In recent weeks, the question has come up among planners as to whether a hotel company’s owned properties or ones that it manages and brands under contract to an ownership group tend to be more or less flexible in enforcing contractual penalties for cancellations or attrition.
Robert T. Patterson, ISHC, president of Paradigm Hospitality, a hotel-consulting firm based in Los Angeles, is of the opinion that where contracts are concerned, size matters. "The bigger the hotel company, the bigger the corporate staff it employs—and this can translate into more policies that are more stringently enforced," he said.
As to the question of owned versus managed hotels, Patterson said it usually doesn’t make much difference.
"Marriott, for example, owns very few of its hotels, yet they tend to allow very little deviation from their policies," he said. "The same is true for Starwood, which owns a higher percentage of its hotels than most other companies. With either owned or managed properties, the policies are usually the same. The difference is the extent to which they’re allowed to be interpreted on the property level."
About as close to a rule of thumb as Patterson would go with the owned versus managed question is this: "I think a planner who books multiple events with a particular hotel company might derive a benefit by finding out whether a property is owned or managed. Planners might get more benefit of the doubt from an owned property because the company wants to keep the planner loyal to the chain. A property that’s just managed by that same hotel chain might not be as flexible, because as a manager, the brand’s loyalty is to the owner."
David Brudney, ISHC, president of Brudney & Associates, a hotel-consulting firm in Rancho Palos Verdes, Calif., has a slightly different take.
"The problem isn’t which company has the more onerous or less onerous contract," Brudney said. "And in my mind, it makes no significant difference whether a hotel is owned or managed and branded by a hotel company. What is important for a meeting planner to investigate is this: One, how much group business does that hotel do? That’s not easy to find out, but if a hotel does 50 percent of its business in meetings, it’s going to be a lot easier to deal with than a hotel that does, say, 20 percent. The second thing is this: What’s the hotel’s credibility and reputation among planners? Both MPI and ASAE keep data bases where planners can read confidential critiques of planners’ experiences with properties they’ve done business with."
Brudney also said that there is a movement among hotel companies to start adopting what he calls "bulletproof" contracts, and that it behooves planners to make sure their meeting contracts are scrutinized by legal counsel.
"There are still a lot of meeting planners that don’t have their attorneys read contracts that could turn out to be onerous," Brudney said. "Within the past five years, there’s been a paradigm shift in how contracts are written and the enforcement of them. Not so long ago, hotel companies were often soft on penalties, saying, ‘It’s OK, let’s not offend such-and-such a company or we’ll risk losing our relationship and our business with them.’ Now, with all the hotel-company mergers and acquisitions, chains have decided to come down hard on cancellation and attrition penalties. They’re not as civil as they used to be because they’re serving not only their customers as masters, but their shareholders and investors. They’re more focused on the bottom line than ever."