CLAUSE: Exposing the Hidden Extras

“Hotel hereby confirms a Group single/double sleeping room rate of $100. Current tax charged on sleeping rooms is 12 percent, including 8 percent sales tax and 4 percent occupancy tax. Neither Group nor its attendees will be responsible for paying any taxes or surcharges on guest sleeping rooms not enumerated in this contract or otherwise disclosed to Group and its attendees unless required by law. Hotel will inform Group of any changes in tax rates or types that will affect Group or its attendees.”

EFFECT: A Taxing Situation

Many attendees — and some meeting planners — are startled to discover how much a $100 per-night sleeping room actually costs after adding in sales tax, occupancy or bed tax, and other fees. In most areas of the United States, hotels are required by law to charge tax on sleeping rooms. The clause above simply requires that hotels disclose the exact amount of taxes and fees upfront. A tax-exempt group may be exempt from sales tax but not occupancy tax, so it is helpful to break out the different types of taxes.

Some meeting planners unfortunately do not consider the tax rate when they are comparing meeting destinations. A clause like that above allows the meeting planner to determine, for example, that a $100 sleeping room rate in an area that charges 20 percent in taxes is not as good a deal as a $110 rate in an area with 5 percent taxes. This holds true for budget items like food and beverage, audiovisual, and meeting room rental, as well.

Don't be surprised to see new surcharges on rooms as hotels try to keep their rates competitive. Adding a clause like this to a contract requires the hotel to disclose any surcharges that are a part of the total amount paid by hotel guests for sleeping rooms, and relieves the group and attendees from paying any surcharges that have not been disclosed. Groups can pass this information along to attendees and avoid unpleasant surprises on check out or review of the master bill.

Some planners even have the hotel complete a “Hotel Disclosure Checklist” at the time of contracting, requiring the hotel to disclose surcharges for local calls, long-distance calls, Internet access, and other services associated with guest rooms. Forewarned is forearmed.

Tyra W. Hilliard, Esq., CMP (tyrah@gwu.edu) is a meeting industry attorney and Assistant Professor of Event and Meeting Management at The George Washington University in Washington, D.C.