Deal Or No Deal: Overcoming Barriers With Hotel Contracts

You’ve found the perfect hotel for your meeting.

It’s a great location. You were able to negotiate a good room rate. The concession package and your meeting space flows well too.

The Contract’s T&Cs Cause You To Pause

The hotel sends you a contract to secure the deal. As you review the 14-page document, you realize that while the business issues are acceptable, the hotel’s terms and conditions (T&Cs) are giving you reason to hesitate.

Some organizations have created their own standardized contract template to counter a hotel’s T&Cs. Some attach an addendum that is intended to override the hotel’s T&Cs.

Unfortunately, the hotel staff often has to send these requests to corporate and legal counsel for review. When the contractual process escalates on either side, the transactional costs increase — and the likelihood of getting the deal done decreases.

Commonly Contested T&Cs

Some of the most commonly contested T&Cs include:

  • Cancellation and attrition (profit versus revenue, mitigated versus liquidated damages)
  • Force Majeure (acts of God)
  • Indemnification
  • Multiple liabilities for performance (attrition and room rental)
  • Room rate protection (lower rates available through other channels, future rate formula, availability of rate after the cut-off date)
  • Master account payment and deposits

While all of these areas could have little to no impact on the spend of the group or the hotel’s revenue, each carries a potential risk that must be evaluated and managed by both parties.

Hotels and groups are both gravitating towards their favorite clauses for each of the areas mentioned. All too often they find themselves in a stalemate because of their preference for their own verbiage or legalese. High-performing organizations will educate their “deal makers” on the components of these T&Cs instead of advising that they take a take-it-or-leave-it stance.

Negotiating From A Position Of Business Intent Instead Of Legalese

If you find yourself at a stalemate, try a negotiating position that is not focused on legalese but rather on business intent.

Example 1: You want a Force Majeure clause that:

  1. Is reciprocal.
    It works for the hotel and the group.
  2. Is not limited.
    It applies for unforeseen circumstances out of the control of both parties whether they are listed by example or not.
  3. Provides protection.
    It provide protection in case of partial performance, as well as full cancellation.

Example 2: You want an attrition clause that:

  1. Encourages the group to make adjustments in advance.
  2. Is able to be calculated by both parties.
  3. Does not make the group liable for more than 80 percent or 85 percent of the total block.
  4. Compensates the hotel only for their lost profit.
    It credits resold rooms, including rooms not coded to the group that are part of the group.
  5. Is not coupled with other liabilities associated with guest room pick-up.
  6. Is not payable any sooner than the master account terms.

Tell the hotel that you will agree to a clause that properly protects your organization and that adequately addresses these issues. This approach will result in fewer stalled deals because of legal jargon. It also helps close the gap on business intent versus verbiage.

What are some other ways to negotiate from a position of business intent instead of legal jargon? How do you normally handle contested T&Cs?

Adapted from Dave’s People & Processes column in PCMA’s Convene. Reprinted with permission of Convene, the magazine of the Professional Convention Management Association. ©2012.

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