Signing on the Dotted Line
This week’s topic is one of my favorites… there is nothing I enjoy more than that moment – after taking the time to research venues, go on site visits, send out RFPs, accept and/or negotiate a deal – that I receive that first contract for review. Yes, emphasis on first here, because I must say in my career I have never signed the first version of a contract. It’s not about giving my chosen venue a hard way to go, but it’s about being sure that both parties are equally empowered and protected in the agreement, and it just so happens that the entity providing the contract tends to be a bit more favorable to themselves when doing so (can you blame them?).
So the key that I’ve found in reviewing and negotiating venue contracts is considering your intended “end game” – when it’s all said and done what are the must-haves, nice-to-haves, and neutral-to-haves? Then, I think about what are the worst things that could happen to you onsite when it’s time to make it all happen? What could happen, completely out of my control, that could render execution an utter disaster? It sounds quite grim, but that whole “expect the best, plan for the worst” theory has some true merit in this case!
With this as my baseline, here are a few can’t-live-without-them clauses that make their way into every venue contract I execute:
- Re-assigning space – here’s the deal: every venue wants the right to move your group around, at their discretion, in accordance with works best for their property (i.e. if your group is using a room larger than you need, and they need that room for a larger group, they want to move you, and they don’t want to have to ask you to do so). That’s fine, we’re in this together but remember that whole mutually protected and empowered bit? Well to be mutually empowered in this case, the move should be mutually agreed upon (meaning, yes you need to tell me, and I need to agree) and the new space must meet space requirements determined by total number of attendees (i.e. X sq. ft. per attendee). Here’s an example: “Venue reserves the right to change function rooms based upon total amount of Group guests attending such function, as well as the function space required to accommodate total number of guests, but agrees that these changes will be agreed to in writing by the Group prior to making any changes and that any changes will be in direct proportion to the change in Group guests attending the function with a minimum of X sq. ft. allotted per confirmed guest.”
- Attrition – if you are also holding sleeping rooms, your venue will want you to hold to your commitment to “actualize” (i.e. actually book) those rooms because they are depending on that revenue. Since we’re not mind readers, and anything can happen, as a courtesy they give us a little wiggle room between the number of rooms we said we needed, and the number we actually end up using. This “gap” is called attrition. Some venues are generous with the standard gap of 20%, and some venues are a wee bit stingy and can impose as narrow as a 5% gap. My first attempt at mutual empowerment is a nice little gap… depending on the venue and the size of the group (i.e. leverage), that can be a not-so-negotiable term. Moving along, it’s important that should you miss the mark in terms of rooms booked, that the you only pay for rooms that were not booked. To do that, you’ll want to add something like this: “Group will only pay liquidated damages for rooms that are not resold and remain available for sale. Prior to the billing for the attrition payment, Hotel must submit to Group a copy of the city ledger or daily occupancy report documenting that the rooms were not resold and were available for sale.” Now, you’re mutually protected.
- Cancellation – again, we are counting on the venue to deliver, and the venue is counting on us to deliver – no one wants to think about cancellation, but it happens so it must be addressed. Your beloved venue will want you to give them as much notice as possible of your intent to cancel so that they can replace the revenue – can’t blame them. They will also want to charge you the highest liquidated damages possible to make up for the risk of them possibly not being able to replace you. It’s like a pulley… the closer to the event the cancellation, the larger the liquidated damages. Again, this is about mutual protection and empowerment, so it’s not about eliminating cancelation damages, but rather finding ways to soften the blow. I love to use the “date change” option, wherein it is not considered a cancellation if I notify the venue 90 days in advance of my need to change dates, and the new date occurs within 90 days of the original date. This clause would look something like this: “unless Group notifies Hotel more than 90 days in advance of the agreed date of their intent to change the date, and the new date will occur no more than 90 days after the originally intended date.”
And on, and on, and on – I often think I should have been a teacher after reviewing my contract “markup” that looks much like grading. One blog could not cover all of the contracting do’s and don’ts, but that leaves room for YOU to tell us what you think, and request a topic for the next discussion! Until next time – happy contracting!
Image courtesy of shho