by Joe Nishi and Jennifer Glynn
Hotel contracts in the events industry can feel like a complex dance. It’s a tango between high-stakes planning and “how many ways can this go wrong?” Add in some post-pandemic contract language, recent hurricanes, labour disputes, and a Taylor Swift concert, and you may find yourself in a stressful situation.
We are not lawyers. But, we have 30 plus years of experience and want to help you navigate the new, post-pandemic, ‘normal’ in contracting. Below is just some of contract clauses demystified.
Room Block Agreements: Keep Calm and Book Rooms
What’s a Room Block, anyway? Picture it as your safety net—a block of rooms set aside at a “discounted” rate.
Attendance at non-mandatory business events is returning. This includes a ‘bleisure’ trend of enjoying leisure time at a destination before or after an event. Event organizers continue to struggle with how many attendees will show and how long they will stay, so how do you help protect your event.
We suggest including language in your contract that your discounted group rate is available up to three days pre/post is important. Furthermore, if the hotel is showing availability request that your group rate should be honoured after cut-off date. In high-demand markets, this can be tough for hotels. If they can’t fully agree, we ask for: “If the hotel’s occupancy is 85% or less at the time of the request, then the group rate will be honoured after the cut-off date.”
Also, ask for attrition to be cumulative, including pre and post hotel stays. This way, your organization can capitalize on these extra room nights.
Another trend we are seeing is attendees booking outside of the block. Let’s face it, human nature says that we want to shop around and get the best rates. Attendees often don’t understand that group rates are negotiated rates. They usually don’t include the strict cancellation rules that online rates do. Also being not part of the group block means they could be relocated in the event the property is oversold. What do you do?
1) Educate your attendees on the importance of booking the group rate at your official conference hotel. Consider incentives, like early bird draws and registration discounts. These should encourage attendees to book within your group block and not waste time “shopping around.”
2) Best room rate guarantee clauses are not perfect but can give some protection if the hotel drops their retail rates below your group rate.
3) Request a room audit clause be added to your contract, this ensures any rooms booked outside the block are attributed to your obligations i.e. attrition and comp ratio.
Food and Beverage: The Art of Feeding the Masses
Hotels want to understand your food and beverage spend, as it’s part of the overall consideration on pricing when a hotel quotes for your specific program aka, the food and beverage minimum. Also, think of it as their way of ensuring everyone has enough calories to make it through three days of networking.
But you should also look to protect your organization in the contract if you cannot meet your F&B obligations. One suggestion is to ask for any difference in your F&B spend and your minimum to be charged at 40 per cent (or their approx.. profit).
Also, be aware of service charges and taxes – they are like a hidden fees buffet: You might think, “I’ll budget for the food.” But, here come the service charges (usually 20-25%) and taxes. Ideally, if your group arrives in the next 12 months, have the property remove the word “currently” from contracts. It will guarantee that the service charges remain as quoted.
Force Majeure: The Fancy Way of Saying “It’s out of our control!
Recent events, like hurricanes, strikes, and lockouts are here to stay, so force majeure clauses are essential. But sometimes less is more; don’t overcomplicate the clause. The more details you add, the more the other party can use them to invoke Force Majeure. Remember, it’s a mutual clause; either party can invoke it.
Room Attrition Clause: It’s like a virtual dart board of the future.
Room attrition clauses mean that if you don’t meet your minimum occupancy, you’ll owe the hotel the difference. How do you avoid attrition:
- Review your booking history and pattern and contract accordingly. Taking into account items like growth in your organization, availability of hotel product in the market, etc.
- Ensure the contracts includes a mitigation clause, so that if the hotel sells out that no attrition is charged.
- Room audit clause as mentioned above.
Indemnification Clauses: The Prenuptial Agreement: The legal stuff that no one wants to read, but make sure you have it. Important to ensure it is mutual indemnification.
Billing and Payment Terms: The Final Frontier
Deposit Schedules – Plan Your Down Payments Wisely: Hotels will ask for deposit that correlates to your cancellation terms. Review timing of these payments; do they work for when you collect registration fees, your fiscal calendar, are they a fair calculation of the value of your program.
Hotel contracts are your guiding star for a successful event. Navigating hotel contracts can feel like decoding a labyrinth. Recent hurricanes, pricing surprises, and fine print that would stun a lawyer make it worse. A professional site selection company can be a game-changer. They don’t just help you choose a venue; they become partners who streamline contract negotiations, safeguard your budget, and manage risks. Their help gives you expert guidance, cost savings, and confidence.
Joe Nishi and Jennifer Glynn are co-owners at Meeting Encore Ltd and Fuel Sports. Please contact them with any contract questions at www.meetingencore.com.
