July 01, 2002
Meetings & Conventions: Planner's Portfolio July 2002 Current Issue
July 2002 lawandplan.gifPLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.


Why some things can’t be left unsaid&How to outline your rights for walked guests

Q:We plan more than 200 meetings per year for medical specialists all over the United States. Given the weak economy, we have suffered tremendous attrition penalties due to registration drop-off.

A colleague told me she almost never signs contracts with attrition penalties. In today’s market, the idea that we are keeping a hotel from meeting its revenue goals is ridiculous, she believes.

What do you think of this? Can we send the hotel a contract template and basically demand that they meet our terms? Other colleagues say it’s best to reduce the penalties and make it a win/win for both hotel and customer.

Holli Tirabasso
Senior Director,
Meetings Management
Company name withheld

A: The purpose of attrition clauses is to make the hotel “whole” for the failure of the planner’s organization to meet its obligations. The lack of an attrition clause does not relieve the meeting planner of obligation for attrition.

Depending on the wording, failure to fill the room block could be considered in court to be a breach of contract for which damages must be paid. The penalty would be calculated based on lost profits for those obligations set forth in the contract.

For example, if you failed to pick up 100 room nights from your block, you would be liable for the common-law damage amount of lost profits plus the cost of mitigation, i.e., trying to resell the rooms, less whatever has been sold, less other expenses not otherwise incurred by the hotel. A similar calculation would be used if there were an obligation for food and beverage.

An attrition clause provides for a mutually agreed-upon sum to be paid should room pickup not be met. The key element here is to negotiate a reasonable and understandable calculation procedure. I do not like formulas; rather, I prefer a set amount per night, per room, or for each dollar not picked up for F&B guarantees.

As for sending out your own contract, a growing number of our planner clients have a customized contract template that they use. Why not? It provides a starting point for negotiation.

Q: Substantial costs can be incurred by organizations when a hotel doesn’t deliver the room blocks that have been reserved. Assuming those rooms were covered by a contract, can an organization seek reimbursement for the additional expenses (and nonmonetary damages)? Just what redresses do conventions, large and small, have when the hotels refuse to make available the rooms booked?

Name withheld on request

A: Your contract’s “walking” clause should delineate your compensation. It should specify what the hotel must do for the person who shows up with a confirmed reservation but is told there is no room at the inn.

First, the hotel must find and pay for housing at a comparable hotel. Second, the hotel must provide ongoing transportation to allow that person to participate in the meeting as if he were staying at the original hotel. Third, and important to planners, the next morning the individual should receive a letter from the general manager apologizing for bumping him and clearly stating that it was not the fault of the meeting professional.

The clause should require the hotel to forward the attendee’s calls to the new location as well. Another economic disincentive to walk a guest: Require a specified sum be credited to the master account each night a bumped guest is off-property.

Jonathan T. Howe, Esq., is a senior partner in the Chicago and Washington, D.C., law firm of Howe & Hutton, Ltd., which specializes in meetings, travel and hospitality law. Legal questions can be e-mailed to him at askhowe@cahners.com.

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