Optimizing the Audit Clause

Many hotel contracts contain a clause that calls for an audit of the hotel's rooming records after an event has been held to ensure that any rooms that may have been booked "outside the block" are properly credited to the group that held the meeting. For very large meetings, these audits can sometimes detect dozens of rooms that were booked outside of the block, which can make a huge difference in lowering or eliminating attrition penalties, increasing the number of complimentary rooms and other concessions that are earned, increasing commissions earned by third-party meeting planners, and increasing rebates or other fees that are based on room block pickup.

However, in recent years, some hotels have begun to object to such clauses, or have attempted to narrow the scope and usefulness of such clauses in ways that can become problematic. Meeting planners need to be on the lookout for the issues that are outlined below, and they need to be prepared to deal with them.

Issue 1: Refusing to Allow a Room Audit Clause
A few hotels are refusing to allow a room audit clause in the contract. Some argue that allowing a group representative to view the hotel's guest registration records violates the privacy rights of the hotel's guests and also allows the group to have access to sensitive, proprietary hotel information. In general, these alleged privacy concerns are unfounded, or at least they can be ameliorated with a carefully drafted audit clause.

For example, the registration form for a meeting could be drafted to contain a clause in which attendees consent to allow their information to be shared with representatives of the hotel and the group for audit purposes, in which case the attendees have waived any privacy concerns. As a last resort, the audit clause could allow the audit to be conducted by hotel employees only (in which case privacy cannot be a viable concern because the hotel is merely reviewing its own records), although in this latter case, the group must rely entirely on the honesty and diligence of hotel employees to do a thorough audit.

Issue 2: Refusing to Honor a Room Audit Clause
Some hotels may agree to a room audit clause at the time the contract was signed but, after the meeting has been held, refuse to honor the clause for many of the same reasons outlined above. Because there is no clear law that makes room audit clauses illegal (and indeed such clauses have been commonplace for years), a refusal to honor a room audit clause after-the-fact is grounds for a breach of contract claim. Groups and their meeting planners should be diligent in demanding that the clause be honored and should be willing to take appropriate legal action if the hotel will not comply.

Issue 3: Charging for Room Audits
Finally, a few enterprising hotels have attempted to charge a fee for the time and effort that they must spend auditing the room block. If the contract has an audit clause and no fee is mentioned in that clause, meeting planners are in a strong position to refuse to pay such a fee. Better still, this issue can be avoided entirely if meeting planners ensure, up front, that room audit clauses contain a provision stating that no charge will be made for the audit.

Issue 4: Using the Power of the Purse
If a hotel refuses to allow a room audit clause, even when a group promises confidentiality or offers to let the hotel conduct the audit on its own, the best solution is to take your business elsewhere, rather than begrudgingly signing a contract with that hotel. If a hotel loses enough meetings business on enough occasions due to its unreasonable position on a particular contract clause, it will almost certainly be forced to change its position or else face plummeting profits.