Most good meeting professionals know how much their meetings cost. But do they know how much their meeting contracts cost? Do they know that there are many hidden expenses buried in "standard clauses" just waiting to break the budget? While identifying those hidden costs won't necessarily eliminate them, it can help to plan for them, or, better still, to lessen them or to negotiate them out altogether.
Show Me the Costs So what are these hidden costs? Some aren't so very hidden, like cancellation fees, slippage charges, attrition clauses--all are examples of hidden charges. Everyone understands that such charges will be incurred if certain events take place (or don't take place), but the amount of those charges and the method of calculation often is quite obscure. A calculation for damages based on a hotel's "recouping its lost income" is a hidden charge because the group can't determine the amount of damages on its own. Cancellation, slippage, and attrition clauses should be calculated by an objective, explicit, and understandable formula. Once there is such a formula, these charges can more easily be negotiated.
For example, one hotel recently proposed a food and beverage slippage fee of 100 percent of each per person plate charge for meals. The hotel explained that this was its "lost profit." But lost profit was certainly less than the full charge for each meal. There is not a $24 per person profit on a $24 per person meal. By knowing the formula, the group was able to negotiate a much smaller slippage fee.
There are many other hidden costs. Most hotel contracts state that there will be no charge for a basic meeting room setup. But what does "basic" get you? And if the group needs something more than basic, what will be the charge? Unless the contract spells it out, those are hidden costs.
The same goes for other equipment rental fees (e.g., signage, displays, tables), security, clean-up/trash removal, material storage, special electrical or telecommunications needs, etc. The costs for these items can be enormous, and usually the hotel contract fails to address these costs at all, putting the group at the hotel's mercy. This is especially true when the group has agreed that certain services will be provided exclusively by the hotel or by one or more exclusive contractors. In such situations, the costs may not only be hidden, they may not even be subject to competitive market forces.
Other examples of hidden costs include service charges or gratuities, taxes, labor costs linked to 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 or otherwise deposit funds in advance, there is a cost associated with acquiring those funds or redirecting them from other activities, and, of course, with the time-value of money.
ADA Compliance The Americans With Disabilities Act--another distinct area of potential hidden costs--is worth special focus. The ADA requires that places of public accommodation be reasonably accessible to persons with disabilities. There are two areas to consider: physical accessibility (e.g., barriers) and auxiliary aids (e.g., braille, interpreters). Both the group and the meeting facility are jointly and severally liable under the provisions of the ADA.
Thus, unless that liability is shifted by contract, a group could be held liable for the cost of physical barrier access at a meeting facility. For example, if wider doors, a ramp, an elevator, or lower public telephones should be required by the ADA, an aggrieved plaintiff could seek damages from the group holding the meeting. That's an enormous hidden cost that can be avoided by making the responsibility for physical barriers solely that of the facility.
An exception to that general rule might apply when the physical barrier is created by the group itself. If, say, a group has a stage erected for its speakers and that stage is not accessible, the group likely should be responsible for the costs of a ramp.
Similarly, with the costs for auxiliary aids, it is unlikely that responsibility can be passed on to facility, nor should it. The meeting sponsor generally is in the better position to determine the need for translators, sign language interpreters, braille, etc. Even so, these costs are hidden if the meeting planner does not know who will supply these services and how much they will cost. It should all be identified and spelled out in the meeting contract.
With hidden costs, the more you look, the more you will find. And the more you find, the better you'll be able to plan for these costs and minimize them.