Over the past year, meeting professionals learned that longevity is no longer assumed in the hospitality industry. Recently, the Association Professionals Council hosted an informative hot topic chat on contract negotiations where an esteemed panel of speakers provided their insights on the state of the industry. The panel included Joshua L. Grimes, Esq. from Grimes Law Offices, LLC; Deb Psioda, global vice president, accounts with ConferenceDirect; and Ava Setzer, director of sales, worldwide accounts with Hilton Worldwide Sales. The panel encouraged planners to start communications regarding existing or new contracts early. If issues arise, include your hotel’s national sales office representative. When building new relationships, try to “come off the page” by having important conversations over the phone or on a video call.
Read on to hear their tips on questions that were posed.
For planners with upcoming events that were contracted pre-pandemic, what should they be looking for when reviewing these contracts?
- The most important point is to thoroughly read the venue contract. It was suggested to start this process a year out from the event. Grimes stated that it is important to know your rights and obligations, as well as those of the venue.
- Confirm renovation and/or construction schedules with the property.
- If you’re at a union property, seek out and read the union contract.
- Stay vigilant for issues at the property. Try to resolve issues before arriving by asking questions. If you are able, visit the property often leading up to your event.
What are recommendations for reconciling a situation where a venue isn’t willing to follow through on parts of an existing contract?
- Ask your venue partner what the reason is for the obstacle. When you know more about the issue, you can work to resolve it more effectively. Also, ask yourself how mission critical the item is to the success of the program.
- Insist on compliance when it is important. Compromise when you can. For example, if you must have a specific number of employees to staff the event, can you be flexible on another item?
- Consider the cost factor for the hotel, especially for a comped item. Can you ask for something else? Most revenue is made on sleeping rooms and, to some degree, F&B.
- Ultimately, each party to a contract can be held to its contractual obligations. But consider the time, effort and cost that would be involved in a legal dispute. If a compromise is feasible, it may be to everyone’s benefit.
What are new clauses that planners should look out for as they contract new business?
- It was noted that hotels are having to push increased costs onto the customer. Properties were able to absorb it initially to get business in the door, but they cannot anymore.
- Force majeure has changed. Read the clause carefully. Many venues have taken out the words “commercially impracticable” and have changed it to impossible or illegal.
- Inflation has dramatically impacted F&B costs. Expect hotels to be less likely to commit to pricing and discounts at time of contract as they cannot predict future costs. However, planners can try to set parameters for future pricing.
- Watch for clauses based on legislative issues.
- There is increased need to specify what is included in sleeping room rates. For example, planners can no longer assume daily housekeeping will be offered.
How do you know it is time to pull in legal counsel in either reviewing an existing contract or drafting a new one?
- Legal counsel is expensive on both sides. Every opportunity to amicably resolve a dispute should be exhausted before bringing in legal counsel.
- When communication stops, it may be time to bring in legal.
- You may also need a lawyer when you don’t understand something or when you don’t believe you have the knowledge to effectively resolve the issue.
- Have your end goal in mind. How do you hope the issue is resolved?
- If you have a contract that has been drawn up or reviewed by a lawyer in the past, use it as a guide with other properties.
At the end of the day, planners were reminded that a signed contract must be enforced and sometimes you must push back. If your contract is not signed, remember that one of the greatest tools you have is the ability to walk away. Hotels suffered through the COVID-19 crises. Associations did too. We must get through it together. Remember that hotels want to produce a successful event as much as planners do.
Contact the Hot Topic Panelists
Joshua L. Grimes, Esq., Grimes Law Offices, LLC, grimesj@grimeslaw.org
Deb Psioda, Global Vice President, Accounts, ConferenceDirect, deborah.psioda@conferencedirect.com
Ava Setzer, Director of Sales, Worldwide Accounts, Hilton Worldwide Sales, Ava.Setzer@Hilton.com
