In an attempt to lower hotel room rates or to get a complimentary function, meeting professionals are often asked to increase their room block and/or food and beverage revenue guarantee. If these commitments are increased solely for the purpose of lowering the room rate or getting comped meeting space, they will likely mean significant financial liability to the group in the form offees.
In other words, unless the planner can support the fact that the room block needs to be higher or that the food and beverage amount should be higher, based on a solid history of similar events, it is not worth taking on the added risk that comes with higher commitments just to lower the rates or to save on function space charges.
No matter how hard a planner works to ensure that no problems will arise in connection with the meeting, often there can be problems that can affect whether the meeting can be held at all or whether the meeting may need to start late or end early. Events that are beyond the control of either party to a, such as a snowstorm that closes down air traffic to Chicago in February, frequently occur and can have a significant impact on the group's meeting. Yet, unless the issue of force majeure is properly addressed in the contract, a group may have little to no protection in the wake of such events.
By including force majeure provisions in hotel contracts, the meeting planner can ensure that if events beyond the control of the planner or the group do occur, the group would not owe any cancellation fees. It's important to be aware of the fact that many force majeure clauses are written in a one-sided manner. This means that if something happens that is beyond the service provider's contract and that affects its performance, the service provider can cancel the contract without liability. In these types of provisions, there is no force majeure coverage for groups. A two-sided provision should therefore be part of every contract for a group's meeting or event.
While planners do their best to ensure that the contracts for their meetings and events reflect all of the commitments made by the parties and include language that addresses all of the possible contingencies, just because such language is in the contract does not mean that the contract will be followed.
Planners need to “police” their contracts to ensure that key dates and requirements are adhered to. For example, if the contract requires that the room rate will be honored for attendees after the cutoff date, and the planner later finds out that attendees are being told by the hotel that the group rate is no longer available, that would be a breach of contract by the hotel.
Yet the breach of contract does not solve the immediate issue, which is that attendees will likely look to book their rooms at other hotels and, as a result, potentially put the group at risk for room block attrition fees.
So as with any contract requirement, the closer the meeting, the more important this monitoring of contract compliance becomes. If there is a problem with compliance, a resolution can be reached before the damage is done. If it's not discovered until after the meeting dates, the problem already will have occurred.
Barbara Dunn is an attorney and partner with the law firm of Howe & Hutton Ltd. She can be reached by e-mail at email@example.com, or at (636) 256-3351.