Contract Negotiations: Planners’ Favorite Clauses

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Contract Negotiations

While some meeting professionals relish contract negotiations, others would rather be held captive on a runway in a sweltering Boeing 737 with a crying baby on board. To make the contract negotiation process less daunting, we asked planners to share the clauses they feel should be included in any negotiation. Here are five to consider.

1. Management-Change Clause

It can be both worrisome and challenging to deal with a property in the midst of an ownership or management change. To that end, many planners now ask for a clause in contracts to either cancel the meeting or allow for a renegotiation if such a change occurs.

Jill Roth, CMP, owner of Jill Roth Events, says a management company she signed a contract with was replaced by another company overnight just four months prior to a meeting she held earlier this year. “These kinds of rapid changes can greatly impact groups,” she says. “I will now request a clause that permits a group to cancel or alter the agreement if there is a management company change that creates any lack of trust or confidence in the delivery of the original contracted program.”

A related item to consider is a renovation or construction clause to protect you in case of unscheduled or unknown work at the hotel.

2. Cancellation-by-Hotel Clause

All hotels include a cancellation clause, but nearly all of them are meant to protect the hotel. What if a hotel decides to cancel on you?

“One of my most important contract negotiation clauses is ‘cancellation by hotel,’” says Stacy Weber, CMP, meeting and procurement manager at Moss Adams LLP. She has language that states that if the hotel cancels on her, it is obligated to help find an alternate and comparable location and pay any difference in cost, including additional transportation. Some hotels balk or say they would never cancel on her. But that changes when she says, “If they would never cancel on me, then I, of course, would never cancel on them either, so let’s take out any cancellation penalties altogether.” So far, Weber has had no takers on that proposition, and the clause has helped her when a hotel attempted to bump her group for a bigger piece of business and another venue went under renovation.

Some planners also add a clause that states cancellation fees are based on lost profit, not lost revenue.

3. Meeting-Room-Change Clause

Planners who don’t currently use a clause like this will want to soon during contract negotiations. Few issues are as troublesome as not having the space needed for a meeting.

“There is one clause in particular that I will not sign a hotel contract without, and which has saved me from potential meeting-space disasters,” says Darcie Smith, annual conference coordinator at the Council on International Educational Exchange (CIEE). “This clause is a simple sentence that reads, ‘Meeting rooms will not be changed unless approved in writing by client.’”

Smith also tends to cross out any language in contract negotiations affecting a change in meeting rooms, especially phrases such as, “Meeting space is subject to change without notice.” For Smith, this is a deal breaker.

4. Rebook Clause

When Ann Lohry Smith, CMP, meeting management specialist at Association Management Ltd., worked for a large corporation planning several hundred training events a year, she required that her venues agree to a cancellation rebook clause. It stated that if, for any reason, she needed to cancel or postpone, she could rebook for another time within one year and that any cancellation fee would be credited toward the rebooking.

“Working for a very large national employer, it wasn’t too difficult to negotiate this into the contracts,” she says. “The venues and hotels we worked with valued our partnership and recognized it could mean many more future bookings.”

5. Banquet-Gratuities Clause

This language essentially states that the group has the right to question the service charge with the banquet manager or director of catering in contract negotiations. “Most of us have heard these horror stories of loud or noisy service people, out-and-out bad service, or food delivered so slow it was cold,” says Jean Travers, manager of global accounts for HelmsBriscoe, who began adding this clause years ago. “This just gives the planner a contractual leg to stand on. Also, the clause is presented at the pre-con, so the director of catering and banquet manager are aware that their service staff better step up.” Another inclusion in this clause: F&B prices will be guaranteed 90 days prior to the event.

Besides these clauses, planners suggest including wording that forbids miscellaneous fees and charges without client approval, and that allows for the use of outside A/V vendors.

Not everyone has must-include clauses in contract negotiations. “Contracts are specific to the type of program it is, the risk associated with the contract and the money invested in the meeting,” says Irene Saulsbery, CMP, meeting planner with the New York State Association of Realtors. Saulsbery says her most effective tip is to adopt a partnership stance, understanding that both parties have goals to reach. Her walk-away moment comes when a hotel is not flexible or if the terms are not in line with the local market.

“While not afraid of a spirited contract negotiation, I recognize the contract has to meet the needs of both the hotel and the group,” she says. “When you are sitting across a negotiating table, it is better to build bridges than fences.”

Alan L. Kleinfeld is a journalist who has been in the meetings industry for 20 years. He is an association management consultant and adjunct professor in hospitality management.