I am heading into negotiations with the Sanibel Island environmentalists from a strong position, as I have very little to lose. I am already projecting a profit, even with some of the environmental remediation work factored into my projections, and the profit will grow substantially after the first year. If I get no concessions out of these negotiations, the hotel will still be profitable; if I get any concessions, that profit could increase exponentially. As Steven P. Cohen indicates, the party with little to lose and much to gain is in a position of power in the negotiating process, as he or she is able to take risks (Cohen, 1995).
The biggest concession I could win would be the ability to expand the hotel to at least four floors, while would greatly increase the hotel's profitability, so my negotiating strategy will focus on achieving that end result. From the environmentalists' perspective, the negotiations will be a success if I do not disturb wetlands when connecting the swimming pool to the hotel, and if I agree to build a buffer zone and retaining pond to mitigate any fresh water disturbance from the parking lot and road run-off. Fortunately, the set of circumstances surrounding this hotel's development provides us both opportunities to win.
I will present my offer first. As Lynne Waymon points out, this strategy allows me to take control of the negotiating process and shows me as a serious and interested party who is looking to make peace (Waymon, 2002). When I make my first offer, if I ask for four floors and the environmentalists say no, I have no room left to negotiate. Therefore, I will start negotiations by asking for six floors. My main arguments will be that the extra development will be good for tourism and the Sanibel Island economy without additional significant environmental impact. Further, it would bring Sanibel Island's building height restrictions into line with similar resort areas, which allow buildings well in excess of three stories.
To strengthen my case, I would point out to the environmentalists that I am a proven friend of the environment and of Sanibel Island. I have operated other properties on this island that have proven to be environmentally sensitive and have met the needs and requirements of the island's environmental lobby. Plus, if the environmentalists see me as a partner and not part of the problem, they are more likely to take offers from me seriously (Cohen, 1994). Sooner or later, I'd point out, there is going to be a hotel taller than three stories built on the island, and it behooves the residents to ensure that these properties are developed by friends.
Fortunately, the environmentalists do not know that I have already factored the costs of buffer zones and retention ponds into my cost projections. In return for supporting a six-story hotel, I will offer to construct the buffer zones and retention ponds to make the site truly environmentally friendly. If this tactic works, I will have secured extra floors for the hotel without having to give anything up. If the environmentalists object to anything taller than three floors, I have the option of withdrawing my commitment to constructing the barriers and retaining walls, which could save me money. Naturally, I would have to secure support from my investors for building six floors, but I am confident that they would be excited by the opportunity to increase profitability.
Hopefully, the environmentalists will want the buffer zones and retention ponds badly enough that they will be willing to negotiate. I suspect this might be the case, because the environmentalists must know that asking for the retention ponds and buffer zones is not as reasonable as raising the wetlands issue with the pool walkway. With the wetlands issue, the environmentalists have the weight of the law on their side -- I simply must replace any lost wetlands. With the retention ponds and buffer zones, the environmentalists are asking for accommodation on a potential pollution issue that may not even occur on the hotel property, and which might not be a genuinely quantifiable risk at all.
Although the environmentalists may be willing to deal in order to get the retention ponds and buffer zones built, I should expect that they will not support a six-story building, which is fine because I would be perfectly comfortable getting four or five stories approved. If the environmentalists counter with an offer that would support four stories if the buffer zones and retention ponds are built, I will ask that the island split the cost. I would continue to pay the cost if five stories were approved.
If I feel like the environmentalists are open to approving five stories, I maintain the option of offering to resolve the issue of the walkway from the hotel to the pool. I have been able to solve the wetlands issue in the nature preserve by building an elevated boardwalk instead of pouring pavement, and I could certainly adopt a similar strategy to connect the hotel and the pool, if needed. Of course, I also could build an indoor pool - if guests want to swim outside, I have 450 feet of ocean frontage. An indoor pool would take some redesigning of the hotel because I wouldn't want to sacrifice any space that would be used for hotel rooms. While either option could be more expensive, I would be saving money that I would have had to spend reconstructing wetlands if I simply paved a walkway. At any rate, I can offer this concession on the walkways issue in order to close a deal on five stories, if the opportunity arises.
If the environmentalists take a hard-line stance and want the buffer zones and retention ponds built, and the pool walkway issue resolved, in return for four floors, I would be inclined to agree. Again, if I am able to win support for four floors, I gain an opportunity for 33% more revenue while giving up very little in return. However, I will not be offering the raised boardwalk (or indoor pool), retention pond and buffer zones in exchange for just four floors - the environmentalists would really have to press for this deal.
The negotiations, of course, could result in a total melt-down. I would define this as the environmentalists insisting that I resolve the outstanding environmental issues in return for building just a three-story hotel. In this scenario, the business can still be profitable and I am in no worse shape than I was in when the negotiations started. The projections, particularly after the first year, are very solid. In essence, I have little to lose in these negotiations, and potentially much to gain.
Bacal, R. (No date). Basic negotiating tips. Retrieved April 13, 2007, at http://www.work911.com/articles/negotiate.htm.
Cohen, S.P. (1994). Focusing on interests rather than positions conflict resolution key. Banker & Tradesman, July 20. Retrieved April 11, 2007, at http://www.pertinent.com/articles/negotiation/stevecohen.asp.
Cohen, S.P. (1995) How to fight fires without burning bridges. MKA Trends for Key Financial Executives. Retrieved April 12, 2007, at http://www.pertinent.com/articles/negotiation/stevecohenN2.asp.
Green swamp (No date). Retrieved April 11, 1007, at http://florida.sierraclub.org/greenswamp.asp.
Waymon, L. (2002). From deadlock to deal: Negotiating skills at work. Expert magazine, June 25. Retrieved April 10, 2007, at http://www.expertmagazine.com/artman/publish/article_20.shtml.