Most event professionals know how much their meetings cost. But do they know how much their meeting contracts cost? Do they know that there are expenses buried in "standard clauses" just waiting to break the budget? While identifying those hidden costs won't necessarily eliminate them, it can help an organizer to negotiate more favorable clauses or, at least, to create a realistic budget.
So what are these hidden costs? Some aren't so hidden, like cancellation fees, slippage charges, and attrition clauses. These costs may be expected, but the method of calculation often is obscure. A calculation for damages based on a hotel "recouping its lost income" is a hidden charge because the group can't determine the amount on its own. Cancellation, slippage, and attrition clauses should be calculated by an objective and explicit formula. Once there is such a formula, charges are more easily negotiated.
For example, a hotel recently proposed a f&b slippage fee of 100 percent of each per person plate charge, calculating that this was its "lost profit." But lost profit is certainly less than that--there is not $24 profit on a $24 meal. By knowing the formula, the group was able to negotiate a smaller slippage fee.
There are many other hidden costs. Most hotel contracts state that there is no charge for a basic room setups. But what does "basic" get you? Unless the contract spells it out, there may be hidden costs. The same goes for other rental fees, security, clean-up/trash removal, storage, electrical or telecommunications needs, and so on. These costs can be enormous, and usually the hotel contract fails to address them at all, putting the group at the hotel's mercy. This is especially true when the group agrees that services will be provided by an exclusive contractor. Here, costs may not only be hidden, they may not even be subject to competitive market forces.
Other examples of hidden costs include service charges, taxes, a requirement to use only local union personnel, permit fees, and minimum guarantees. Even known expenses, such as deposits, can also include hidden costs. For example, if a group is required to prepay a portion of the estimated master account, there is a cost associated with acquiring those funds or redirecting them from other activities.
ADA Compliance The Americans With Disabilities Act is worth special focus. The ADA requires that places of public accommodation be reasonably accessible to persons with disabilities in terms of physical accessibility and auxiliary aids (e.g., braille, interpreters). Both the group and the facility are jointly and severally liable under the ADA. Thus, unless liability is shifted by contract, a group could be held liable for the cost of physical access to a facility (wider doors, a ramp, or lower public phones, etc.). That's a huge cost that can be avoided by making the facility responsibile for physical barriers (unless the barrier is created by the group itself). With auxiliary aids, it is unlikely that the cost can be passed on to a facility, nor should it. Even so, these costs are hidden if the planner does not know who will supply the services and how much they will be. The contract should spell it out.
With hidden costs, the more you look, the more you find. And the more you find, the better you'll be able to plan the budget and minimize the charges.