Contracts

Event Planning Contingencies: Contract Clauses to Prepare for Unexpected Hotel Challenges

This is a guest post by Barbara Dunn, Attorney & Meeting Industry Expert. This article shall not be considered legal advice. Readers are advised to consult their legal counsel.

Have you ever worried about something happening only to find that it did not happen and something else you did not worry about happened instead? 

Whether in life or in your organization’s meetings and events, planning for the unexpected is critical. The approach should be to hope for the best but plan for the worst and hope that because you have a plan, the worst will not happen.

In today’s climate, hotel occupancy is rising, and future business prospects are bright. While we all benefit from a booming meetings industry, this increase in demand with a limited supply of hotels puts organizations at a disadvantage. The unexpected is happening increasingly in today’s seller’s market, and meeting professionals should prepare for those occurrences. Following is a summary of some unexpected occurrences that have affected my group clients.

Shield Your Event from Unexpected Hotel Cancellations

If you are toiling under the assumption that a hotel would never cancel a contracted meeting, that mindset needs to change. There has been a significant increase in hotels canceling on contracted groups in the last few years. Often, the reason for the cancellation is that the hotel will be replacing the group with a significantly more lucrative group with the promise of multiple meetings. Further, many of these cancellations occur very close to the group’s meeting dates, making the search for an alternate hotel more challenging.

The key to preparing for this unexpected event is to include strong language in the hotel contract addressing cancellation by the hotel. Such language would allow the group to recover direct damages (all costs associated with finding an alternate hotel), indirect damages (the second tier fallout from the cancellation, e.g., as a result of the change in hotels, the group loses sponsor), and attorney’s fees – the last two which you only get if it is specified in the contract. Here’s a sample provision:

Cancellation by Hotel – In the event of a cancellation of this Agreement by the Hotel not otherwise permitted under this Agreement, the Hotel shall pay Group for all direct, indirect, and consequential damages, expenses, attorney’s fees, and costs incurred by Group on account of such cancellation including, but not limited to, staff time and travel expenses to secure an alternate location for the Event, incremental room rate and airfare differential, function space rental, and airfare differences, and long-distance telephone, postage and printing costs, attorney’s fees.

If you haven’t included this language in your contracts, do not worry. The law provides for recovery of direct damages in the event of a breach but the group will be able to have more costs covered if this provision is included in the contract.

Secure Room Block Flexibility

Many of you have become accustomed to hotels being willing to increase the group’s room block at the group rate. Those days are definitely gone or are significantly limited. With the hotel likely able to sell rooms at rates higher than the group rates, additional rooms will likely be offered at a higher rate. Legally, the hotel is not required to offer more rooms than contracted at the group rate.

My recommendation to address this unexpected development is to include language in the hotel contract, allowing the group to increase its room block at the group rate. While these rooms will be based on availability and likely be subject to a maximum increase, they will be offered at the group rate. Here’s a sample provision:

“Group reserves the right to increase its room block by up to 10% on a space available basis at the group rate.”

This provision is among those that do not “hurt” to include in a hotel contract if the unexpected occurs.

Prevent Unwanted Function Space Reassignments

After you have done all the research, site visits, and function space layout (with room names included, which is always recommended) for the hotel, the last thing you might expect would be for the hotel to reassign your organization’s function space. 

More and more organizations are experiencing this occurrence because the hotel is trying to accommodate other businesses. To make matters worse, most hotel contracts include a provision permitting the hotel to reassign the organization’s function space without their consent.

In order to be in the best position if this reassignment occurs, I recommend organizations ensure that their hotel contract does not include the provision noted above but instead includes a provision that requires the organization’s consent to the reassignment. Here’s a sample provision:

“The Hotel shall not reassign any of the function space listed in the attached Function Space Agenda without the prior written consent of the Group.”

Remember that if you see language that says the hotel will “notify” or “consult” with the organization regarding function space changes, that language is not as strong as “consent” and can leave the group vulnerable to reassignment.

If function space is reassigned regardless of the contract language, organizations should ensure that the alternate space is equal to or better than the contracted space. The hotel will provide financial concessions to offset the organization’s costs and inconvenience.

Contract Clauses for Technology Failures

I often say that today’s “fingernails on a chalkboard” is that the hotel’s wireless Internet service is not working. Many planners have heard complaints about that from attendees with two or three mobile devices that they want to use during the meeting. Yet these breakdowns in wireless Internet service or overcapacity of users/devices often occur, rendering organizations helpless to recover service during the meeting.

I recommend including language in your contract which specifies the bandwidth and capacity of the hotel’s wireless service. The provision would also require the hotel to address service interruptions and accommodate the group for outages promptly. Here’s a sample provision:

“Hotel represents and warrants that its facility, equipment and services meet with Group’s technology requirements and that its wireless Internet service will function in proper order and speed as may be needed by the Group. The Hotel shall also provide industry standard protection for Internet, network (including network segments) and physical IT security to provide reasonable expectations for data confidentiality, privacy, integrity, and availability. Should there be a failure to meet Group’s technology requirements during the Event, Hotel shall work to correct any such problems immediately and at its cost. Any costs incurred by the Group in connection with remedying technology problems shall, at Group’s option, be paid by Hotel or credited to the Master Account.”

From a practical standpoint, I recommend that groups with heavy internet requirements plan ahead for the possibility of an interruption in wireless Internet service and have a backup plan to provide such service if necessary.

Managing Food and Beverage Allergy Risks

With the presence of food allergies on the rise, many organizations often overlook the possibility of food allergies or at least overlook allergies beyond peanut allergies. While each individual is expected to monitor the food they eat at a meeting and ensure such food is free from allergic ingredients, attendees have become accustomed to organizations inquiring about food allergies (which is recommended) and selecting menu items that do not contain these ingredients, far too many organizations do not ask about food allergies or if they ask, they are not prepared to properly accommodate those allergies.

Organizations can include language in their hotel contract to ensure the hotel will assist the group with compliance to address these unexpected allergies. Here’s a sample provision:

“The Hotel shall work with Group to ensure attendees with food allergies are appropriately handled by the Hotel’s catering department. Such assistance includes offering menu selections which avoid specified ingredients, ensuring the food to be served is labeled, and listing the foods ingredients below the food name.”

From a practical standpoint, planners should be prepared on-site if an attendee suffers a food allergy reaction. As with any other medical situation at meetings, the organization should be prepared to respond appropriately and train onsite staff to do the same.

In summary, expect the expected and the unexpected. Plan for common and uncommon issues in your organization’s contracts and undertake practical measures to ensure an expected or unexpected occurrence will be addressed in the best interest of the organization.

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