Complacency is never an option when it comes to working in the rapidly changing world of meetings and events—especially when it’s time to negotiate a contract, where keeping up with key clauses is critical.
“You need all the standard things, like a cancellation clause that works for both parties,” said Tony Pastor, manager of McKinsey Learning, based in New York. “But there is more to contracting than the familiar hot-button issues like cancellation and indemnification. The market is changing, hotel practices are changing and contracts have to change to accommodate the way business works today.”
Meetings Cancellation Clauses
Start with protecting yourself via cancellation clauses. Once upon a time, cancellation was something planners and their clients did. Cancellation may have been in response to an impending hurricane, civil unrest, disease, recession, labor issues and other causes, but hotels almost never called off an event. That is changing, as demand continues to outpace supply in nearly every meeting market.
“Properties are increasingly cancelling events because they see a better piece of business for your dates,” said Joshua Grimes, the planner-focused managing attorney of Grimes Law Offices. “The group needs to have an adequate remedy in the contract. I see too many contracts with no mention of cancellation by the venue or only vague mention of unspecified remedies.”
Meetings Indemnification Clauses
Indemnification is another traditional trouble point. Too many standard hotel contracts are written to protect the hotel, says Tricia Van Every, independent contractor and director of national accounts for Premier Event Resources, based in Phoenix.
Indemnification clauses, she says, can hide nasty surprises.
The most egregious clauses put the burden for any damage or loss from any cause anywhere on property on the group. That kind of broad language might sound reasonable, but it could leave your client on the hook for rebuilding if a distant wing of the hotel is struck by lightning and burns down during your event.
Indemnification clauses are also being extended to cover risks that hotels have traditionally borne—unless planners are alert. Big chains seem to be the most aggressive in trying to shift liability to groups, Grimes says. He cited contract provisions that require groups to notify attendees of Americans with Disability Act issues and indemnify hotels against any purported ADA breeches, even though groups have no part in facility design or ADA compliance.
Another common clause requires groups to indemnify hotels against claims made by exhibitors relating to hotel facilities, procedures, requirements and performance. Again, the group plays no role in hotel operations and has no business indemnifying the hotel against practices it cannot control.
“The group should only absorb risks it can control,” Grimes says. “If there is a data breach in hotel operations, why should the group accept liability when it has no control? You should only be accepting risks that are your responsibility.”
Meetings Room Block Clauses
One of the risks that falls under the group’s responsibility is its room block. Continuing strong demand is encouraging hotels to push back on planner efforts to obtain low-price guarantees, and they’re also taking a tougher stance on attrition.
“Hotels are not legally required to guarantee the lowest available rate, which is why they resist putting such clauses in their contracts,” says hotel counsel Lisa Sommer Devlin, with Phoenix-based Devlin Law Firm. “Planners need to manage their attendees more effectively to ensure they book within the block. One mechanism is to require booking within the block as a condition of registering for the event. Other groups are using incentives such as registration discounts or bus passes for booking within the block. Others are trying disincentives such as higher prices for attendees who book outside the block. Booking within your block helps insulate you from attrition concerns.”