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Negotiation experts share tips for building win-win event contracts
The ROI is in the details when drafting a vendor contract. The bottom-line goal is to ensure that your company is protected in case of the unexpected. Yes, Covid was a vivid reminder of the importance of force majeure clauses, but weather damage, union unrest and other disruptions are even more common and need to be considered in the fine print of a well-crafted event contract.
An effective legal document is one that clearly outlines roles and responsibilities and keeps all parties out of court, arguing over vague wording. A win-win contract allows everyone to feel that their biggest risks are covered and they can partner in good faith to execute confidently while working creatively to deliver the best event possible.
Contract Creation
OK, you have an agreement in principle, but who should draft this all-important language. We asked a trio of seasoned negotiators and only one, Cheryl Payne, a strategic partner with INNOV8 Meetings + Events in Las Vegas, had tried using AI to enhance the language and had this cautionary advice: “AI is not always right. Also, AI cannot defend a contract discussion in real-time and so there is only so much that can be done with AI.”
Read More: Why AI Might Mean Salvation for the Meeting Industry
Payne believes in creating a custom contract for each client that addresses all hotel fees and surcharges. “Our contract is created to be more mutual and to better protect the organizations that we work with. A hotel’s contract is created to protect the hotel,” she said.
Lynn Edwards, owner of Proper Planning in Washington State, typically asks the hotel to send the contract and then requests changes as needed. “We work with them on the contract language to protect the interests of our client and have the client’s attorney review,” she said. Areas she focuses on include attrition terms and minimum spend.
Maureen Sloan, CTA, manager of global accounts with HelmsBriscoe in Orange County, California, said she starts with the customized HelmsBriscoe program in Cvent to edit and customize the document. Some of her larger corporate clients have in-house legal teams that review the final draft before it gets signed. “I must ensure that everything is perfect but after several contracts with any given client, you get to know their style, preferences, and what to do,” she said.
Concessions Worth Asking For in 2024
As the market continues to be tight, planners don’t have quite as much power as they might in a down market, but experts are still finding areas where they can get some relief. Edwards asks for additional upgrades, valet parking validation for VIPs and speakers. “We ask for hosted activities, waiving of an exclusive AV vendor and exceptions to bring in a particular vendor,” she said.
The negotiation phase is a good time to ask the hotel partner for ways to save—by using the same AV set-up as an event pre or post to share set-up costs for instance. “Always ask if the rates, F&B minimums, etc. can be lower to expose your client less on the financial side. It is not always about lowering costs but adding value to your contract,” Edwards said.
Sloan sets her sights on the wave of fees now popping up at venues, hotels and resorts for things that were included in the past. She also asks for free in-room Wi-Fi and bottled water replenished daily. “I do ask for concessions but it always depends on how many room nights. The more sleeping rooms my clients can commit to, the more leverage I have,” she said. She always asks for a waived or reduced resort/destination fee, reduced self-parking and if they are spending above the F&B minimum, that meeting space fees be waived or reduced.
Read More: Top Business Travel Trends Coming in 2024
She is having some success throwing out “event planning fees,” which have recently started showing up. The same with set-up fees, outdoor event fees and delivering amenities to room charges. “I do enjoy creating a spreadsheet for clients to show them the value of the HelmsBriscoe buying power. When I calculate the original proposal with the signed contract and can show them a $45,000 savings, it makes us all so happy, especially for non-profits with limited budgets.”
Also on the table—special group rates extended up to three days before and after the meeting or event because of the popularity of “bleisure” travel today.
Shloan asks that the rate not be subject to increase, especially when they are booking more than three years out to lock in prices. “This started when inflation and supply issues dominated the news and we’ve kept it,” Sloan said.
For larger blocks, Sloan asks for staff rooms at reduced rates, a comp room for every 30 or 40 booked.
Finally, Sloan asks for the right to audit to find attendees who may have booked outside the block. “It is still business brought to their hotel by my client’s meeting,” she reasons.
To Clause or Not to Clause
When it comes to those now ubiquitous force majeure or “Act of God” clauses, attorneys often advise, and Edwards agrees that they should be more general than specific because like unhappy families in classic Russian literature, every disaster is unhappy in its own way. So, don’t say, “If a global severe acute respiratory syndrome coronavirus hits, the contract is no longer binding.” Instead, stay with wording true to the meaning of the term and refer to “circumstances that make the meeting illegal, impossible or commercially impracticable.”
Payne believes in covering as many scenarios and angles as possible and it paid off. “99% of our clients did not pay any cancellation damages as a result of cancels from Covid,” she reported.
Hotel attorney Lisa Sommer Devlin is not a fan of including client privacy clauses, “Everyone has to follow the laws and all hotels have their own data privacy policies. Don’t layer yours on top because the hotel will just default to their own.”
Read More: Contract Clauses You Need in 2024
Sloan added, “Many of the major chains add this in assuring us they’ll protect our clients and their attendees as best they can and advise us to beware of ‘bad imposters.’ It’s implied that they’ll abide by common privacy practices and protect all guests in every reasonable way.”
In general, Sloan believes in anticipating possible challenges in the clauses and spelling out what each party will be responsible for doing/ paying. “It’s always good to cover all bases after what we went through the past four years and to tailor things to a group’s specific needs,” she said.
One that Sloan likes to add: “The Hotel represents and warrants that there will be no overlapping meetings, conventions, special events, or other attractions planned to be held in the Hotel during the meeting that could affect the ordinary use of the meeting rooms or other facilities to be used by the Group and its attendees.”
Instead of an unenforceable “Don’t Walk” clause in case of a conflict due to a damaged ballroom or double-booking, Sommer Devlin suggests focusing on the concessions the hotel will provide if attendees can’t be accommodated.
Edwards asks that in case of an emergency, the venue pay for the cost to move the group to a new venue plus a predetermined flat cancellation fee that the hotel has to cover for work to find a new venue.
Payne says overselling has been more prevalent than ever since Covid. “We make our Relocation clause very strong and make it painful for a hotel to relocate our guests,” she said.
The Ultimate Event Contract Template
What needs to be included and excluded from a contract? What should be an addendum and what belongs front-and-center? Every event is unique and what follows is not legal advice, but consider this your checklist of things to consider. And remember, everything is open to negotiation.
1. Introduction
This is where you establish the full legal names and addresses of the parties that will be represented in the contract. What are the companies involved and how will they be referred to in the subsequent sections?
a. This Service Agreement between Event Producer X (hereinafter referred to as the “Client”) and X Hotel, Resort & Spa. (hereinafter referred to as “Vendor”).
2. Event Description
This is a space for ensuring everyone is on the same page about how many will be arriving when and where.
a. Start with the date and time Client will arrive and be given access to what room. When will attendees arrive and how many? When will they be checking out? When will load-out be complete?
b. Room Block language should outline the number of each type of room at what prices. Spell out any upgrades and/or complimentary accommodations being provided and what type. Specify if any loyalty points will be awarded and if so how many based on what metric. What other amenities will be available, including transportation, parking, fitness center, spa and VIP lounge access and at what price?
c. Spell out Attrition rules, including when Room Block Adjustments will be confirmed (there could be more than one milestone of confirmations and adjusted attrition prices). Responsibilities could include Vendor providing regular pick-up reports to see how many have registered and audits to see if Guests register outside the room block and if the Vendor made reasonable effort to re-sell released rooms. What happens if more registrations come in than originally planned? Will additional blocks be available and at what price? If fewer people register than planned, what will the Client be responsible for and at what price?
d. Describe the specific meeting space/s that will be available and when they will be available. Specify staffing ratios and amenities available. AV can be a separate section itemizing equipment, staffing and costs and whether in-house or external team will be used and if there is a fee for bringing in an outside company. Itemize level of Internet Access that will be available at what cost.
e. Food and beverage prices and minimums along with the number and type of meals should be outlined and refined in the Banquet Event Order (BEO). This section can also include wording about making accommodations for dietary needs, how leftover food will be handled (donated, recycled, etc.)
3. Payment Terms
This will outline the deposit amount/s, billing and payment due dates. When will reports be available from the hotel and the procedures if there are any discrepancies.
4. Cancellation Clause
While no one plans to cancel this can become a highly contested part of the contract if timelines, methods of canceling determination of responsibility and fees are not spelled out.
a. Include a timeline of fees due if the Client cancels for a reason other than the meeting being “impracticable, illegal, or impossible.” Similarly, spell out the fee if the Vendor chancels the agreement. Liability can include, but not be limited to staff time, lost revenue and attorney fees.
5. Liability Insurance
Both parties will want to ensure they are covered in case of an incident and most hotels will have required certificates of insurance that they require.
Mutual Indemnification, Arbitration, ADA Compliance and other clauses could be added as applicable. The goal is to cover all responsibilities agreed upon during informal conversations so everyone can move forward confidently. If good fences make good neighbors, good contracts make reliable partners.
This article appears in the January 2024 and January/February 2024 issues as “Agree to Be Agreeable.” You can subscribe to the magazine here.
