By Thomas Ishmael
After the fifth ballroom viewing and smiling through yet another tasting, many meeting professionals are eager to sign a contract and move on. But before you sign the next hotel contract that comes your way, take some time to read it. Then, politely reject it.
Whether you’re a hotelier looking to land a group, or an event planner searching for the perfect space, the initial draft of the contract memorializing the terms of your meeting is unlikely to be adequate. Often, meeting contracts include unfair terms or use vague boilerplate language that could result in unintended consequences.
Frequently, contracts for meeting space are a cut and paste hodgepodge nightmare. It isn’t uncommon to find event sales staff mixing and matching terms from old contracts, competitors’ contractors and who knows where else. And though I recommend you have an attorney look at contracts before you enter into them, the reality is that most businesses elect not to. So, be your own advocate and negotiate a sound contract.
Negotiating a contract can be tedious. Many find engaging in the give and take of demands and concessions to be awkward. But a savvy meeting professional knows the devil is in the details. Ideally, getting the event agreement reduced to writing should be a collaborative effort. Every party to a contract benefits from a clear understanding of its terms before it is signed.
Though this article is not exhaustive, I hope it can make you aware of some common pitfalls found in meeting contracts, and provide some tips on how to avoid them.
First, don’t do business with someone who will not provide you with a written contract spelling out the terms of your agreement. No exceptions.
Second, decide how much money your event is worth. If your event is rendered a disaster because of a venue staff strike, management or ownership change, bankruptcy or any other reason, what amount of money would it take to make you and your group whole? This figure should serve as the value of the “liquidated damages” you will suffer if your event is cancelled at the last minute, or otherwise entirely ruined as a result of the other party’s actions.
Third, insist on specific terms. Avoid language describing a “reasonable fee,” “reasonable time” or anything similar. Likewise, avoid giving the other party “sole discretion” to amend the services agreed to under the contract.
Below, I have provided some specific terms to consider when negotiating your next event contract:
EXHIBIT AND EVENT SPACE CONTRACT CONSIDERATIONS
• Indicate whether the agenda is tentative or finalized, and when the event program is due.
• Include exact dates and times for setup and functions.
• Insist on the inclusion of the room names or minimum square footage needed.
• Define when “optional” or “ancillary” charges may occur, and identify their exact costs.
• For example: Are there charges for meeting room setup? Is there a fee for “excessive” setup? What does that mean? Is there a charge for bringing in outside vendors? If there is no charge, state so. If you are being charged, what are you getting for the fee? Is the property taking on responsibility for the vendor’s performance?
• Identify who is responsible for security at the event. Specify if security is necessary, and whose responsibility it is. If it is not your responsibility, clearly state so in the contract.
• State whether there will be delivery fees. If exhibitors are shipping to the property in advance, what is the agreed-upon method?
• Consider an Exhibitor Responsibility Clause. This would absolve both the property and your organization from liability caused by the negligence of any exhibitor(s).
FOOD AND BEVERAGE CONTRACT CONSIDERATIONS
• Clearly state menu prices. Have a firm price no later than six months out. Food costs can change rapidly, and you should pin down the price for your menu as soon as possible. Consider excluding language allowing the food vendor to raise prices if a swing in costs occurs, and suggest alternative wording that you and the other party agree to in advance.
• Consider taxes. Are service charges taxable?
• Find out the space’s alcohol policies. Solicit an affirmative statement from the property that it will adhere to applicable liquor laws.
MISCELLANEOUS CONTRACT TERMS CONSIDERATIONS
• Find out if the property warrants compliance with the Americans with Disabilities Act (ADA). If a disabled person is turned away from your event for lack of access, and later brings a lawsuit, wouldn’t you prefer to have the property’s ADA compliance statement in writing? Similarly, the property should note in the contract that it is solely responsible for adherence to applicable fire, safety, and public health codes.
• Outline insurance and indemnity issues. I recommend you insist on being identified as an additional insured on the property’s policy. Also, who will be responsible for ensuring that any third party vendors are adequately insured? If you are not taking responsibility, state so affirmatively. The contract you are given may include an “indemnity clause” allowing the property to collect from you the value of any damages caused by your group or members of it. Think twice before giving the property such sweeping rights. Because insurance and indemnity agreements are often complex, I recommend you run any terms relating to those topics by your attorney before entering into the agreement.
• Decide how you will warrant the condition of the facility. I suggest you include a clause requiring the property to be in condition as good as, or better than, it was at the time you signed the contract. Also, confirm in writing that no construction or other events will be taking place at the venue during your event. A savvy meeting planner may successfully negotiate a discounted rate into the contract in case the property doesn’t uphold its end of the bargain.
• Agree on cancellation terms. The property will undoubtedly expect you to pay a deposit. Many properties demand nonrefundable deposits. It is not unreasonable to request that the property pay your damages if it must cancel without cause. Include the value of the “liquidated damage” you will be caused if the contract is breached by the property, as discussed above.
Negotiating specific terms is sometimes intimidating and always time-consuming. Even so, I urge you to take time in scrutinizing the contracts you enter into as a meeting and event planner.
The old saying that “an ounce of prevention is worth a pound of cure” holds true in contract matters. By specifically spelling out the expectations, rights and obligations of the parties to your contract, future misunderstandings can be minimized. MM&E
Thomas Ishmael is an attorney with Hornbeek Vitali & Braun, PLLC in Oklahoma City. Hornbeek Vitali & Braun represents hotels, restaurants, bars, golf courses and others in the hospitality industry. Ishmael has more than 15 years working in the hospitality industry specializing in luxury hotel and resort management.
E-mail Address: [email protected]
Web Site: www.hvblaw.com
This column is meant to provide practical advise, tips and rules of engagement you need in the meetings and events industry. However, please consult with legal, insurance and tax professionals before acting on any information presented in this column.