Atlanta-based attorney John S. Foster has been preparing and revising hotel group contracts for nearly three decades. In addition to common attrition, cancellation and force majeure clauses, Foster recommends the following contract inclusions as told to BTN editor-in-chief Elizabeth West. Will these clauses always be accepted by the hotel? It depends on the demand in the market and the value of the business to the hotel.
"Some hotels will react because they've never seen these clauses before," said Foster, "but there's nothing here that goes against the hotels' interests. Once the hotels figure that out, they usually don't object."
Purpose of the meeting. This clause specifies the meeting's purpose. For example, "to bring franchisees to the resort for a golf outing." It functions with the force majeure clause, which protects each party should an event outside of either party's control affect contracted performance obligations. Force majeure applies to four types of interference—illegality, impossibility, impracticability and frustration of purpose. Frustration of purpose is often overlooked. The purpose, though, must be specified in the contract to later claim it was frustrated. Should the golf course become unavailable over the contracted dates, for example, there's no point in using the hotel for a golf outing, triggering the force majeure based on a frustration of purpose.
Guaranteed function space. This clause guarantees that the function space committed by the hotel to the group cannot be changed without the group's approval. With rising meetings demand, hotels are motivated to fit new business, which could mean adjusting space for existing groups as the puzzle comes together. This clause addresses that scenario, specifying that: 1) financial damages are not a remedy and 2) the group is entitled to the equitable remedy of specific performance. "The company doesn't want money to solve the problem," said Foster. "They want to compel the hotel to give them the space that was agreed to in the contract."
Unapproved miscellaneous charges. "Onsite planners often get a master account at the end of a meeting that contains miscellaneous charges they didn't agree to," said Foster. This clause specifies that the group is not responsible for charges not specified in the agreement or later agreed to in writing, like an extra microphone requested by a speaker. This clause puts the burden on the hotel to get a signature from an authorized individual before the group is responsible for paying the charge.
Overbooked hotel prior to check-in. If a group doesn't pick up all the rooms it booked in the room block, it pays attrition. The overbooked clause is the reverse: If the hotel doesn't give the group all the rooms in the contracted block, the hotel pays damages. "The block isn't full, but the hotel sold out because it cut into the group's block," said Foster. In this case, the hotel will pay the group, X dollars per room night removed from the block as liquidated damages.
Audit arrangements.Some hotels have a standard clause that allows the buyer to send a rooming list and the hotel will do an audit to identify additional rooms booked outside the room block. That sounds nice, said Foster, but it's not enough. "The buyer should have the right to independently verify the accuracy of a hotel audit to determine if all attendees were counted." This means the group representative has a right to inspect all hotel records relating to the group's attendance and the overall hotel occupancy. The clause also specifies that the group representative will sign a confidentiality clause.
Date change versus cancel & rebook. Hotels often treat meeting date changes as a cancellation and rebooking. This clause defines the circumstances under which a change should be treated as a simple date change. For example, the event will take place at the same hotel or another hotel with the same owner; the event has the same or greater revenue; and the change is made within X days of the event date and within X days of the booking.
Blocking personal Wi-Fi hotspots.Blocking a personal Wi-Fi is against Federal Communications Commission regulations, but hotels might attempt it to force meetings buyers to pay for hotel bandwidth. This clause specifies damages that the hotel will pay to the group—generally, this is equal to whatever cost the group incurred using the hotel's Wi-Fi.
Avoid double dipping.This clause protects the group from paying both attrition damages and meeting room rental (unless the group's rooms-to-space ratio is out of balance). It specifies that all rooms nights paid for as attrition damages will count towards complimentary concessions (e.g. complimentary space, free parking, comp guest rooms, free access to fitness center, etc.) based on room nights picked up. If a group does not meet its commitment, the sponsor should be allowed to pay the amount required to satisfy the commitment and reclaim access to those concessions and/or complimentary meeting space. Or, they could pay for the concessions and space on a pro-rate basis, but not the attrition. They should not pay both—since that would be paying twice to cure the same problem. "Most hotel contracts don't provide for that," said Foster.
Personally identifiable information/GDPR. "Meeting sponsors have to make sure suppliers are complying with all U.S. privacy laws as well as the GDPR, when applicable," said Foster. Outside of the data associated with sleeping rooms directly booked with the hotel, the General Data Protection Regulation holds the sponsor group—the data controller—liable even if the hotel—the data processor—has a data breach. The agreement should specify that the hotel will comply with all U.S. privacy laws as well as the GDPR requirements, when applicable, and that the hotel will hold the data controller harmless for any breach of privacy the hotel may have.