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Two of the industry’s top lawyers—one who works the hotel side, the other the planner side—staked out their positions on rate protection,, and liquidated damages during this year’s MPI WEC.
Barbara Dunn, Esq., an attorney with Barnes and Thornburg, and Lisa Sommer Devlin, Esq., Devlin Law Firm, PC, were as entertaining as they were informative as they hashed out the finer points of today’s hottestissues during a session at the Meeting Professionals International World Education Congress, held in Minneapolis August 2-5. Here are some highlights.
With the economy picking up, hotels are seeing a resurgence of the seller’s market, but that doesn’t mean they can, or should, dig in their heels when it comes to negotiating rates for future events, said Dunn and Devlin. All involved need to be fair because who knows where the market will be when the meeting’s dates come around?
But what if what seemed like a good deal when the contract was signed no longer seems so great closer in? “Whether your deal is better or worse than you thought it would be, it’s still the deal you made,” said Devlin. “You can ask the other side to change, but they’re not obligated to do it.” Added Dunn, “You have to make the business case for it.”
Planners who are looking to hedge their bets by asking for a rate protection clause—which specifies a formula on how rates for a future event will be set using a percentage off rack rate, a percentage increase per year, or a rate that would increase based on the Consumer Price Index—may get some pushback from their hotel. As Devlin pointed out, would the planner also be willing to agree to pay a rate that’s higher than what’s contracted if the key indicators increase over time? “No one in 20 years has taken me up on that!
Instead, advised Dunn, ask for a contract clause to protect the rate, one that says the hotel won’t publicize lower rates over your dates. But keep in mind that the hotel, which likely has long-term contracted low corporate and airline rates, may not be willing or able to guarantee that your rates will be the absolute lowest. Instead, she said, ask for the lowest promoted date, and be sure to specify where the promotions can take place. Just on the hotel’s Web site? Through online brokers?
Added Devlin, “If you require attendees to book within your block to attend your conference, you won’t have to worry about, but people don’t like that idea.” Another thing that helps is if you can occupy the majority of the hotel, she said. “If you’re the biggest game in the house, you have a better shot at getting the rate protection you want.”