper motivation behind those positions, i.e., the real needs and concerns. On the surface, the two differing positions might seem incompatible, while their underlying interests may actually be reconcilable. Negotiations often stall when both sides cling to rigid positions, but when negotiators take time to uncover interests, this is how new and creative solutions emerge. Shifting from positions to interests transforms confrontation into a joint problem-solving situation, where the goal is to find ways for each party to get what matters most to them. This principle is one of the most important in integrative negotiation because it increases the chances of reaching a sustainable “win-win” agreement.

Consider a hotel manager negotiating with a linen supplier over the price of a contract. If the manager thinks “fixed pie” style, the negotiation will be viewed solely as a power struggle over price. Every penny gained on the bill means a victory for the hotel manager and an equivalent loss for the supplier. Whereas if the manager adopts an integrative approach, the discussion gets broadened beyond price. Stated positions: “The hotel wants -8%” vs. “The supplier will not go below -3%.” The underlying interests are that the hotel wants reliable deliveries, consistent quality and a predictable budget, while the supplier wants secure volumes, 12-month visibility and good cash flow. Here, the hotel could commit to a larger purchase volume or agree to a 2-year contract, which would increase the pie by providing the supplier with stable revenue over time. In exchange for a one-year contract with minimum volumes and 15-day payment terms (which is in the supplier’s interest), the supplier would grant a 5% discount and include valuable services, such as more frequent deliveries and staff training. This would be in the hotel’s interest. Ultimately, both parties benefit. The hotel improves the quality of its offerings and secures its supply, and the supplier retains an important client.

Strategic Preparation for Better Hospitality Negotiations

Mastering the basics of negotiation skills requires careful preparation and reading situations with a keen sense of psychology. Equally, it’s important to understand that most negotiations are opportunities to create value rather than battles to be won. In hospitality, especially, where long-term relationships matter as much as short-term deals, negotiation is less about confrontation and more about collaboration. Each discussion is a chance to expand possibilities and strengthen partnerships. Forget talking louder; instead, invest more time and energy in preparing smarter. Future hospitality leaders who embrace this mindset will go a long way to securing better deals and building the kinds of enduring relationships our industry thrives on.

Dr Lohyd Terrier – Associate Professor at EHL. Connect with Loyhd on LinkedIn.

This article originally appeared on EHL Insights.