The same principles used with all meeting vendors apply when negotiating and formatting hotel contracts. Here are seven things to learn before getting started.
What is a contract?
- According to APEX, the Accepted Practices Exchange initiative of the Convention Industry Council, “A contract is an agreement between two or more persons (or entities) that creates an obligation to do or not to do a particular thing. A contract spells out the rights and duties of the contracting parties. A well-written contract should be a clear roadmap of the parties’ expectations and responsibilities.”
- Refer to the APEX Contracts Accepted Practices to learn more about terminology.
- What I learned from attorney Jeff King, who for years was the CIC’s chief legal counsel and also defended me and a client in a lawsuit, holds true today: “It doesn’t matter if you’re right or wrong, you can still be sued.” The more you know the better you understand what you are recommending to be signed, and if necessary, can later defend.
Why do we need written contracts?
- Contracts confirm the mutually agreed to arrangements and provide a foundation for a relationship and an event.
- Although lawyers tell me that verbal agreements can stand, having all information in writing, signed by the parties to the contract, allows anyone to execute the arrangements.
Are contract terms always negotiable?
- “It depends,” to quote any number of industry attorneys. To reach terms that include what the parties need, write a thorough request for proposal (RFP) with all your meeting requirements and “wants.”
- Ask hotels to propose RFP responses that answer all your needs specifically.
- Don’t sign the proposal (the first offer from a hotel). Negotiate the terms and the verbiage so that the parties are in agreement.
How do I include in the contract all the elements needed?
- Ask questions, clarify terms and put everything in writing.
- If you’re asked to talk with the hotel’s legal counsel, welcome the opportunity to gain clarification. Be ready with your knowledge of the parties’ needs and legal terminology.
Who are the parties to the contract?
- The owner/s of the hotel dba (“doing business as”) the hotel name, which is often the brand name and the meeting sponsor.
How do I know if everything I need is included?
- E-mail me for a contract negotiation checklist that has many elements that should be included. Don’t go for the “shorter is better” idea! If more is needed to ensure understanding, add it.
- Hire a hospitality industry attorney who works on the group side. The Academy of Hospitality Industry Attorneys is a good starting point.
When and what should I sign?
- There is lack of specificity in many contracts that planners sign or recommend be signed in the interest of time. Those signatures can be costly when questions aren’t asked and clarification is missing.
- Don’t rush to sign, especially at year or quarter end. Hotels may suggest that you’ll lose the space or the negotiated items if a contract isn’t signed “right now.” The terms should be acceptable to the parties before signature. After signature, it’s tougher to change any language or conditions, although it’s sometimes necessary based on changing conditions.
- Though you can sign “as agent for,” I recommend someone with a greater responsibility review and sign. As King noted and I’ve experienced, even if you don’t sign, you may still be sued, even after you leave the employ of the organization. Limit your liability as best you can.
For a deeper understanding of aspects to consider for hotel contracts, check out my recent webinar, “Site Selection: Finding the Right Fit,” and corresponding article. Additionally, the UNCC Meetings and Events Certificate Program on risk management includes a portion on contracts.
For even more on contracts also make sure to read through the August edition of my Friday With Joan newsletter. And make sure to register for my upcoming "Contracts: Accommodations" webinar.
