If you work with a group whose attendees absolutely loved a particular hotel or meeting facility, you might be tempted to capitalize on that success by booking a multi-year contract at that same facility, rather than rolling the dice and using someplace untried. This might take the form of booking meetings at the same venue in successive years (such as always having the annual winter conference at the same Florida resort) or perhaps booking one favorite facility in odd-numbered years and a different one in even-numbered years.
Returning to a popular facility can certainly provide a group with a significant degree of predictability about their upcoming experience, and in addition, many facilities will offer you an especially good price on rooms or other concessions in the current year if you sign a binding promise to return in one or more additional later years. But before you sign on the dotted line, here are four contract issues to address.
1. Negotiate long term. First and foremost, if you are going to use the same facility in more than one year, you should negotiate all of those contracts at the same time. Never sign one contract for an upcoming event ahead of the other contracts for the future years, because you will have lost much of your bargaining leverage. Instead, the contracts should be an all-or-nothing package deal.
2. Term limits. Make sure the contracts for each year have uniform terms, and especially uniform key provisions regarding attrition, cancellation damages, force majeure events, and a listing of free concessions. One easy way to ensure this is to roll all of the contract terms for each of the years into one big contract. Rooms prices, cutoff dates, and certain other information will need to be listed for each year, but the bulk of the remaining clauses can stay the same.
3. Lock in rates. If at all possible, the room prices for the later years should be locked in and clearly stated in the contract. If the hotel will not do so, you should at least insist on a maximum price increase from the current year's room prices. For example, you could insist that room prices will not increase more than X percent per year from the prices listed in the contract for the 2008 event you are booking.
4. Termination clause. Remember that it is possible for even the best hotels to suddenly have a decrease in their quality of service, food, maintenance of their rooms, or other aspects of the facility. Therefore, the fact that your attendees loved a property in 2007 does not necessarily mean that they will have the same experience when you go back in 2009. You can protect yourself from these quality downturns to some degree by building into the contract a clause allowing you to terminate a later year's contract if the hotel's ratings by an independent party take a dip, or if there are other objective indicators of a slip in quality in the intervening years.
Some groups that hear good things about a particular property they have not used will take a chance and book a multiyear deal based solely on recommendations. In addition, brand-new hotels that are still in the construction phase will often try to fill their books with business as fast as possible by offering lucrative deals to groups willing to hold multiple meetings once the facility has been built.
If you are considering signing a multiyear contract with a facility you have never used, and especially with a brand-new facility that is still being built at the time of your contract negotiations, then you obviously need to worry about all of the same issues outlined above. But in addition, you have one other huge area of concernwhat if after your first meeting at a new facility, attendees swear they will never return because of poor service, poor food quality, or other factors that you did not anticipate and that are not likely to improve in the future? If your first meeting is a flop, are you stuck having to go back to the same facility in the future?
Again, it is possible to build a clause into a multiyear contract that allows your organization to back out of a future contract if there is widespread dissatisfaction by your attendees during an earlier year's meeting at the property. Exactly how the clause is written and how you prove the necessary level of dissatisfaction is partly a matter of careful contract drafting and partly a matter of good negotiation, but it can be done. Indeed, in my experience, reasonable hotel managers who have good quality-control systems and a well-trained staff are more than willing to agree to such clauses because they know that their hotel can guarantee a high level of service and guest satisfaction year after year.
Ben Tesdahl, Esq., is an attorney concentrating in nonprofit, corporate, tax and contract law, including meeting and convention law. He is with the law firm of Powers, Pyles, Sutter & Verville, P.C. in Washington, D.C. He can be reached at 1-202-466-6550 or at [email protected].
Originally published July 1, 2008
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