Meeting Sites Resource

Article Index
Contract Components
Published Rate Clause
Room and Space Review
Method of Reservation
Audio Visual
Resell Clause
Claims & Disputes
Bankruptcy Termination
All Pages

Contract Components
Meeting Sites Resource has a proven, methodical system to add significant value to the hotel contract and negotiation process. This includes all contract components, value added concessions, hotel fees/surcharges and performance clauses.

Option Date

•  Specific date to execute contract by both parties
•  If this date cannot be met, receive extension in writing
•  If option date is not met, Hotel can release/resell rooms and meeting space

Guestroom Accommodations/Sleeping Room Categories
Outline all sleeping room requirements by day including:

• Breakdown of rooms and suites by category
• Meeting group rate by category Example of room categories are:
  • Oceanview
  • Golf view
  • Garden view
  • Pool view
  • Single (one bed)
  • Double/Double (two beds)
  • King bedded room
• Run of House (ROH means a combination of all non-suite room categories. Identify exact percentage of each room category in contract)
• Staff rooms/Concierge Club/VIP suites/Hospitality suites
• Applicable taxes

Cut-off Dates
Specific date hotel will hold rooms at guaranteed rate

• Specify dates to "review & adjust" room blocks
• Final date to release all unused rooms back to hotel
• Maintain your group rate based on availability
• Adjust room block (increase or decrease) as early as possible

 

Published Rate Clause
Protects your company if meeting attendees make reservations around group room block (via
Internet/discount web sites)

• Any rooms booked direct will be credited to your room block (in the event of attrition) regardless of room rate

Fees/Surcharges
Negotiate out and or reduce hotel fees and surcharges

• Resort Fee
• Early departure fee
• Parking
• Health Club
• F&B Surcharges
• Maid/Bellman
• Telephone/Internet Access
• Meeting room setup charges

Hotel Check-in/Checkout

• Hotel policy
• Customer requested times for VIPs/Staff

Guestroom Attrition (see mitigated vs. liquidated damages/resell)
The number of sleeping rooms you may cancel/not use without compensation to the hotel

• Percentage of total room block
• Guarantee 80% of your room block. This will allow 20% guestroom attrition up to your meeting date
• Hotel to mitigate damages by reselling rooms/ credit Customer account
• Hotel to use participants list to include in total room pickup numbers
• If attrition compensation due, hotel entitled to lost profit, not lost revenue (75% guestrooms; 35% food and beverage)
• Method and timetable for compensation to hotel

 

Room and Space Block Review (If contracting 2 plus years out)                                                 

• Never sign a long term contract stating “rates to be negotiated”
• Define a formula in contract to establish a fair rate structure
• Match lowest group rate offered to other groups during same period
• Cancellation without penalty if agreement can not be reached at least 18 months out
• Current lowest group rate/maximum percentage increases for future years (2%-5%)
• If hotel quality deteriorates , Customer may cancel meeting without penalty

 Value Added Concessions

Prioritize for each meeting based on meeting specific needs and meeting value

• Group rate honored 3 days prior and post meeting dates
• Discount on staff rooms
• Complimentary rooms ratio/cumulative (start at 1 per 40)
• Suite/Club Floor upgrades at group rate
• Complimentary/Discounted hospitality suites
• VIP transportation/in-room amenities
• Late check out for VIPs/staff
• Complimentary/discounted food & beverage functions
• Complimentary/discounted parking
• Discount off printed banquet menus
• Discount off printed AV prices
• Complimentary entry to health/fitness club
• Complimentary signage outside each meeting room/meal function/office/speaker ready room
• Complimentary acceptance and storage of boxes/product/materials 3 days prior to meeting

 
Bellman/Maid Gratuities

• Bellman gratuities and maid gratuities will be added to the master account (specify exact amount)
• Bellman and maid gratuities will be made at the discretion of attendees

Method of Reservation/Cutoff Date

• Agreed upon date to have rooming list to the hotel (generally two to three weeks)
• Company to provide rooming list on or before cutoff date (list payment type, complimentary room
• assignments, staff rooms, VIP upgrades)
• Guests call hotel direct/pay via credit card
• Room and tax to master account; guest pays own incidentals
• Guests pays room, tax and incidentals via credit card

Payment/Deposit/Billing
Determine how and when rooms and services will be paid:

• Individual reservations
• Company Check
• Credit card
• Master account
• Deposit formula (flat fee, one night deposit, percentage of projected revenue)
• No deposit due to hotel if guests pay for sleeping rooms via credit card
• Will hotel place deposits in escrow account?
• All advance deposits applied to master account
• Establish timetable for final payment of master account
• Final payment agreement from the time you receive corrected master account
• Adjustments for accounting errors
• Master Account arrangements
• Billing arrangements
• Interest/late charges

Additional Charges

• No fees or mandatory charges to guest folio or Master Account unless specifically stated in contract

Food & Beverage Guarantee
Outline details for all meal/social function activities:

• Specify all group events/setup and use times/number of guests
• Additional room requirements (AV, head table, dance floor, theme props, etc)
• Allowable percentage reduction/date
• Percentage that hotel will overset for each event
• Guarantee number of guests per event or total minimum food & beverage revenue guarantee

 

Audio/Visual Electrical Requirements

• Be sure fees for lighting and other fees that may be incurred for electrician, equipment and other support personnel or equipment is provided in the contract
• Know all fees that could pertain to your meeting
• Ask if hotel is union. If so, ask how union labor will support your meeting and what are the costs involved.

Function Space
Outline all meeting and event space as confirmed in request for proposal (RFP) and/or site inspection

• Detail specific room(s), dates & times
• No room change (without your approval)
• Define "break-out" rooms
• Room rental/set-up fees
• Approval of other social functions in adjoining rooms/foyer areas
• Complimentary meeting/event space based on percentage room pickup (start with complimentary space with 80% guestroom pickup)
• Define “sliding scale” room rental rate structure (actual dollar amounts)

No Walk/Relocation
“Walking” confirmed reservations occur when hotel is oversold

• Include “no walk” clause
• Relocation clause/financial responsibility
• Guest relocated to hotel of similar/better quality

Cancellation (see mitigated vs. liquidated damages/resell)
In the event meeting is cancelled or postponed:

• Cancellation clause in every contract
• Compensation if reasons are other than termination/ Force Majeure
• Determine a fair formula: Flat fee, peak room night revenue, sliding scale, percentage of total revenue
• "anticipated lost revenue" defined, not exceed the profit margins of the hotel & include sales tax
• Establish criteria and methods that hotel will recoup revenues against the cancellation fee
• Identify a specific timetable for another meeting (of similar profile) can be booked without penalty
• Define cancellation compensation if hotel defaults and does not honor your contract
• Always include resell clause
• Conduct hotel audit to verify rooms resold/credited to account

Resell Clause
Plan in advance and know how damages are to be eliminated or reduced.

• The issues and details of sleeping room attrition and meeting cancellation are of utmost importance and spelling out specific compensation and responsibilities is a must.
• Generally, when a hotel contract is not honored (breached), the non-breaching party is entitled to lost profit, not lost revenue. Since lost revenue is difficult to calculate in advance, the courts allow the two parties to agree in advance on an amount or formula to be stated in the contract. It is best for damages to be stated on a sliding scale, with the amount increasing as the meeting dates get closer.
• A liquidated damage is a guaranteed dollar amount or specific formula to calculate a dollar amount. Liquidated damages must not be unreasonable or it could be deemed as a penalty if the case goes to court or arbitration.
• Mitigated damages hold the hotel accountable to try to resell sleeping rooms, Food & Beverage and other services. This duty to mitigate damages calls for the hotel to immediately try to replace business and minimize (or eliminate) compensation by the customer.
• Although this is the legal requirement, it is recommended placing a resell clause in the contract to make responsibilities clear. 
• The other important issues are when compensation to the hotel is due and conducting an auditwith the hotel after the meeting dates to determine if there is a credit due to your account.
• Again, hotels are entitled to lost profit, not lost revenue
• Provide provision that the amount due (or part of) can be applied to future meeting (include specific timeline)

Indemnification                                                                                                                      

The agreement by Customer and Hotel to indemnify each other for own negligence

• Reciprocal protection for both the group and hotel
• Both parties mutually indemnify, defend and hold harmless against, claims of negligence/misconduct
• Many indemnification clauses are one-sided and it is a good idea to have an attorney review this clause (or create one for you)

Americans with Disabilities Act

• Required by law – must be stated in contract

Claims & Disputes
Agreement on procedures if Customer and Hotel cannot agree on performance damages

• Parties attempt to resolve dispute over a period of at least 30 days before resorting to formal dispute resolution
• If parties cannot resolve dispute, they will submit matter to J.A.M.S./ endispute or its successor for binding arbitration

Construction and Remodeling
Does not allow hotel to conduct renovations that impact your meetings

• Hotel to notify group if any construction, maintenance, remodeling, repairs that may be in effect over your meeting/room block dates
• Group has right to cancel without penalty and/or receive compensation if construction, maintenance, appearance or noise affects meeting
• Group reserves right to request construction, maintenance, repairs to be stopped during their meeting dates
• If group does cancel due to construction, maintenance and repairs, all deposits will be returned to group in full within 30 days

Change in Management/Termination

• Allows company to terminate contract without liability if hotel changes management company, franchise or if foreclosure occurs

Breach by Hotel/Termination

• Hotel liable to company all direct and indirect costs if hotel fails to provide sleeping rooms, meeting space and services as contracted

Force Majeure/Termination
Allows company to cancel meeting based on factors out of your control

• Specific terms and conditions which either group or the hotel can cancel the meeting without financial responsibilities 
• Events out of control of parties including but not limited to flood, earthquake, fire, war, terrorist attacks, curtailment of transportation, labor strikes and government regulations
• Anything that makes it impracticable, illegal or impossible to perform
• If Customer still elects to conduct meeting, no attrition, food and beverage guarantees apply

 

Bankruptcy/Termination

• Addresses liability issues in the event the hotel or company enters into bankruptcy or foreclosure

Compliance with Laws

• Verify that the hotel will be in full compliance with all government laws and regulations

Successors and Assigns

• Identifies commitments in event the company or Hotel is sold; assigns assets

Plan and think before you ink. Contract tips:

• All hotel contracts are negotiable (plan and prioritize before you negotiate)
• A thorough and well designed contract is essential for a successful meeting
• Stay away from vague phrases such as “ample”, “reasonable”, “to be assigned”, “appropriate”, etc.
• All meeting and event space to be assigned by day (if a hotel will not assign specific space, they are not considered a candidate)
• There is no contract until both parties have signed the document
• Written changes on the contract with date and initials represent a counteroffer
• Discuss areas of dispute and counter offers in an open and honest manner
• Negotiate an option date to sign and return the contract
• Do not rush into signing a contract if you do not understand or agree with its content

Planners can add significant value to their meetings and the bottom line when they have a negotiation strategy that includes quality advance planning, a focus on meeting goals and objectives, an understanding of their meeting value and leverage and prioritized their hotel and contract components.

Tim Brown is a partner with Meeting Sites Resource based in Irvine, California. The company
specializes in meeting site research and hotel/contract negotiations, domestically and
internationally. The company also offers full-service planning and Staff On-Site (SOS) for
professional on-site meeting management/logistics support. Tim can be contacted at (949)250-
7483) extension 312 or by email at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . www.meetingsitesresource.net