Contract tips to keep in mind
A quarter century into the second millennium, there are several things that remain constant: humans need food, water and shelter to survive; the law of gravity is still in play; and event contracts are still a necessity between meeting professionals and hospitality venues.
While the event contract itself is a constant, what’s included in the pages—which, according to Joshua L. Grimes, attorney at law and president of Grimes Law Offices LLC, are getting “longer, not shorter”—and between the lines is an ever-evolving beast.
Challenging the Force Majeure
Although the force majeure (or “act of God”) clause was given its time in the spotlight years ago thanks to Covid, it has always been a staple in contracts. Like many traditions humanity follows, just because it’s been around doesn’t mean it’s something we should stick to—Grimes can be added to the list of skeptics.
“I’ve been critical of the standard clauses for a long time,” Grimes says. The standard clauses he’s referring to are those strict details found in the force majeure. They don’t always work in every situation, he says, referencing the fires that recently ravaged more than 40,000 acres across several regions in Los Angeles County, including the Palisades, Altadena and Ventura.
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“Hotels almost always just deal with cancellation for when it’s ‘illegal’ or ‘impossible’ to go forward,” Grimes says. “With what’s going on in LA right now, for example, you couldn’t cancel a meeting without paying damages, because it’s not illegal or impossible to have a meeting in Los Angeles.” The clause doesn’t consider whether the meeting should be canceled.
“These clauses have gotten more difficult since Covid because hotels don’t want to lose the revenue,” Grimes adds. But given the fires in Los Angeles, Grimes suspects there could be a review of the force majeure clause.
Challenging Extra Charges
Resort Fees
In 2013, Marriott International decided to disclose all hidden consumer fees, including resort, destination and other fees. This flip to more transparent communication did not apply to group rates, and still doesn’t. In fact, Grimes says he’s been seeing new fees and charges sneaking into room rates.
“New kinds of add-on fees, fees for daily housekeeping, various kinds of surcharges that are disguised to look like taxes,” he says, just before expressing expectation of change, due to a new federal regulation. “We may see changes both because the federal government has required that any fees, specifically resort fees, be prominently disclosed in consumer contracts, and I think that could impact the way some fees are disclosed more upfront.”
The new requirement, announced by the Federal Trade Commission in December 2024, ruled against “bait-and-switch pricing that hides the total price by omitting mandatory fees and charges from advertised prices, and misrepresenting the nature, purpose, amount and refundability of fees or charges.” The ruling is set to go into effect 120 days after the motion was passed, so it’s expected to go into effect in March.
“It wouldn’t necessarily apply to a contract between a hotel and meeting group,” Grimes says, “but it impacts it because it creates an obligation to disclose any resort fees, probably within the registration materials. You might say, ‘We have hotels in this room block. We encourage you to book them. The rates start at $169 a night,’ and that would probably have to include a resort fee, so it may create an obligation between hotels and the meeting group for disclosure.”
In any case, smart planners, Grimes says, would ask that all fees be disclosed up front rather than be hidden. “As the fees continue to go up, it’s becoming more of an issue.”
Service Charges
“With the raise in types of service charges and the amounts, planners should be careful to agree on a service charge,” Grimes says, recommending planners avoid agreements that read something like, “’service charge currently 25% but subject to change,’ because then how do you know how much it’s going to be?”
“We’re seeing new service charges on meeting space rentals, in addition to the service charge for services performed in the meeting space,” Grimes says. “There’s food and beverage service charges; there’s service charges for just about everything. These kinds of things can explode. Planners need to get some sort of containment on that, because those can be budget busters.”
Slow Down There, Planner!
“Everybody is in a hurry these days because of the increased demand for meetings post-Covid,” Grimes says. You can only be so careful looking at a contract when you’re told you have to return it within a week or two, something Grimes says he encountered a lot at the end of 2024. “I had an unprecedented number of clients I work with tell me they had to sign their meeting contracts by December 31 or they were going to lose all sorts of benefits,” he says.
“So everyone’s in a hurry, and I think that planners need to slow down,” Grimes adds. “If a contract doesn’t work for them, or the terms don’t work for them, they shouldn’t be afraid to ask for something different.” Even as we become further removed from Covid, Grimes says, “There still seems to be a culture of ‘Don’t wait; sign your contracts’…Groups are generally booking closer to the dates, so there’s more pressure.”
Despite the event contract process being rushed, since the height of Covid, Grimes says things have relaxed a bit—and it’s better to stay relaxed and negotiate a good contract than to be in a hurry and sign a bad one. “I don’t think most hotels or venues are going to walk away if you’re showing legitimate interest,” he says. “I doubt they’re going to dump you because you asked for five changes to a contract rather than work with you on those issues to get the business done.”
Security
As the chasm between opposing political beliefs widens by the year, whether to have groups who harbor different politics has become a greater concern.
Read More: Event Safety PSA: Failing to Prepare Could Cost You
“There is an increasing concern over the kinds of groups that share facilities,” Grimes says. “There are some groups that have certain kinds of political beliefs that might not want another group of opposite political beliefs meeting in the function space right next door. This used to be less of an issue, but now people seem to be more free to express themselves and maybe not contain their opinions about others.” For this reason, he sees conflicts among groups becoming more of an issue for this reason.
On the hotel side of this issue, Grimes says some hotels want the right to eject groups they consider “objectionable.” “What does that mean?” he asks. “That could depend on what part of the country you’re in.”
Be Aggressive
Grimes says he believes the typical planner doesn’t feel comfortable negotiating or feels they run the risk of losing the space is they negotiate too hard. “The hotel market, that’s their mantra: If you take too long, if you make too many changes, we have to send this to legal and that’s going to take weeks, and if we get another piece of business, we’re going to have to look at it. There are planners who respond to that.”
He went on to say he doesn’t know if the typical planner has enough confidence with their contract terms to aggressively negotiate to protect their own interests. “Planners need to be more proactive about what they want, not just sign what the hotel puts in front of them.” On the issues Grimes mentioned earlier—extra fees, increases in fees and the force majeure clause—he asks, “Does it work for the group?”
If the hotel cancels, the planner should have remedies beyond just getting their deposit back. “What if the hotel’s quality is not up to where it needs to be? Quality is not just general quality, but also if the hotel decides to do a big renovation and it interferes with the group. There should be remedies in the contract, and planners need to be proactive about getting those terms in the contract, because no hotel is going to offer that.”
Along with having a remedy, Grimes says planners should always have an alternative venue in their back pocket. “If you go into a negotiation with only the plan of meeting at that venue, that venue is probably going to find that out, and you’re not going to have very much negotiating room. I’ve dealt with this before, where clients have set their heart on meeting at a specific property or with specific amenities, and the hotel knows that. Why should they negotiate? They have no incentive.”
“Sometimes people think you have to agree to everything. You just don’t,” he says. “Most groups have budgets, and their attendees have budgets, and the budgets can only go so far. You add on a room rate charge for function space, and then a 26% service charge, subject to increase, and all sorts of other fees, and it becomes a cost-prohibitive meeting. That’s why you have to sometimes put a lid on it. There are some groups that don’t care, but many do.”
Second Half of the RFP
In Grimes’ experience, he sees the RFP being filled out as it should, with the usual questions answered:
- What’s the name of your meeting?
- What are your dates?
- How many rooms do you need?
- F&B requirements
- How much function space do you think you need?
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“That’s the standard RFP, but that’s only part of the story,” he says. As an example, he suggests providing several more detailed lines like the following: “X group is convening a meeting in Las Vegas at CES to entertain and network with clients in the technology field.”
“The point being that you inform the hotel that it’s a networking meeting, maybe with some education so the hotel can better respond to your needs,” Grimes says. “It’s not just what you hope to do at the event, but it’s also things like informing them if you don’t want a certain group near yours. Suppose you’re a religious group; do you want a wild bachelor party right next door?
“It helps the hotel provide a better response. Providing more information is better, particularly if your group has special needs. [List details] about the kind of meeting you want to have and the kind of environment you want around the hotel at the time of your meeting. If you’re going to have VIPs or your topics are controversial, it helps the hotel plan what the security needs are, rather than dealing with it later on down the road.”
This article appears in the January/February 2025 issue. You can subscribe to the magazine here.
