Understanding Meeting Contracts
When you’ve found the perfect venue for your event, the next step is negotiating a hotel contract. For meeting planners, the contract is much more than a formality; it’s the foundation of your event’s success. A well-negotiated agreement not only locks in your venue but also protects your budget, mitigates risk, and ensures clarity between you and the hotel on expectations and deliverables.
At Meetingscouts, we specialize in complimentary site selection and contract negotiation services because we know that deciphering the fine print can be overwhelming, especially with today’s market challenges. Whether you’re booking a meeting at a boutique hotel like our client did recently in Nashville, or securing a venue for a large-scale conference, knowing what to focus on in a contract can save you headaches down the line.
In this comprehensive guide, we’ll walk you through the eight key elements of a hotel event contract, explaining why each aspect matters, what to negotiate, and how to avoid common pitfalls. These elements will help you protect your financial interests and make sure your event runs as planned. Let’s dive in!
1. Room Block and Attrition Clauses
What is a Room Block?
A room block refers to the number of rooms the hotel agrees to reserve for your event attendees. This block can include a variety of room types (standard, deluxe, suites, etc.), and the hotel often provides a discounted rate for your attendees as part of the agreement. Knowing how many rooms to block depends on several factors like the number of attendees, past attendance trends, and room-sharing patterns among participants.
If you’re booking for a conference or a large meeting, accurately estimating the size of the room block is critical. Underestimating might lead to a shortage of rooms, while overestimating can result in penalties if your attendees don’t fill the rooms you’ve committed to.
What is an Attrition Clause?
The attrition clause is directly linked to your room block and outlines the penalties if your group fails to meet a specified percentage of the blocked rooms. Hotels typically allow a cushion—usually 80% to 90%—which means you’re required to fill that percentage of the reserved block, or pay a penalty for the unbooked rooms.
Attrition penalties are essentially liquidated damages the hotel charges for revenue lost due to unfilled rooms. For instance, if your room block is 100 and the attrition clause is 85%, you’re responsible for filling at least 85 rooms. If only 75 are filled, you may owe the hotel the difference in revenue.
How to Negotiate the Best Room Block Terms:
Realistic Estimates: Be conservative but realistic when calculating your room block. Look at historical data from previous events to forecast your needs accurately.
Avoid Overcommitting: Start with a smaller block and, if necessary, add more rooms later. Hotels are often more amenable to increasing the block than allowing reductions.
Negotiating Attrition: Try to negotiate a flexible attrition clause. Aim for a lower percentage (like 80%) or negotiate that penalties are based on the hotel’s ability to resell unbooked rooms.
If you’re working with a professional meeting planner like Meetingscouts, we can help analyze attendee behavior to ensure you don’t commit to more rooms than you can fill.
2. Food and Beverage (F&B) Minimums
Understanding F&B Minimums
Most hotels require a minimum food and beverage (F&B) spend when booking their event space. The minimum can vary based on the size of the event, the time of year, and the hotel’s location. Hotels often leverage F&B spend to help offset the cost of providing meeting space. If your event includes catered meals, coffee breaks, or cocktail receptions, you’ll likely need to meet a pre-determined F&B minimum.
This is another critical area where overestimating can hurt your budget. The hotel may charge penalties if you don’t meet the minimum spend, or they may increase service charges to make up for the shortfall. Likewise, underestimating can result in additional charges for last-minute catering needs.
What to Look for in F&B Contracts:
Clear Definitions: Ensure the contract clearly defines what counts toward the minimum. Does it include taxes, gratuities, and service charges? Some hotels exclude these, which means your actual F&B spend will need to be higher to meet the minimum.
Menu Pricing Flexibility: Negotiate flexibility in the F&B package. If possible, request a range of menu pricing or agree on fixed menu prices at the time of signing to avoid future price increases.
Handling Leftovers: Some contracts include clauses that specify what happens to leftover food. If sustainability is important to your event, discuss donating leftovers to local shelters or food banks.
F&B Cost Management Strategies:
Negotiate Package Deals: Many hotels will offer set packages for meals and beverages. These packages can often be customized to fit your budget.
Limit Open Bars: If your event includes a cocktail hour or reception, consider limiting open bar hours or using a drink ticket system to control alcohol costs.
Be Creative with Menus: The published hotel menus are often a starting point of what the hotel can create. Work closely with the hotel team to create custom menus that meet your specific needs.
At Meetingscouts, we work closely with hotels to craft creative, cost-effective F&B solutions that align with your budget and event goals.
3. Force Majeure
What is Force Majeure?
A force majeure clause protects both you and the hotel in the event of an unforeseen circumstance that makes it impossible or impractical to hold the event. This can include natural disasters (hurricanes, earthquakes), terrorist attacks, pandemics, government actions (such as travel bans), or other “Acts of God.”
With the impact of COVID-19 still fresh in the events industry, force majeure clauses have become increasingly important. An effective clause should clearly outline what qualifies as force majeure and what happens if such an event occurs.
Key Aspects of a Force Majeure Clause:
Inclusions and Exclusions: Ensure the clause includes a broad range of force majeure events, including health-related crises, natural disasters, and travel restrictions. Be cautious if the contract limits force majeure to very specific scenarios.
Termination Rights: Clarify who has the right to terminate the contract under force majeure conditions. In most cases, both the event organizer and the hotel should have the option to cancel without penalty.
Deposits and Payments: Address what happens to deposits and other prepayments if the event is canceled due to force majeure. Ideally, you should receive a full refund, or at the very least, a credit toward a future event.
Consideration of Alternative Solutions:
Rescheduling: Many hotels are willing to reschedule events rather than cancel outright in force majeure situations. If your event can be moved, this option may be preferable to starting the process over from scratch.
Partial Cancellation: Depending on the nature of the force majeure, you may still want to proceed with a scaled-down event. Negotiate the flexibility to alter the size and scope of the event without facing cancellation penalties.
Meetingscouts has firsthand experience navigating force majeure scenarios. We can help you craft clauses that protect your interests while keeping the door open for future collaboration with your venue.
4. Cancellation and Termination Clauses
What Are Cancellation and Termination Clauses?
Cancellation and termination clauses outline what happens if you need to cancel your event. This is one of the most important—and negotiable—parts of your contract because it directly affects your financial liability.
Cancellation refers to when one party decides to back out of the contract for reasons unrelated to force majeure.
Termination generally refers to circumstances where one party has the right to exit the contract due to a significant breach or unforeseen conditions (like a venue not meeting specified standards).
Types of Cancellation Penalties: Hotels impose penalties based on a sliding scale—typically, the closer to the event date you cancel, the higher the penalty. These penalties are meant to compensate the hotel for lost revenue from room bookings, meeting spaces, and F&B that they can’t recover due to the late notice.
For example, a contract may stipulate the following cancellation schedule:
More than 180 days before event: No penalty or loss of deposit
90-180 days before event: 50% of estimated revenue
30-90 days before event: 75% of estimated revenue
Less than 30 days before event: 100% of estimated revenue
How to Minimize Cancellation Penalties:
Negotiate a Gradual Penalty Scale: Instead of large jumps in penalties, try to negotiate a more gradual scale that gives you more time to adjust your plans without incurring hefty fines.
Rebook Credits: Some hotels offer partial or full credits toward future bookings if you need to cancel. Negotiate to receive these credits instead of forfeiting all payments.
Mitigation Clause: Request a mitigation clause stating that the hotel will attempt to rebook the space or rooms and, if successful, you won’t be liable for the full penalty.
Termination Rights: Termination clauses should clearly define conditions that allow either party to exit the contract without penalty. Common reasons for termination include breaches of contract, hotel renovations, or changes in ownership that significantly impact the event.
5. Meeting and Event Space
Why Specificity Matters in Space Allocation
The contract should specify the exact meeting and event spaces you will be using during your event. This includes room names, locations within the hotel, and capacities. Hotels often overbook their spaces, and without clear specifications in the contract, they may move your event to another room or space that may not meet your needs.
What to Include in the Contract:
Room Setup: Ensure the contract outlines the agreed-upon room setup (classroom, theater, banquet, etc.). If you require specific room configurations, include them in the contract to avoid last-minute surprises.
Room Size: Be sure the room is large enough to accommodate your expected number of attendees, especially considering current social distancing guidelines.
Hotel’s Right to Relocate: Most hotel contracts give them the right to move your event to another space, often without needing your approval. Negotiate to ensure that any relocation must be approved by you and that the new space must meet certain standards.
6. Audio-Visual (AV) and Technology Needs
Understanding AV and Technology Clauses
AV services are crucial for most events, whether it’s for presentations, microphones, projectors, or video conferencing. Many hotels have in-house AV providers, and they may charge high fees for using outside vendors. Ensure your contract addresses the following:
In-House vs. Outside Providers: If you prefer to bring in your AV team, make sure the hotel contract allows this without excessive fees.
AV Equipment Costs: Review the list of provided AV equipment and determine whether additional rentals are needed. Negotiate any fees for basic AV services, such as microphones and projectors.
Wi-Fi and Bandwidth: High-speed internet access is crucial for events today. Make sure the contract includes sufficient bandwidth and Wi-Fi access for attendees. If the hotel charges per device or user, ensure you understand these fees upfront.
7. Payment Schedule and Deposit
What to Look for in Payment Terms
The payment schedule and deposit requirements should be clearly outlined in the contract. This section details when payments are due and what percentage of the total cost is required at different stages.
- Deposit: Most hotels will require a deposit to hold the space. This can range from 10% to 50% of the estimated total cost.
- Final Payment: Final payments are often due 30 days before the event. Ensure you understand the schedule and any penalties for late payments.
- Direct Bill: Applying for Direct Bill will allow you to pay some or all of your master hotel bill after departure. The hotel will conduct a reference check from your past events, so starting this process early is key.
8. Hotel’s Responsibilities
Clearly Define the Hotel’s Role
Finally, the contract should specify the hotel’s responsibilities beyond simply providing rooms and event space. This could include staffing levels, cleaning schedules, and support during the event.
Staffing: Ensure the contract outlines the number of hotel staff available to assist with the event.
Maintenance: The hotel should maintain clean and functional meeting spaces, and this should be specified in the contract.
Final Thoughts
Securing a hotel event contract can be a complex process, but by understanding and negotiating these eight key elements, you’ll be in a stronger position to ensure a successful event. At Meetingscouts, we work with our clients to ensure every aspect of their contract is in line with their needs and budget. Our complimentary contract negotiation services mean you can rest easy knowing we’ve got you covered. Whether it’s negotiating room blocks or mitigating cancellation penalties, we handle the details so you can focus on delivering an outstanding event.
Ready to book your next meeting? Contact Meetingscouts today and let us take the stress out of event planning!
