Ultimately, the venue contract is the blueprint for your program. It outlines sleeping rooms and meeting spaces contracted along with the associated rates. The deposit schedule and thresholds for compliance and communications are also vital details. The contract is referred to many times during the planning process, by the planner as well as the venue.
Risk mitigation and due diligence are a large reason for many established processes and the workflow around site selection and contracting for meetings and events. Now more than ever, it becomes critical to have a solid understanding of the hotel contract as we are pushed to navigate situations such as this latest pandemic interruption.
Consider the following three steps to ensure you are hotel contract ready:
STEP 1) Have Templated Hotel & Venue Contracts
To facilitate a smooth process, planners often have a template contract, addendum, or master services agreement that they rely on. These documents are the backbone of the contracting process and should be a playbook of sorts that will showcase the threshold for risk that they are willing to accept to hold a meeting or event.
Contracts often speak to the type of program that will take place – association annual conference, corporate sales meeting, pharmaceutical advisory board meeting, executive board meeting, tradeshow, citywide conference, incentive trip, etc. – with specific clauses and needs addressed for each type of meeting.
STEP 2) Review Templates Every Year
It is a good idea to undertake a review of key documents every year or so to be sure that they represent the current environment. Templates will streamline the sourcing process with the hotel and make it much easier for your legal team to review and ultimately approved.
At M&IW, we often provide recommended changes and/or additions that that are needed in these documents to protect the organization based on our procurement team’s experience in reviewing a vast number and variety of contracts. Our clients often reach out to us to provide recommendations on changes and/or additions to provide as suggested updates for their legal teams to review.
STEP 3) Adapt Key Clauses to Current Times
During these uncertain times, it is important to review key clauses to be sure that risk is mutual and acceptable. Currently, it is important to review attrition, cancelation (by the client and by the hotel), overbooking, rebooking, and today’s hottest clause, force majeure.
Experience over the last few months has summoned the M&IW team to craft a revised force majeure clause. This clause showcases mutual liability while also takes a unique approach to the usual lists of unforeseen events. Adding a timeline when the need to invoke occurs and enhancing the clause to signal a full or partial incident is also crucial.
As we review the current environment there are other clauses that need to be looked at with a more meticulous eye as the venues are providing offers to clients while also watching their bottom line. The overbooking (walk) clause is one that should be looked at closely as hotels are overbooking their rooms as they are considering a higher no-show rate than they have seen in the recent past.
Planners’ hotel contract templates may require unique clauses that address specific client needs. Ensure your contracts have the most current clauses to begin sourcing for upcoming programs.
Final Note: Don’t Delay—Start Now
Start sourcing for upcoming programs now. As we noted in our first blog in our Adaptive Hotel Procurement Series, 10 Vital Considerations for Sourcing Events in 2021, “Our global procurement team is starting to see market compression and an increase in demand for both 2021 and 2022. Don’t get left behind!”
As a partner, M&IW works diligently with the client and venue to make sure that the final fully executed contract is one that both parties feel confident.
The M&IW team is fortunate to have experiences in contract negotiations based on our wide range of industry background and an average of 18-years of experience per buyer on the procurement team. To learn more about becoming hotel contract ready, email M&IW Director of Procurement, Denise Farrell at email@example.com for a free consultation.