MPI-SEC: Advanced Hotel Contracts: Maximize Your ROI, Minimize Your Exposure
We just pass the time in our hotel rooms And wander 'round backstage Till those lights come up and we hear that crowd And we remember why we came --Jackson Browne, Running on Empty, 1977
Tom Pasha, CONTACT Planning email@example.com
*IntroductionsTom PashaHotels since age 1514 Hyatts over 20 years6-time DOSNational Sales DirectorFounded CONTACT Planning, a national meeting and golf planning companyTrains planners from The Hotel Side
In this sessionTONS of Information!Very InteractiveAsk lots of good questionsTake lots of notes Contracts are critical to a great meetingheres the hotel side of them.
Hotels Need Meeting Business!Hotels Depend on Groups and MeetingsHigher rateBetter catering, facility use golf, spa, gamingPrime time groups increase revenueOff-peak groups increase occupancyHotels are designed with Group Meeting Space to fill rooms!What can you Negotiate? Everything! When you confirm the negotiations, its time to go to Contract.
Hotels Contracts Confirm.
Dates, Rates and SpaceConcessions and ConsiderationsReservationsPayment and BillingPenalties: Attrition and Cancellation
Good contracts confirm your Space, Dates and RatesSpace: General Sessions, Break-outs, Meals, with set-up and tear-down times, turn times, weather backups.Dates: Make sure the program matches the rooms; add staff arrival and departure dates; VIP and speaker rooms;Rates: Rates are ALL the revenue streams of the hotel and include..
*Contracted Rate$Much more than Room Rates! Be sure to ContractRoom Rates (Sgl /dbl / trip / quad)Suites Rates (1, 2-bdrm suites?)Staff RatesComp rooms: 1/40, 1/45, 1/50?)Resort Fees (PP or Per Room?)Internet access fees: Room and Mtg SpaceParking Fees (Staff price / Comps?)Porterage Fees (Optional?)Housekeeping Fees (Optional?)Room delivery fees
Contracted Concessions After the Room Block and Rate information, Concessions are next. Bullet-point format, include comps, upgrades, VIPs, meeting space, so everything is easily found and confirmed.Sample Concessions:1 per 40 comp room credit, calculated on a cumulative basis;Three VIP upgrades to Junior Suites at the Group Rate for the duration of the conference;One (1) two-bedroom VIP suite complimentary for the duration of the conference;Complimentary wireless internet in all guest rooms;Complimentary wireless internet in all meeting rooms;Complimentary meeting space, based on the program and pick-up;Complimentary Health Club Fitness Center for all attendees10% off AV equipment10% off Catered F&B (Or current menu prices GTD for future year event)Additional guest rooms will be accepted at group rate based on space availabilityGroup rate extended three days pre and post the event, based on availability.
Reservations Items:Reservation Method: Individual, Rooming List, Housing BureauRooming List Due date-Cut-offRoom Block Review Date: 10% or 20%, 3 to 6 months prior to Cut-off, not Event Day.Rooms received after Cut-off should be based on room availability at the Group RateRates available 3 days pre- and post-meeting dates, space available
Payment and BillingBilling: Master Account: All Charges to MasterM/A Room & Tax, Ind. IncidentalsGTD to corp; Individual Payment at check-inMaster Account Catering, Specified Staff Charges, per Rooming List
Payment: Pre-payment / Payment; Credit Card Authorization; Credit Application Form
Special Forms: Purchase Orders, W-9, Separate Invoice for every deposit due
Contracts are Fun, But What Happens IF Things Go Wrong?
BIG THREE LEAST FUN TOPICS IN PLANNING!AttritionCancellationPerformance Penalties
Remember that Planners and Hotels REALLY hate these conversations, so if you work as partners, you will avoid most problems.
Avoid Penalties With Planning, Executing, Follow-ThroughPlanning:Since you want a hotel to hold Definite dates, you have to make a Definite commitmentDefinite Dates, Rates and Space Get a Definite Commitment from: VIPs and Speakers, Budget, FDA, all outside approvals Check for competing / similar events in advance Have your bosses sign a commitment memo or purchase order
Executing to Avoid PenaltiesCommunicate:Before Cut-off: Does your contract have a 3, 6 or 9 month review? Does it show exact dates and percentages?Observe all review dates
Follow-ThroughKeep in touch with the hotelAre your counts accurate?Dupes and CancelsRegistration Vs. ReservationsRooms credited to the block Pre- and post rooms All banquet charges counted
Attrition and Cancellation.
EWWWWWW! Both Hotels and Planners HATE this topic!Book a group when youre sure it is happening!Contract an extended decision date, if youre not sure;Contracts should have a sliding scale of cancellation dates; the penalty increases as the cancellation date approaches the event date.Tell the hotel if its a continuing education block or a promotional block; ask for a Courtesy or No Attrition block.
Contracting Rooms Minimums and Attrition
Negotiate and contract Rooms minimum at 80% of the block.Contract a Resell clause, so the hotel can re-sell the released space, and youll pay for what was not sold;Contract a Re-book clause, so any Cancellation or Attrition fees are applied 100% to your next contracted date;Whenever possible, any attrition or cancellation penalty based on Rooms profit, of 80%, Not Retail.Determine whether cancellation is taxable --ask to see the tax code covering cancellation fees.
F&B Minimums and AttritionBase the F&B minimum on your selected menu, not on the Average Check assigned by the hotel.Contract the minimum at @ 80%Negotiate to have the F&B minimum include Tax and Tip InclusiveHave meeting space rental include tax and tip, in the event of a fee.Have hospitality catering applied to the minimumContract to pay the anticipated profit of the Catered F&B, at 40%, not retail.
Re-Sell Clause?Most hotels have a version of this in their contracts; they typically dont offer it, but will add it if requested; make sure it is in your contract.If you are liable for a cancellation, ask for the hotels Daily Report or Flash Report for those days. Ask the hotel to compare it to their Annual Forecast for the cancelled days, to see if they were actually affected.Pay for the difference between the estimated revenue and the forecasted revenue @ anticipated Rooms profit of 80%, not the 100% retail.
If you re-book the same meeting within 6-12 months of the cancelled dates, you should have the cancellation fee applied as a pre-payment for the new dates.Ask for 100% of the prepayment to be applied, sometimes youll get it, and others may be 25%, 50% or 75%.Again, make sure it is clearly spelled out in the contract, before anyone signs anything!Make sure everyone signs and counter-signs everything.
Attrition Clause SamplesATTRITIONThis Agreement is based on Groups use of the guestroom block as outlined above. However, thirty (30) days or more, prior to the first day of arrival, Group may reduce its guestroom block by a maximum of 10% cumulative. Thereafter, Group shall pay Hotel one nights guestroom rate and tax for each unused guestroom night based on the guestroom night commitment or the adjusted guestroom night commitment. No payment shall be due, however, for any night during the Group stay in which the Rooms Revenue meets or exceeds the Rooms Revenue as forecasted in the hotels Annual Budget.
RE-BOOK CONSIDERATIONIn the event any attrition charges are posted to the Master Account for the above group, the entire amount will be applied as a credit towards any rebooking of this group within 12 months following the departure of this contracted event.
THE Ultimate Attrition and Cancellation Clause Seminar / Education Meeting Review Date:
The will have the option of reviewing the pick-up and registration performance of the group 30 (45) days prior to arrival. At that time, the may increase the block and space requirement, based on hotel availability or decrease and/or release the booking with no penalty.
Any reductions or cancellations occurring within 30 days of the contracted arrival date will result in a cancellation charge of $______; to be paid upon receipt of invoice.
Contract Clauses to Request:Be sure to Ask for:Construction and Renovation clausesEntire AgreementPerformance ClausesWaiver of Corkage for contractorsMutual IndemnificationLowest available rate over event dates.Resale AND Rebook Clauses
Contract Clauses to Request.
Construction or Renovation. Hotel acknowledges and agrees that there shall be no planned or scheduled alterations construction or renovations during the period of the meeting. For any renovations that would impact the successful completion of this event, the Group will have the option of postponing the scheduled event on a space available basis or cancelling the event at the hotel without penalty.
Entire Agreement. The foregoing Agreement, set forth the entire understanding between the parties hereto and supersedes all prior agreements, arrangements, and communications, whether oral or written, with respect to the subject matter hereof. This Agreement may not be modified or amended except by the mutual and prior written consent of both parties. No additional Rental Fees, Minimums or other charges not specifically set forth in this contract can be added at a later date, without mutual agreement by both parties.
More ClausesPerformance Clause:It is agreed that in the event of a problem in facilities or service,