This excerpt from “What to Know About Event Sourcing: Part 1” is reprinted with permission from the Meetings & Incentives Worldwide blog.
Hotel contracts have changed, and you can’t assume common pre-pandemic terms still apply. There’s a much bigger emphasis on deadlines (and therefore a bigger impact when one is missed) as well as new expectations affecting the overall budget.
Here are some of the top trends to be aware of as you start the contracting process.
Deposits. Advance deposits are a new and impactful trend. Pre-pandemic, it was very common for U.S. hotels to require only a small deposit, if any, at the time of contract execution or within 10 to 14 business days after contract signature. This is no longer the case. We are seeing higher initial deposits required—up to 50 percent of the total contracted value—across all hotel brands. These deposits are required even if there’s intent to apply for direct billing or direct billing has been approved.
An important item to note is that deposits have deadlines, too. We have started seeing initial contract language stating that if a deposit is not received within a certain time frame, the hotel has the right to cancel the program.
Also, keep in mind that if your hotel contract is for a room block only, the hotel may require a credit-card authorization form to be completed at the time of contract signature to guarantee the rooms—even if guests are responsible for paying their own charges. Be prepared to complete these timely authorization requests so you don’t lose your booking.
Direct Billing. In addition to initial deposits, the direct-billing process is more robust than ever before. It can now take 60 to 90 days for completion and approval. If your event is taking place in 60 days or less, you may need to pay much of the contracted liability in advance of the event, sometimes up to 90 percent of anticipated contracted revenue.
Hotels mean business when it comes to payments, and there is very little forgiveness if timely payments are not received. Hotels are now checking past-payment history of your company when reviewing direct-billing applications. If there have been late payments in the past, this will likely affect your current request. It is more important than ever to make invoice payments on time.
The bottom line is to be fully aware of the billing details included in your contract. This process alone can have a huge impact on budgeting and planning a successful event.
Rebook and Resale. As we all know, rebook and resale clauses should always be included in hotel contracts. However, hotels are generally only accepting one clause or the other, not always both. This can be problematic for myriad reasons.
We work closely with our customers’ stakeholders and planners to determine which is the best clause to include based on the scope of the meeting. The resale clause ensures that if room pick-ups are lower than anticipated, the group should not be charged for the room nights the hotel is able to resell, saving those costs. However, this may only apply on nights when the hotel reaches 95 to 100 percent occupancy.
The rebook clause should be included if there is a possibility that the meeting may not move forward. This will provide an opportunity for the group to recoup a percentage of the cancellation fees as credit towards a future program of equal or greater value, usually within 12 months or, in some cases, during the same calendar year as the cancellation date. However, don’t expect a full credit of the cancellation damages; it is much more likely that it will be 50 percent. The 100-percent cancellation-rebook clause is the exception, not the rule.
Guest-Room Reservations and Concessions
New trends affecting guest rooms and concessions are also impacting today’s contracts. Some of these are particularly noteworthy because they impact not just the planning team and budget but also the attendee experience.
Name Substitutions. Hotels are pushing back on allowing name changes on guest-room reservations. We now see hotels only allowing complimentary name changes for a certain percentage of the group room block, even if the arrival and departure parameters remain the same.
Pre- and Post-Event Reservations. This is another new trend. Some hotels no longer accept standard contract language that allows for the contracted rate to apply for reservations three days before and after the contracted room block. Instead, their contract language includes something along these lines: “Group rate for pre- and post- to not exceed 10 percent of contracted room block.”
Depending on the size of your room block, this will limit the number of guest rooms accepted at the group rate. Your attendees may have to pay the prevailing guest-room rate for extended stays. Pay close attention to your room block to ensure rooms are protected at the group rate before and after your event.
Concessions. The days of the standard list of requested concessions are gone. Hotels may now require a precise list that will add value to your program, and they are being selective about what they will and will not accept. Think about those valued items before finalizing your list.
One example is the standard 1:40 comp policy. If your total room block is between 40 and 75 guest rooms, it may not be worth including this as a concession as it will only net you one complimentary guest room. It could bring greater value to focus on meeting-room internet or discounted staff rates. Take time to determine which concessions will bring you the most value and provide true savings for your budget.
The authors are sourcing specialists at Meetings & Incentives Worldwide. Vicki Walsh, HMCC, is senior director of event sourcing, and Lynn McCrory Brown, CMP, HMCC, is team leader, event sourcing. Read the full article on the M&IW blog, where you’ll also find “What to Know About Event Sourcing: Part 2.”
