While hotels are achieving record profitability, the language in many a meeting contract is getting increasingly creative, according to several industry observers. That’s why it is more important than ever for planners to understand meeting agreements.
Lauralee Shapiro, global account executive, ConferenceDirect, recently saw a contract that included a 5% “administrative fee” on cancellation damages. “I took it out, and the hotel didn’t fight it. It was a high demand area, and they were pushing the envelope.”
Shapiro also just heard from a colleague about a recent hotel contract with an 8% event fee. “The event fee covers set up and clean up for the program, plus general overhead such as utilities, insurance, etc.,” the contract stated. Shapiro explains, “Those event costs should be in the menu pricing.”
She asserts, “They know they’re testing the limits. Planners have to read the contract.” That may sound simplistic, but it’s a suggestion that seems to go unheeded.”
“I know planners don’t always read contracts because I’m called in after [to clean up messes],” says veteran meeting planner Joan Eisenstodt, founder, Eisenstodt Associates, who has renegotiated agreements and testified in contract disputes. She, too has advice, for planners and industry associations. “Read the contract aloud and question what you don’t understand. Asking what terms mean is part of negotiation,” she notes. “Industry conferences should delve deeper into contract language, in smaller sessions, and discuss consequences.”
Adds John Foster, Foster, senior partner, Jensen & Gulley, a frequent speaker at industry association conferences, “Planners should read contracts two times. First to look for clauses that are vague or one-sided and then re-read them to see what should be there that’s missing. Most disputes between planners and hotels are over matters that were left out of the contact.”
After teaching about this and more at industry events for years, he advises associations to keep covering the topic. “I tell industry organizations, ‘Don’t get away from the nuts and bolts; new people come in all the time.’”
After all, Foster adds, “How many times can you hear about ‘how to think outside the box?’”