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Hotel Contract Review Process

Early in my book, I talk about what a daunting task the planning of meetings can be especially for the novice planner or for administrative or other professionals who may be called upon occasionally to plan a meeting over and above their normal day-to-day responsibilities.  Of all the components of the planning process, none is probably more daunting nor carries more risk than that of the contract negotiation and review process.   

 

A contract is a legally binding document, and everyone concerned needs to fully understand the language and implications of such.  Let’s face it; we are none of us legal experts or lawyers.  Cancellation clauses in particular can result in huge financial losses if not fully read and/or understood.   

 

As planners, we have or develop over time a good understanding of the hospitality industry -- the terminology, what’s negotiable, etc.    Procurement is sure to raise questions on such items as room rates, parking fees, service fees, cut-off dates, and cancellation and attrition clauses and percentages, so you need to make sure you’ve covered your bases and believe that you’ve done your best to negotiate what you believe to be fair. 

 

Legal may not be as proficient or familiar with hospitality terminology and may not necessarily get the concepts of attrition, no show, cancellations, renovations, no relocation,  etc. like a planner would, BUT they know LAW, and if they see something that is out of line or could in some way put the company in jeopardy, they will (and should) insert their voice.  Those one-sided Hold Harmless clauses come to mind here as one case in point; insurance requirements could be another point of contention with them. 

 

Typical steps in the Contract Review Process (as followed by me per company policy) were as follows.

 

  1. Planner reviews contract terms; forwards to Procurement for further review. 

  2. Procurement forwards contract to Legal.

  3. Legal approves and returns contract to Procurement.

  4. Procurement forwards contract to officer in charge of meeting budget for signature.

  5. Procurement forwards signed contract to hotel salesperson for signature.  When contract has been signed by both parties, Procurement returns document to planner. 

 

A huge benefit for me working in the insurance industry was my access to our Risk Management area.  They would not  review contracts, but would make sure from a risk management standpoint the venues we were selecting were up to insurable construction standards and codes, and that the surrounding areas were deemed safe.   If they felt a Risk Management site assessment was warranted, they would conduct a review and provide feedback.  If the venue passed their inspection, then it was my turn for a site visit specific to the meeting.   It was also nice to know that if I wasn’t able to do a site visit for whatever reason, that we were at least covered from a Risk Management point of view.   

 

Hotel contracts should include the following information.

 

  • Identification of Group and Hotel.   Company and hotel name and address;  names, titles, phone/fax and email addresses of planner and sales contact; group arrival and departure dates; early and late arrival requirements; and the name and type of meeting being held. 

  • Sleeping Room Reservations.  Number and types of guest rooms required; room rate and applicable taxes and service fees; reservation process and confirmation details; complimentary room policy; special room requirements and rate concessions for upgraded and/or staff rooms; rooming  list cut-off dates; guarantee and deposit requirements; check-in and check-out times.

  • Billing Procedures.  Method of payment; time of payment; names of people authorized to sign on the master account; any agreed upon discounts for payment of account upon checkout.

  • Facilities for Meetings and Exhibits.  Room rental or setup charges; convention services and equipment provided by the facility; and the jurisdiction and responsibilities of any unions under contract with the facility.

  • Exhibit Program (if applicable).   Specific requirements for exhibit booths; maximum number of exhibitors; storage; set up and tear down access;  security; hours of operation; electrical and internet provisions; services and facilities provided; and key rules and regulations.

  • Miscellaneous Items.  This would/could include information on transportation, parking, operational gratuities, recreational fees and promotional support. 

 

Typical clauses to look for in a contract include:  (more specifics on clauses to follow in another post.) 

  • Fire Protection

  • Cancellation and Attrition

  • Rebooking

  • No-walk

  • Arbitration

  • Insurance

  • Change in Facility or Association Management

  • Facility Remodeling or Pending Construction Stipulations

  • Noise Disturbances (from other groups)

  • No Competition

  • Bed Bug Infestation; Disease Outbreaks

  • Hold-Harmless

  • Force Majeure

  • ADA Requirements

 

Of these clauses, the one you’ll want to pay special attention to would be Cancellation and Attrition because this is where the most damage could occur should your room pickup fall far shorter than expected and/or you have to totally cancel the program.  Other areas of concern would be clauses pertaining to changes in hotel management/ownership, pending construction and renovations that occur between contract signing and program dates.  AND, you also want to make sure that on the hold-harmless clause, that the hold-harmless works both ways – it can’t be a one-sided deal.

 

I always enjoyed attending hospitality-related conferences throughout my career and never missed an opportunity to repeat the workshops on contract negotiations.  I walked away with something new each time and/or reinforced that which I’d already learned. 

 

I hope this information is helpful or at least provides a good start to working with and understanding the contract review process.  We’ll save contract clause terminology for another day, another article.   Just remember to ask questions, ask for help before it’s too late, and know that there are people/companies who specialize in sourcing hotel space AND contract review and negotiations ready to help.  I’ve worked with a few throughout my career and would be more than happy to make a recommendation. 

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