How a Contract Can Protect Your Group From Hotel Renovations

A well-written legal agreement can protect your meeting from being displaced

SM0617 Hard hat opener

"Dante's Seventh Circle of Hell" is how Dianne Davis, event producer for TulNet Meetings and Events, based in Tulsa, OK, describes a recent five-day meeting she planned. Everything was all set for this international publishing association to gather in Fort Lauderdale, FL, for a stimulating conference that combined education, networking, and discussion of topics related to the magazine publishing industry. Or so she thought. Unexpected construction issues at the property the group was meeting in led to a last-minute cancellation by the hotel. Davis, a 25-year veteran of the events industry, has run into her share of challenges, but when she turned to her contract for relief this time, she found it didn't offer the protection she needed.

Here are some of the lessons about construction clauses that Davis learned the hard way, along with some success stories of planners whose contracts protected their events from being wrecked by renovations.   


The First Red Flag
When Davis signed the contract for the meeting, she was aware of some construction going on at the hotel, but was told it would be completed well before her meeting. The first indication of a problem occurred a month before its kickoff when she learned that a terrace overlooking the ocean where a reception was to be held wasn't going to be finished in time. The hotel rep said the event would have to be moved to the pool deck.

What Davis did: She said moving the event to the pool deck was fine and went on with planning the event.

What Davis will do in the future: She knew the hotel was under construction when she booked it, so she should have added language in her contract over and above standard clauses pertaining to what action will be taken if construction is not complete in time.

John Foster, Esq., CHME, an attorney whose firm, Foster, Jensen & Gulley, specializes in the legal aspects of meetings and events, also recommends requesting a general contractor's report. "It usually comes out every month and contains the guidelines of project due dates," he says. "It will state whether a project is on target to meet deadlines or not."

Further, he says contracts should include a date, six to 12 months in advance of the meeting, whereby the group may terminate the contract without liability on its part and hold the hotel liable for cancellation if the general contractor's report indicates that the project will not be completed by the meeting dates. The hotel would also be required to assist in finding alternate arrangements.


The Crisis Hits
After the shift of the reception, things seemed to be going as planned and Davis focused on the event's menu selection, registrations, and last-minute queries from the group of 70. But then, 13 days before the event was to begin, she joined a conference call with the hotel's director of sales and marketing, a convention services manager, and her sales manager. They told her that due to the ongoing construction issue it would be unsafe to hold the meeting, and that they could not accommodate the group. An email from the director of sales and marketing followed, recommending that Davis make alternate meeting arrangements, and offering to help secure arrangements.  

"At first, I had trouble processing this," says Davis. "I was in the hotel business for 15 years and know these things happen. I know what it looks like when a scenario like this is managed right. They should have offered to pick up all the charges associated with moving to a comparable hotel." That did not happen.

What Davis did: A clause in the contract stated if the hotel couldn't accommodate the group, they could make arrangements at a sister property. Thing is, this hotel chain consists of only five properties. "I saw this language and was shocked. It shows the life of a busy meeting planner is not perfect. We miss things," she admits. "I owned it and didn't try to gloss over it."

The sales manager told Davis that there wasn't a hotel in Fort Lauderdale that could accommodate her group, but its sister hotel in Orlando had availability.

"This was unacceptable, as Orlando is 220 miles away and the group was looking forward to a beach destination," says Davis. "Plus, after running the numbers, I realized it would cost approximately $100,000 to change all the flights, many of which were international."

In addition, the contract they sent for the Orlando hotel was completely different than the contract they had in place. The food and beverage minimum at the new hotel was $13,000 more and the attrition and cancellation clauses had also been changed. To make matters worse, the hotel started avoiding her calls and emails. "We didn't have time for this as the hours were ticking down," says Davis. "I needed a solution, and fast."

What Davis will do in the future:      At this point, Davis reached out to Foster, whom she considers a friend as well as a colleague, and he gave her sage advice. "A planner's No. 1 priority in a situation like this is to explore all options to book another hotel and then figure out what damages the first hotel would be responsible to pay for," he says.

The general rule is that the party breaching the agreement is responsible for paying the other party for all increased costs it incurs to use a different hotel, he explains. Damages would also include revenue lost through lower attendance at the second hotel, if it could be proven that the change in hotels caused this, he adds.

"I also told her to keep me in the background to give advice as long as the hotel was cooperating and offering compensation. It is best to try and resolve situations like these on a customer-to-hotel level rather than lawyering up right away," he says.


Triple Jeopardy
It's bad enough when one group is having its meeting canceled because of a missed construction deadline. Try having it happen to three groups at the same time. That's what happened for the grand opening of Austin, TX's Kimpton Hotel Van Zandt.

The property is infused with rock 'n' roll features such as an art installation of vinyl birds sculpted from LPs, and light fixtures made of trombones and trumpets. Needless to say, there was a great deal of excitement surrounding its scheduled opening in September of 2015. Three groups took advantage of pre-opening rates and booked their meetings while the property was still under construction. But as is often the case with construction projects, the Hotel Van Zandt's opening was delayed by two months.

What the hotel did: "We want our customers to come back to us over and over again," explains Chuck Moses, director of sales and marketing for the hotel. "Before we called them about this situation, we reached out to neighboring properties, including the W, the Westin, and the Four Seasons. We believe in approaching the client with a solution, not a problem."

Two of the hotels honored the groups' existing rates. One came back with a higher rate and the Hotel Van Zandt picked up the difference. "The situation was not ideal, but we did what we had to do to make the clients happy, and they have rebooked with us to come back next year," says Moses.

What the planners of those events should do in the future:
 Although Moses recommends planners have construction clauses in their contracts, especially when there is a renovation or remodeling taking place, he points out that there weren't such clauses in the contracts of these three groups. "We did what we did because it was the right thing to do," he says.

Construction clauses take on added importance when dealing with a hotel that is a new build. Moses recommends including language that requires a project timeline and the ability to escape the contract and relocate.

"Planners get excited about new hotels and the great rates that are often $50 to $80 cheaper than the going market rate," he says. "But the planners should go in with their eyes wide open and have a strong relationship with their sales manager."  



Questions or comments? Email [email protected]



This article appears in the June 2017 issue of Successful Meetings.


Space Miscalculator
Dana Toland, founder and president of Weymouth, MA--based The IT Exchange Group, a company that provides turnkey meeting planning, as well as complimentary site-selection services, had a similar experience related to hotel construction in Houston, TX.

The property involved was being completely gutted and rebranded. "I had done a hard-hat tour and the renderings of the meeting space, including the room specs and occupancy rates, were a perfect fit for an industry trade show," explains Toland, who had drafted a contract based upon the negotiations with the hotel that the client and hotel executed.

"Upon completion of the renovation, the CEO of the trade group and I did a tour of the final project two months prior to our event, and it was beautiful," she says.

But as Toland and her client did the site inspection, they noticed that the maximum occupancy plaques in each room stated figures substantially less than those included in the contract.

"We asked for a copy of the fire marshal's report that stipulated the occupancy levels of each meeting room post renovation," she says. It turned out that although the rooms were physically large enough for the group, the number of plumbing fixtures in the bathrooms were not adequate to accommodate the total occupancy numbers on the meeting rooms floor, and were in violation of a local ordinance and codes. As a result, the fire marshal reduced the maximum room occupancies.  

What Toland did: Toland searched, but could not find another hotel with enough space to accommodate this group of more than 1,000 for the dates she needed. Ingenuity solved the problem, as she reconfigured the layout of the exhibit space and used multiple areas. The main session was also spread out across two rooms. To appease the sponsors, concessions were made, reducing the revenues and profits of the conference.

Fortunately, in the contract she had written, she had a number of clauses to protect the group, as she specified that the meeting space is a material part of the contract (go to successfulmeetings.com/TolandContract to see the full details).

She worked closely with the hotel to restructure the program and came up with a new exhibit and meeting space layout, additional A/V at a cost of $60,000. Compromises were made to exhibitors, which cost another $10,000. Labor costs were incurred in drafting a new floor plan, editing the website, and reaching out to exhibitors with new space assignments.  

"We asked the hotel to refund us, and they refused. We decided to put it on the back burner, and proceeded with the planning of the conference, as we did not want to strain the relationship just prior to the event," says Toland. "Afterward, we had an attorney contact them for reimbursement. They refused. Fortunately, although the event was in Texas, the legal jurisdiction in the contract was listed as Boston. In Massachusetts, since they willfully refused to honor the contract, they could have been liable for treble damages, including legal fees. They paid."


End Game
Davis also enlisted the help of the Greater Fort Lauderdale Convention & Visitors Bureau, which sent out an all-points bulletin to its member hotels. The Westin Fort Lauderdale Beach Resort, a property Davis had worked with in the past, had availability. This was a perfect option.

Immediately, she started a tentative hotel contracting process with the Westin Fort Lauderdale Beach Resort. But the contract could not be signed until a settlement  was reached with the original hotel, and at this point, no one was returning her calls.

After several messages, the hotel general manager got involved.

What Davis did: "I told the GM to let me out of the contract immediately as I had found another hotel that could host us," she says.

The general manager agreed to send a settlement agreement for signature, refund the deposit, issue an apology, and pay for roundtrip airport transfers to the new hotel, as well as to reimburse a portion of Davis' added staff time and labor.

A confidentiality and non-disparagement clause was included in the agreement that surprised Davis. Basically, it stated that she was not allowed to speak about this situation, not even to the attendees or the association, and that she was potentially responsible for anything a member of the group said about their failure to perform.

"After much back and forth, they agreed to waive this clause," she says. "My No. 1 responsibility is to the attendees. The reputation management of the hotel is their problem."

In light of this situation, the original hotel also paid for each attendee to have two complimentary drinks during the opening reception, for two bottles of water per room per day, and for beach chairs and umbrellas. In addition, it refunded the $10,840 deposit, made a payment of $2,850 to TulNet for time and labor, and $1,200 for hotel shuttles.

Attendees and sponsors didn't accept the change of hotels without questions. But with some finessing, and uniform email, social media, and website messaging, all was good.

What Davis will do in the future: In every mistake there is potential for growth, the old adage goes. In the future, if Davis thinks a contract looks good, she will examine it one more time. She will also be hesitant when booking a small or independent hotel chain. "Caveat emptor. You do not have the depth of the brand or a national sales officer to back you up," she says.

The hero in all this, says Davis, is the Westin Fort Lauderdale Beach Resort. The hotel could have upped its charges, since the meeting was only days away. Instead, it matched everything from the original contract, including food and beverage minimums, comps, and room rates.

After all of this turmoil, the conference was a success. "At one point, I seriously wondered if we could have this meeting," she says. "If the conference had not happened, we would have had to refund sponsors, which could have bankrupted the association."

Davis says that this has been the most stressful situation in her entire career. "It took a toll on me personally. I lost hours of sleep working nonstop to make sure this conference went off without a hitch," she says. "I planned an entire meeting at one hotel and then had to plan another in a different hotel."


End Game
Davis also enlisted the help of the Greater Fort Lauderdale Convention & Visitors Bureau, which sent out an all-points bulletin to its member hotels. The Westin Fort Lauderdale Beach Resort, a property Davis had worked with in the past, had availability. This was a perfect option.

The Westin Fort Lauderdale Beach
Resort came to the rescue of Dianne
Davis by accommodating her meeting
less than two weeks out
The Westin Fort Lauderdale Beach Resort came to the rescue of Dianne Davis by accommodating her meeting less than two weeks out

Immediately, she started a tentative hotel contracting process with the Westin Fort Lauderdale Beach Resort. But the contract could not be signed until a settlement  was reached with the original hotel, and at this point, no one was returning her calls.

After several messages, the hotel general manager got involved.

What Davis did: "I told the GM to let me out of the contract immediately as I had found another hotel that could host us," she says.

The general manager agreed to send a settlement agreement for signature, refund the deposit, issue an apology, and pay for roundtrip airport transfers to the new hotel, as well as to reimburse a portion of Davis' added staff time and labor.

A confidentiality and non-disparagement clause was included in the agreement that surprised Davis. Basically, it stated that she was not allowed to speak about this situation, not even to the attendees or the association, and that she was potentially responsible for anything a member of the group said about their failure to perform.

"After much back and forth, they agreed to waive this clause," she says. "My No. 1 responsibility is to the attendees. The reputation management of the hotel is their problem."

In light of this situation, the original hotel also paid for each attendee to have two complimentary drinks during the opening reception, for two bottles of water per room per day, and for beach chairs and umbrellas. In addition, it refunded the $10,840 deposit, made a payment of $2,850 to TulNet for time and labor, and $1,200 for hotel shuttles.

Attendees and sponsors didn't accept the change of hotels without questions. But with some finessing, and uniform email, social media, and website messaging, all was good.

What Davis will do in the future: In every mistake there is potential for growth, the old adage goes. In the future, if Davis thinks a contract looks good, she will examine it one more time. She will also be hesitant when booking a small or independent hotel chain. "Caveat emptor. You do not have the depth of the brand or a national sales officer to back you up," she says.

The Westin Fort Lauderdale Beach
Resort could have upped its charges,
since the meeting was only days away.
Instead, it matched everything from
the original contract, food and beverage
minimums, comps, and room rates.
The Westin Fort Lauderdale Beach Resort could have upped its charges, since the meeting was only days away. Instead, it matched everything from the original contract, food and beverage minimums, comps, and room rates.

The hero in all this, says Davis, is the Westin Fort Lauderdale Beach Resort. The hotel could have upped its charges, since the meeting was only days away. Instead, it matched everything from the original contract, including food and beverage minimums, comps, and room rates.

After all of this turmoil, the conference was a success. "At one point, I seriously wondered if we could have this meeting," she says. "If the conference had not happened, we would have had to refund sponsors, which could have bankrupted the association."

Davis says that this has been the most stressful situation in her entire career. "It took a toll on me personally. I lost hours of sleep working nonstop to make sure this conference went off without a hitch," she says. "I planned an entire meeting at one hotel and then had to plan another in a different hotel."

Words on a Piece of Paper
In situations where properties are missing a deadline on a renovation or an opening, meeting planners learn -- and fast -- that contracts are only as good as the ability to litigate them.

"If a hotel says, 'We are not doing that, sue us,' you are stuck," says Dianne Davis, event producer for TulNet Meetings and Events. "Unless you are willing to go into litigation, and have the time and money that costs, it is just all words on a piece of paper."

It is expensive to enforce your legal rights. John Foster, Esq., CHME, an attorney with Foster, Jensen & Gulley, recommends including a fee-shifting provision, which allows the prevailing party to recover its attorney fees and costs in the event of litigation.

While hotel construction resulted in Davis' group having to be relocated, there are cases where a hotel will cancel one group in order to accommodate another, more profitable, one.

"There is nothing immoral or illegal about a hotel canceling a meeting," explains Foster, who advises meeting planners to have their contracts reviewed by an attorney before signing, to avoid potential future disputes. "It's all dollars and cents. The only thing you can do is make sure the injured party gets enough money to be made whole again by the defaulting party."

In spite of the fact that the hotel Davis was having her gathering in canceled less than two weeks out, the meeting was a great success. "I am a better meeting planner having done this, as I learned so much. I will never take that something like this can happen for granted. It can happen to anyone."


Space Miscalculator
Dana Toland, founder and president of Weymouth, MA--based The IT Exchange Group, a company that provides turnkey meeting planning, as well as complimentary site-selection services, had a similar experience related to hotel construction in Houston, TX.

The property involved was being completely gutted and rebranded. "I had done a hard-hat tour and the renderings of the meeting space, including the room specs and occupancy rates, were a perfect fit for an industry trade show," explains Toland, who had drafted a contract based upon the negotiations with the hotel that the client and hotel executed.

"Upon completion of the renovation, the CEO of the trade group and I did a tour of the final project two months prior to our event, and it was beautiful," she says.

But as Toland and her client did the site inspection, they noticed that the maximum occupancy plaques in each room stated figures substantially less than those included in the contract.

"We asked for a copy of the fire marshal's report that stipulated the occupancy levels of each meeting room post renovation," she says. It turned out that although the rooms were physically large enough for the group, the number of plumbing fixtures in the bathrooms were not adequate to accommodate the total occupancy numbers on the meeting rooms floor, and were in violation of a local ordinance and codes. As a result, the fire marshal reduced the maximum room occupancies.  

What Toland did: Toland searched, but could not find another hotel with enough space to accommodate this group of more than 1,000 for the dates she needed. Ingenuity solved the problem, as she reconfigured the layout of the exhibit space and used multiple areas. The main session was also spread out across two rooms. To appease the sponsors, concessions were made, reducing the revenues and profits of the conference.

Fortunately, in the contract she had written, she had a number of clauses to protect the group, as she specified that the meeting space is a material part of the contract (go to successfulmeetings.com/TolandContract to see the full details).

She worked closely with the hotel to restructure the program and came up with a new exhibit and meeting space layout, additional A/V at a cost of $60,000. Compromises were made to exhibitors, which cost another $10,000. Labor costs were incurred in drafting a new floor plan, editing the website, and reaching out to exhibitors with new space assignments.  

"We asked the hotel to refund us, and they refused. We decided to put it on the back burner, and proceeded with the planning of the conference, as we did not want to strain the relationship just prior to the event," says Toland. "Afterward, we had an attorney contact them for reimbursement. They refused. Fortunately, although the event was in Texas, the legal jurisdiction in the contract was listed as Boston. In Massachusetts, since they willfully refused to honor the contract, they could have been liable for treble damages, including legal fees. They paid."


Triple Jeopardy
It's bad enough when one group is having its meeting canceled because of a missed construction deadline. Try having it happen to three groups at the same time. That's what happened for the grand opening of Austin, TX's Kimpton Hotel Van Zandt.

The Hotel Van Zandt did the
right thing when its opening
was delayed and three groups
had to be relocated
The Hotel Van Zandt did the right thing when its opening was delayed and three groups had to be relocated

The property is infused with rock 'n' roll features such as an art installation of vinyl birds sculpted from LPs, and light fixtures made of trombones and trumpets. Needless to say, there was a great deal of excitement surrounding its scheduled opening in September of 2015. Three groups took advantage of pre-opening rates and booked their meetings while the property was still under construction. But as is often the case with construction projects, the Hotel Van Zandt's opening was delayed by two months.

What the hotel did: "We want our customers to come back to us over and over again," explains Chuck Moses, director of sales and marketing for the hotel. "Before we called them about this situation, we reached out to neighboring properties, including the W, the Westin, and the Four Seasons. We believe in approaching the client with a solution, not a problem."

Chuck Moses, Hotel Van Zandt
Chuck Moses, Hotel Van Zandt

Two of the hotels honored the groups' existing rates. One came back with a higher rate and the Hotel Van Zandt picked up the difference. "The situation was not ideal, but we did what we had to do to make the clients happy, and they have rebooked with us to come back next year," says Moses.

What the planners of those events should do in the future:
 Although Moses recommends planners have construction clauses in their contracts, especially when there is a renovation or remodeling taking place, he points out that there weren't such clauses in the contracts of these three groups. "We did what we did because it was the right thing to do," he says.

Construction clauses take on added importance when dealing with a hotel that is a new build. Moses recommends including language that requires a project timeline and the ability to escape the contract and relocate.

"Planners get excited about new hotels and the great rates that are often $50 to $80 cheaper than the going market rate," he says. "But the planners should go in with their eyes wide open and have a strong relationship with their sales manager."  



Questions or comments? Email [email protected]



This article appears in the June 2017 issue of Successful Meetings.