contractProbably the most tedious and time-consuming part of any meeting planner’s job is to review, negotiate and sign the conference contract. While it can be an overwhelming task, especially to a new or infrequent planner, it doesn’t have to be, if the guidelines below are followed.

This blog will aid you in identifying the five essential clauses and tricks of the trade for preventing large penalty fees and missteps in the communication process.

 

Five Key Clauses

 

Attrition

An attrition clause in the contract is a commitment to hold a specific number of guest rooms by a certain date. Should your number decrease, this reduction requires a payment as a penalty. Let’s do an example: You sign with a hotel to hold 200 rooms for your conference. By the time you’re supposed to release the remainder of inventory (50 unsold rooms your group hasn’t booked), your team decides to hold onto the rooms for last-minute registrants. Let’s say 25 of the 50 rooms are booked. That leaves the hotel with 25 rooms it couldn’t sell because you held onto them; hence, an attrition clause is evoked.

Here are things you should consider:

Agree on your cutoff dates and attrition rates, and get it in writing. If you release your block outside of 45 days, your attrition clause should be lower than if you release the block at 15 days.

Have the attrition calculation completed on lost profit versus lost revenue.

Find out how many rooms are “picked up,” and have them counted and credited. As given in the earlier example, if 25 rooms were not booked, yet the hotel ended up selling 20 of the 25 rooms to other guests, you should only be charged an attrition rate on the five rooms not filled.

If you reduce your room block, how will it affect your F&B costs or meeting room fees?

 

Cancellation

A cancellation clause is a stipulation in an agreement that grants (to one or both parties) the right to terminate the contract, under specified terms and conditions.

A cancellation clause might be invoked due to a terrorism threat, union strike, or construction or remodeling overruns.

 

Force Majeure

This is a standard clause found in hotel contracts. It exempts both parties from fulfilling their contractual obligations for causes that could not be anticipated and/or are beyond their control. These causes usually include Act of God (tornado), Act of Man (9/11) or Act of Congress (all airplanes grounded in the days following 9/11).

 

Mutual Indemnification

A provision in a contract under which both parties commit to be “held harmless” for any harm, liability or loss arising out of the contract. In short, this means neither the hotel or group can be compensated for any claims or damages to persons or properties during the conference.

 

Non-Performance

Failure of a party to abide by or fulfill the terms of a contract may lead to a breach of contract. This can occur if multiple already booked guest rooms were not available and the hotel “walked” your attendees. Or if the food and beverage you agreed to on the BEO was not served. Or your group canceled the conference for reasons not specified above.

 

Overall Recommendations

If you have specific contract terms, put them in the RFP. This way when you come to the negotiating table, your terms will not be a surprise.

Use a contract checklist. It’s unlikely you’ll miss things if you have a checklist of the “must-haves” when reviewing the draft contract.

Read the contract twice and ask your hotel’s group sales professional about any questions you may have. Take notes, immediately relay an email back to the person about items discussed and ask them to be inserted/changed/deleted from the contract.

If you still are uncertain about the contract, ask your company’s legal counsel to review it.

Communicate early and often with your attendees about the hotel registration process. Remind them several times when the registration window closes — by email, on social media and even via texting.

Get all verbal agreements in writing.

Don’t expect concessions after you’ve signed on the dotted line. Negotiations usually end upon contract signature.

 

In Closing

Contract negotiations and signing don’t have to be overwhelming. Remember, these are general guidelines, but if properly followed, your association, company or group should be protected from liability and unwanted charges.

In addition, most hotel and convention centers welcome your business and will work with you to arrive at a “win-win” solution.

 

About Kalahari Resorts and Conventions

Our mix of incredible amenities and beyond-expectations service means we do an exceptional job taking a meeting or event from something you have to attend and turning it into an experience that you want to attend. Give our sales team a call at 855.411.4605 to learn more about our destinations!