“Group will not be required to use Facility's in-house, exclusive, or preferred contractors or vendors for services such as audiovisual, security, exhibition services, and similar types of goods and services. If Group brings in outside contractors, Group will not be required to pay surcharges for use of outside contractors, nor will Group be required to pay Facility's employees or agents to supervise outside contractors. Group agrees that this provision does not include services provided by unions with current agreements with Facility.”
Many hotels, convention centers, and other facilities have agreements with contractors that provide specific goods and services to groups meeting within the facility. These agreements grant the contractor preferred or exclusive rights to provide the particular goods or services in the facility. Exclusive contractor agreements are common for catered food and beverage, concessions, audiovisual equipment, and cleaning services. Preferred vendor agreements may cover services like security, floral, or decoration and drayage.
Exclusive or preferred vendor agreements can be good for the facility because the facility works with vendors it knows and can provide training and information on unique aspects of the facility to the vendor. Facilities may also receive extra compensation from exclusive or preferred vendors in the form of a paid lease (for in-house contractors) or a percentage of sales.
Meeting planners may choose to use a facility's exclusive or preferred vendors because of the vendors' familiarity with the facility or the ease of communication — the vendor often has an office right in the facility. On the other hand, some planners feel that being required to use exclusive or preferred vendors drives up the cost and increases the risk of lower-quality services because of the lack of competition. A clause like the one above gives meeting planners the option to ensure they are getting the best possible price and service by preserving the right to shop around. This clause can be customized to exclude facility services restricted or reserved by union or other contracts.
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.