Corporate Meetings & Incentives: What are your suggestions on negotiating an addendum or changing a contract that has already been signed?

James Goldberg

James Goldberg: Make sure the addendum clearly refers to the underlying contract (stating its date and parties), states specifically what provisions are being changed (including clear replacement language), and states that all other provisions of the underlying agreement remain in effect. However, a hotel is under no obligation to renegotiate an existing contract.

CMI: If you get cancellations after the cutoff date that put you in an attrition situation, should the hotel allow you to buy/reserve those rooms that your attendees canceled?

JG: While that would seem to make sense, it’s always best to put such an option in the contract at the outset. Depending on what your contract says about the amount of attrition, it may be financially advantageous to pay the attrition fee (especially if it’s less than the usual room rate and the state does not impose any taxes) than to pay “full fare” for the unused room.

CMI: If booking far into the future (i.e., more than five years), is it wise to include in the contract an annual block review based on each year’s actual pickup?

JG: An annual or periodic review can be built into a contract, but it’s beneficial to the planner only if the adjusted room block becomes the new room block for all purposes of the contract (e.g., attrition). And if any adjustment requires agreement of both parties, the planner runs the risk that the hotel might not agree to a substantial, or even a second, room block reduction.

CMI: Where can I get information on event cancellation insurance?

JG: It’s best to talk to an insurance agent or broker, preferably one who can seek out proposals from the various companies now offering this type of coverage. Premiums can vary widely from insurer to insurer.

Keep in mind that this type of insurance does not provide reimbursement if attendance lags because of such things as a poor economy or high hotel rates. But if an unanticipated force majeure–type event occurs (like last year’s flooding in Nashville), it can provide reimbursement for lost meeting profits and/or the costs incurred in finding a new venue.

CMI: Does force majeure cover individual cancellation, wherein, say, the airport of departure for some members is closed for a lengthy period of time, making it “impossible” to attend the meeting?

JG: Generally not. Since the party to the contract is the planner’s organization, it is the organization’s inability to perform that is generally covered by a force majeure provision. The inability of a certain percentage of attendees to easily make it to the meeting can be included in a force majeure clause, but whether a closed airport will invoke the clause depends on how it is drafted. Suggested language might be:

“The performance of this agreement in whole or in part is subject to occurrences beyond the control of the parties which renders it illegal, impossible, commercially impracticable or inadvisable for the Hotel to provide the facilities for the meeting or for the Group to hold the meeting.”

[Note that many hotels will object to inclusion of the word inadvisable, which they regard as too subjective. Use of the term commercially impracticable is important because it’s a generally used legal term that has been recognized and applied in court decisions involving all types of force majeure situations.]

For more on force majeure and attrition, visit our Contracts/Negotiating One Stop.