Understanding Hotel Walk Clauses & Dishonored Reservations
In this video, you’ll learn how to approach dishonored reservations at your event hotel, and how to navigate the Walk Clause with your hotel partner in your contract.
Experts
Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP
Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.
Overview
Once a room reservation is made by a Group guest with the Hotel, there is a contract between the guest and the Hotel which essentially states that the Hotel will provide a room for XX nights at $XX rate.
If the Hotel is unable to offer the guest a room as contracted, the Hotel will be required honor the “contract” in a different manner – typically by providing the guest with a room at a nearby hotel. The hotel contract should include a dishonored reservations or “walk clause” which specifies the requirements if the Hotel cannot honor a room reservation for one of Group’s guests.
Group Perspective
Some groups do not include a “walk” clause in hotel contracts because they don’t want to allow the hotel to walk guests. But that is the worst thing a group can do. Instead, they should include a walk clause which provides the maximum benefits and protection to Group’s guests if a walk must occur.
The provision should specify the process for walking a guest, e.g., “Hotel shall first notify Group and Group will direct which reservations are to be walked”.
The provision should also make clear that the alternate hotel be of “equal or better quality” than the Hotel and that the Group must approve the alternate hotel.
The Hotel should pay the cost for the alternate hotel room as well as Internet access for the guest and transportation costs to and from the alternate hotel to the Hotel.
The Hotel’s obligations should remain in place for each night the Hotel cannot provide a room to the guest.
If the Hotel can provide a room to a guest the next day, the Hotel should notify the guest. The guest can then decide if it wants to move to the Hotel or to stay at the alternate hotel. In either case, the Hotel’s obligations to pay the cost of the room should cease.
Groups should seek to get “credit” for walked rooms for purposes of complimentary room nights.
When the guest returns to the Hotel, they should be offered upgraded accommodations and a guest amenity and apology note from the Hotel.
Hotel Perspective
It is not helpful to request a clause that says “Hotel shall not walk group’s guests,” as walks can occur for many reasons that are beyond the control of the hotel, like guests overstaying their check out date, rooms being out of order, or other issues.
Hotels generally recognize their obligations if they fail to honor a reservation and will provide alternate accommodations and transportation to the displaced guest.
A walk clause including the types of things listed under “Group’s Perspective” is common and usually not controversial.
Clauses that provide cash payments to the individuals walked or to the group will be resisted, as they are likely a legally unenforceable penalty, not reasonable compensation for the inconvenience caused by the walk.
Managing Hotel Construction and Renovation During Your Event
In this video, you’ll learn how to navigate your group if construction and renovation are occurring at your hotel during your event, three main areas of the construction and renovation clause to cover and more!
Experts
Barbara Dunn
(representing Groups)
Partner at Barnes & Thornburg, LLP
Lisa Sommer Devlin
(representing Hotels)
Devlin Law Firm, P.C.
Overview
To “terminate” a contract means that a party can stop performance (cancel) without having to pay damages to the other side. The most common type of termination clause is a Force Majeure or Impossibility clause, which will be discussed separately.
The other most common types of termination clauses in event contracts are Renovation/Construction or Competitor clauses.
When a termination occurs, it is as if the contract never occurred, and the parties have no further obligation to each other.
If deposits have been paid, they are to be refunded, whether or not the clause specifically says so. However, if expenses have been incurred in performance rendered up to the date of termination, the party incurring those expenses is entitled to be reimbursed or paid for the expenses incurred.
Customers are concerned that their event will be disrupted if the hotel is under renovation, and do not want projects taking place during their event.
Depending upon the nature and scope of the project, guests may be disrupted during the event or disappointed in the aesthetics of the hotel, which can reflect negatively on the event sponsor.
Customers often request a clause allowing them to terminate an event contract if the hotel will be under renovation.
Group Perspective
Construction and renovation at a hotel can have a significant impact on a group’s meeting.
Groups should also ask the hotel about any construction to take place in areas adjacent to the hotel such as roads, driveways, entrances, parking lots, and loading docks.
Tip: Groups should ask hotels about whether there is any planned construction or renovation scheduled to take place at the hotel and if so, the scope and timing of such construction or renovation. Groups should understand that the project itself and timing are all subject to change – sometimes at the last minute as noted above.
Even after having the discussion with the hotel and putting language in the contract to address construction/renovavtion, groups should regularly ask the hotel whether there is anyh planned construction or renovation – it is not enough to rely on the hotel to notify the group. The sooner the group knows about a potential issue, the better.
Groups should consider the impact of construction on the meeting as it relates to noise, odors, dust, unavailability of amenities (such as the pool), and safety hazards.
The contract language should provide that the hotel give notice to the group of any construction/renovation to occur at the hotel, the nature and scope of the project, the approximate timing, the parties’ opportunity to discuss the project and to agree on any necessary remedial measures to ensure the project does not interfere with the group’s meeting. If the parties can agree on a resolution, they should sign an amendment to the contract addressing the resolution. If they cannot agree on a resolution, then the group would have the right to terminate the contract without liability.
If the group encounters construction/renovation onsite which was not disclosed to the group, the group should use its best efforts to work with the hotel to remediate any problems or concerns during the meeting. The group should also document the construction/renovation work by taking pictures or videos so that the impact of the construction/renovation can be assessed after the meeting as well.
Hotel Perspective
Hotels have to renovate in order for the facilities to remain up to the expectations of guests.
Renovation projects are often under consideration for years, and depend on budgets, financing, design, zoning, permitting, locating contractors and many other factors. Because it is uncertain when, the extent, or even if the project will happen, the hotel must continue to book business until the project is confirmed. Sometimes, a project under consideration for years “comes together” quickly and a start date is scheduled only a few weeks in advance.
In addition to scheduled projects, hotels must undertake repairs that may impact facilities. Hotels cannot plan for a pipe that breaks, or an air conditioning unit that fails, or a pool filter that unexpectedly needs an unavailable part. For these reasons, hotels are usually reluctant to promise that there will be no renovation or construction on-site during an event date.
Because renovation projects may be under consideration for extended periods, it is not helpful to include a requirement that the hotel notifies the customer of “any planned renovation.” The clause should require notification of a project once it is approved and once a start date is determined.
When construction does occur, its impact on a scheduled group event may vary, so hotels are reluctant to grant customers an automatic right to terminate the contract if “any” construction is taking place. For example, if the scheduled event is a business meeting with little time for attendees to engage in leisure activities, if the pool is under construction it might not impact the event at all. On the other hand, if the event is an incentive trip where the attendees are coming solely to enjoy the hotel amenities, a closed pool might ruin the purpose of the event.
Hotels prefer to include a clause that requires the parties to review the scope and nature of the construction, its potential impact on the event, and to try to reach an agreement on how the hotels will reduce the impact, or what concessions the hotel will provide to offset any inconvenience.
If the parties agree that despite their negotiations the construction will have a “material” impact on the event (meaning that it will deprive the customer of the benefit of its contract), then the contract is terminated.
Marketing Your Meeting in the Hotel’s Public Space
In this video, you’ll learn about how to approach marketing your meeting in the hotel’s public space and how to approach the conversation with the hotel.
Experts
Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP
Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.
Overview
Many hotels have started charging groups for use of public space within the hotel for which the group would want to place banners, signage, vinyl clings, Gobos, etc. This issue should be addressed in the hotel contract and any cost for such use should be specified. The cost, if any, would be separate from any labor fees (such as those to hang banners) which would need to be paid by the Group or sponsor.
Group Perspective
If the Group wants to offer sponsorship packages which include use of public space at the Hotel, the Group should negotiate the right to be able to use the space without any charge except for any labor fees.
Hotel Perspective
Groups are not usually allowed to place anything in public areas, since hotels usually host multiple groups at the same time. Groups who want to take advantage of public areas should pay for the privilege since other customers do not get to use the space.
Audiovisual Equipment and Services In Your Hotel Contracts
In this video, you’ll learn about audiovisual equipment and services’ role in your hotel contracts and how to navigate to ensure all parties feel comfortable.
Experts
Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP
Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.
Overview
It is more common now that hotels will have exclusive arrangements with an audio-visual company. If they do, the hotel contract should specify this exclusive arrangement.
Audio Visual Services provisions also typically address any cost and/or permissions needed if the Group wants to utilize its own audio-visual company.
Group Perspective
If Group wants to use its own audio-visual company, the Group should negotiate this right and include it in the hotel contract.
If the Group utilizes its own audio-visual company, it is reasonable for the Hotel to seek to be indemnified by the Group’s audio-visual company and to require that company to provide proof of liability insurance.
Some hotels are under the jurisdiction of a labor union and, as a result, some services may not be able to be provided by the Group’s audio-visual company.
Hotel Perspective
The hotel’s agreement with exclusive providers, including A/V companies may not allow for outside A/V providers, so the request to use an outside provider should be included in the RFP or sourcing proposal.
Some exclusive agreements or union requirements allow for third parties, but require the union employees or the A/V company to provide “stand-by” supervision of the outside company. These charges should be factored in when considering the use of an outside company.
Insurance and indemnification requirements for outside A/V benefits both the group and the hotel, as it provides protection for both for claims arising out of the A/V provider’s fault.
What to Include in Your Function Space Contract Clause
In this video, you’ll learn how to approach including a function space clause in your hotel contract. What should you be aware of? What is important to share with the hotel? Learn why some groups might be sensitive with their function space request.
Experts
Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP
Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.
Overview
If the Group will host any meetings or events at the Hotel, the hotel contract should specify the function space to be used in a function space agenda. The agenda should include the date, time, room set, and room name for each function space area. The provision should also state what is/is not included in the function space and what (if any) rate will be charged for the function space.
Group Perspective
Groups should ensure the function space agenda is correct and includes the date, time, room set, and room name for each function space area.
The provision should also state what is/is not included in the function space and what (if any) rate will be charged for the function space. The hotel contract should state that the Hotel cannot reassign any function space without the Group’s prior written consent.
Function space is often offered on a complimentary basis based on the Group’s room revenue and/or food and beverage minimum revenue. If space is not listed as complimentary, rates for each space should be specified.
The hotel contract should provide that the Group will have “quiet enjoyment” for its function space – meaning no interruptions from noise, odors, dust, etc. If there is such interruption, the Hotel should be obligated to correct the problem immediately.
If the function space includes WiFi, the hotel contract should specify that service in terms of speed, usage, etc. as well as address what will happen if the WiFi fails.
Hotel Perspective
The more information that the group can provide to the hotel regarding its intended use of function space in the RFP or sourcing proposal the better the hotel will be able to determine appropriate space for the event.
Hotels may hold multiple events in the same space on the same day: breakfast for group A; lunch for group B; dinner for group C. If that presents a conflict or issue to the group, that needs to be addressed in the Schedule of Events.
Set up and tear down time is typically included in the time allotted in the Schedule of Events. If Group’s event has extensive set-up or tear down, it should ensure that adequate time is included.
If the group is willing to allow the hotel to substitute alternate space of appropriate size based on final guest counts or other considerations, which will allow the hotel to maximize the use of its space with other customers, the hotel may be willing to offer additional concessions for group’s agreement.
Hotels typically charge for the use of function space, but often offer reduced or waived fees based on other revenues that a group event will generate. The hotel may impose function space charges if the other minimum commitments are not met, because if hotel had known the group event was going to be smaller, it would have given the group smaller space and sold the remainder to another group.
