3 Make or Break Hotel Contract Clauses
Hotel negotiations are a delicate balancing act where both sides can find a compromise they can live with. Many new meeting planners assume hotel contracts are an all-or-nothing transaction. In reality, we have a great amount of negotiating power. Let’s face it, being the official host hotel of your event is a perk and powerful marketing strategy for the hotel. So, make sure your relationship with them is a true and equal partnership. One way to do so is to fine-tune the following three hotel contract clauses that could make or break your event.
Room attrition is the most common expected expense for meeting planners. Groups need to be very careful when choosing how many rooms to block, and on what nights. For all guarantees not met, the group is responsible for a percentage of the difference, or attrition. A typical hotel contract will hold the group accountable for rooms not sold below a certain percentage of rooms blocked – usually 75-80%. Some hotel contracts take the total room count into consideration, while others consider each individual room night unused as “unsold room revenue.”
But room nights aren’t the only thing ringing up attrition fees. Food & Beverage minimums not met will do the same. Make sure the minimums are realistic and that deadlines for submitting guaranteed numbers are not missed.
Creating Cancellation Clauses that both parties can agree on may be a challenge. There are liquidated damages and actual damages to consider. Timing of the cancellation is also an important factor. If the hotel cancels on you, do you have enough time to relocate? On the flip side, if you cancel on the hotel, do they have enough time to recoup your rooms and F&B? For hotel contract clause wording, it’s always best to consult a legal professional to ensure you are protected as much as possible.
Force Majeure Clause
Force majeure literally means a superior or irresistible power. In typical event contracts, force majeure covers acts of God, war, terrorism, and other emergencies. It is important that your hotel contract protects you against these things and that “other emergencies” are clearly defined. What you might consider an emergency, your hotel partner may not.
Instead of “other emergencies,” event planners may consider using “other situations beyond the control of both parties.” This could cover industry issues that may arise and take attendees away from your event. What if storm damage closes an airport making it impossible for your attendees to travel as conveniently as once planned? In this case, including wording such as “situations arising that make the event commercially impractical” could solve the problem. As stated earlier, it’s best to discuss these issues with your legal representative to ensure that the clauses are covered properly in your hotel contract.
Other Negotiating Tips
- Get everything in writing. Even if you think something is a “given”, like a force majeure clause, add it to the contract anyway. It’s better to be safe than sorry.
- Have a contingency plan for hotel renovations. Ask if major renovations are on the horizon before you sign on the dotted line. Construction can be a huge inconvenience.
- Have a “walk” policy. If the hotel oversells, make sure your contract states that your guests take priority. If your guest must be moved to another property, you can negotiate the type of property, location, and transportation. You can also negotiate concessions for your guests.
- Food & Beverage is negotiable. Ask about complimentary continental breakfasts, or guest discounts for hotel restaurants.