Hotel Contracts… From the Hotel Side

MPI-SEC: Advanced Hotel
Contracts: Maximize Your
ROI, Minimize Your Exposure
We just pass the time in our hotel rooms
And wander 'round backstage
Till those lights come up and we hear that crowd
And we remember why we came
--Jackson Browne, Running on Empty, 1977
Tom Pasha, CONTACT Planning
[email protected]
Tom Pasha…
Hotels since age 15
14 Hyatts over 20 years
6-time DOS
National Sales Director
Founded CONTACT Planning,
a national meeting and golf
planning company
Trains planners from
“The Hotel Side…”
In this session…
TONS of Information!
Very Interactive
Ask lots of good questions
Take lots of notes…
Contracts are critical to a great
meeting…here’s the hotel side of
Hotels Need Meeting Business!
Hotels Depend on Groups and
Higher rate
Better catering, facility use – golf, spa, gaming
Prime time groups increase revenue
Off-peak groups increase occupancy
Hotels are designed with Group Meeting Space
to fill rooms!
What can you Negotiate? Everything!
When you confirm the negotiations, it’s time to
go to Contract.
Hotels Contracts Confirm….
Dates, Rates and Space
Concessions and
Payment and Billing
Penalties: Attrition and
Good contracts confirm your
Space, Dates and Rates…
Space: General Sessions,
Break-outs, Meals, with set-up
and tear-down times, turn
times, weather backups.
Dates: Make sure the program
matches the rooms; add staff
arrival and departure dates;
VIP and speaker rooms;
Rates: Rates are ALL the
revenue streams of the hotel
and include…..
Contracted Rate$
Much more than Room Rates!
Be sure to Contract…
Room Rates (Sgl /dbl / trip / quad)
Suites Rates (1, 2-bdrm suites?)
Staff Rates
Comp rooms: 1/40, 1/45, 1/50?)
Resort Fees (PP or Per Room?)
Internet access fees: Room and Mtg Space
Parking Fees (Staff price / Comps?)
Porterage Fees (Optional?)
Housekeeping Fees (Optional?)
Room delivery fees
Contracted Concessions
After the Room Block and Rate information, Concessions are next.
Bullet-point format, include comps, upgrades, VIP’s, meeting space, so
everything is easily found and confirmed.
Sample Concessions:
1 per 40 comp room credit, calculated on a cumulative basis;
Three VIP upgrades to Junior Suites at the Group Rate for the duration of the
One (1) two-bedroom VIP suite complimentary for the duration of the conference;
Complimentary wireless internet in all guest rooms;
Complimentary wireless internet in all meeting rooms;
Complimentary meeting space, based on the program and pick-up;
Complimentary Health Club Fitness Center for all attendees
10% off AV equipment
10% off Catered F&B (Or current menu prices GTD for future year event)
Additional guest rooms will be accepted at group rate based on space availability
Group rate extended three days pre and post the event, based on availability.
Reservations Items:
Reservation Method: Individual,
Rooming List, Housing Bureau
Rooming List Due date-Cut-off
Room Block Review Date: 10% or
20%, 3 to 6 months prior to Cut-off,
not Event Day.
Rooms received after Cut-off should
be based on room availability at the
Group Rate
Rates available 3 days pre- and
post-meeting dates, space available
Payment and Billing
Billing: Master Account:
 All Charges to Master
 M/A Room & Tax, Ind.
 GTD to corp; Individual
Payment at check-in
 Master Account Catering,
Specified Staff Charges, per
Rooming List
Payment: Pre-payment / Payment;
Credit Card Authorization; Credit Application
Special Forms: Purchase Orders, W-9,
Separate Invoice for every deposit due
Contracts are Fun, But What
Happens “IF” Things Go Wrong?
Performance Penalties
Remember that Planners and Hotels REALLY hate
these conversations, so if you work as partners, you
will avoid most problems.
Avoid Penalties With Planning,
Executing, Follow-Through
Since you want a hotel to hold Definite
dates, you have to make a Definite
Definite Dates, Rates and Space
Get a Definite Commitment from:
VIP’s and Speakers,
Budget, FDA, all outside approvals
Check for competing / similar events in
Have your bosses sign a
commitment memo or purchase order
Executing to Avoid Penalties
Before Cut-off: Does your contract have a
3, 6 or 9 month review? Does it show
exact dates and percentages?
Observe all review dates
Keep in touch with the hotel
Are your counts accurate?
Dupes and Cancels
Registration Vs. Reservations
Rooms credited to the block
Pre- and post rooms
All banquet charges counted
Attrition and Cancellation….
EWWWWWW! Both Hotels and Planners HATE this topic!
Book a group when you’re sure it is happening!
Contract an extended decision date, if you’re not sure;
Contracts should have a sliding scale of cancellation
dates; the penalty increases as the cancellation date
approaches the event date.
Tell the hotel if it’s a continuing education block or a
promotional block; ask for a Courtesy or “No Attrition”
Contracting Rooms
Minimums and Attrition
Negotiate and contract Rooms minimum at
80% of the block.
Contract a Resell clause, so the hotel can
re-sell the released space, and you’ll pay for
what was not sold;
Contract a Re-book clause, so any
Cancellation or Attrition fees are applied
100% to your next contracted date;
Whenever possible, any attrition or
cancellation penalty based on Rooms profit,
of 80%, Not Retail.
Determine whether cancellation is taxable -ask to see the tax code covering
cancellation fees.
F&B Minimums and Attrition
Base the F&B minimum on your
selected menu, not on the “Average
Check” assigned by the hotel.
Contract the minimum at @ 80%
Negotiate to have the F&B minimum
include Tax and Tip– “Inclusive”
Have meeting space rental include tax
and tip, in the event of a fee.
Have hospitality catering applied to the
Contract to pay the anticipated profit of
the Catered F&B, at 40%, not retail.
Re-Sell Clause?
Most hotels have a version of this in their contracts;
they typically don’t offer it, but will add it if requested;
make sure it is in your contract.
If you are liable for a cancellation, ask for the hotel’s
Daily Report or Flash Report for those days. Ask the
hotel to compare it to their Annual Forecast for the
cancelled days, to see if they were actually affected.
Pay for the difference between the estimated revenue
and the forecasted revenue @ anticipated Rooms profit
of 80%, not the 100% retail.
Re-book Clause?
If you re-book the same meeting within 6-12 months of
the cancelled dates, you should have the cancellation
fee applied as a pre-payment for the new dates.
Ask for 100% of the prepayment to be applied,
sometimes you’ll get it, and others may be 25%, 50%
or 75%.
Again, make sure it is clearly spelled out in the
contract, before anyone signs anything!
Make sure everyone signs and counter-signs
Attrition Clause Samples
This Agreement is based on Group’s use of the guestroom block as
outlined above. However, thirty (30) days or more, prior to the first
day of arrival, Group may reduce its guestroom block by a maximum
of 10% cumulative. Thereafter, Group shall pay Hotel one night’s
guestroom rate and tax for each unused guestroom night based on
the guestroom night commitment or the adjusted guestroom night
commitment. No payment shall be due, however, for any night
during the Group stay in which the Rooms Revenue meets or
exceeds the Rooms Revenue as forecasted in the hotel’s Annual
In the event any attrition charges are posted to the Master Account
for the above group, the entire amount will be applied as a credit
towards any rebooking of this group within 12 months following the
departure of this contracted event.
THE Ultimate Attrition and
Cancellation Clause
Seminar / Education Meeting Review Date:
The <group> will have the option of reviewing the pick-up and
registration performance of the group 30 (45) days prior to arrival.
At that time, the <group> may increase the block and space
requirement, based on hotel availability or decrease and/or
release the booking with no penalty.
Any reductions or cancellations occurring within 30 days of the
contracted arrival date will result in a cancellation charge of
$______; to be paid upon receipt of invoice.
Contract Clauses to Request:
Be sure to Ask for:
Construction and Renovation clauses
Entire Agreement
Performance Clauses
Waiver of “Corkage” for contractors
Mutual Indemnification
Lowest available rate over event
Resale AND Rebook Clauses
Contract Clauses to Request….
Construction or Renovation.
Hotel acknowledges and agrees that there shall be no planned or scheduled
alterations construction or renovations during the period of the meeting. For
any renovations that would impact the successful completion of this event,
the Group will have the option of postponing the scheduled event on a space
available basis or cancelling the event at the hotel without penalty.
Entire Agreement.
The foregoing Agreement, set forth the entire understanding between the
parties hereto and supersedes all prior agreements, arrangements, and
communications, whether oral or written, with respect to the subject matter
hereof. This Agreement may not be modified or amended except by the
mutual and prior written consent of both parties. No additional Rental Fees,
Minimums or other charges not specifically set forth in this contract can be
added at a later date, without mutual agreement by both parties.
More Clauses…
Performance Clause:
It is agreed that in the event of a problem in facilities or service, that the client will clearly identify
the issue to the sales and convention service manager assigned; the hotel will have the
opportunity to remedy the situation. In the event that the proposed remedy is not mutually
agreed upon as resolving the issue, the client reserves the right to negotiate appropriate and
proportionate adjustments to the Master Account.
Outside Contractors:
Catering, in-house electrical service and rigging are exclusive services provided by the hotel.
The hotel agrees to waive any service fees, patch fees or other billing in the event the Group
selects an outside contractor for convention-related services such as DMC’s, Décor, Audiovisual services, etc. Standard and reasonable licensing and insurance will be required from any
outside vendors.
Mutual Indemnification:
Each party to this Agreement shall, to the extent not covered by the indemnified party’s
insurance, indemnify, defend, and hold harmless the other party and its officers, directors,
agents, employees, and owners from and against any and all demands, claims, damages to
persons or property, losses, and liabilities, including reasonable attorneys’ fees (collectively,
“Claims”), arising solely out of or solely caused by the indemnifying party’s negligence or willful
misconduct in connection with the services contemplated by this Agreement. This paragraph
shall not waive any statutory limitations of liability available to either party nor shall it waive any
defenses either party may have with respect to any Claim.
The Final Edit….
Check that the client name, group name, hotel name and all
contact information is accurate;
Check and double-check that space, dates and rates are
Set-up times, event turn-times, weather back-up rooms
reserved, exact access times.
Make sure all concessions are on bullet-points, not hidden
Check to confirm the program is exactly as you want it;
Make sure all the clauses are clear;
Negotiate all Cancellation and Attrition clauses;
Check that the Resell and Rebook Clauses are added;
Ready to Sign the Contract…?
NOT YET!! Double-check everything! It’s a real
document… (VERY real sometimes!)
Make any changes before you sign the final contract;
once it’s signed, it’s done.
“Line-outs” are legal– date and initial any changes;
hotel to counter-initial changes;
For major changes, request a re-write;
Sign, date and scan or fax-return the contract, have
the hotel send you a countersigned copy.
Make sure you receive a counter-signed copy–
Legally, a contract without a countersignature is
binding ONLY on the signer.
And finally…
Hotels are in the Service
business! They are NOT out to
get you!
Good negotiations lead to good
Contracts are critical, but be sure
they are fair for both sides… you
want the group to be a success
and for the hotel to want to work
with your group!
And, as always….
Call me if I can help!
…Thank You!
Tom Pasha
CONTACT Planning
Tel: 407-891-2252
[email protected]
“ And still those voices are calling from far away,
Wake you up in the middle of the night, just to hear them say,
Welcome to the Hotel California.”
-- The Eagles, Hotel California, 1979
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