Meetings & Conventions: Planner's Portfolio April
The Law & the Planner
By Jonathan T. Howe,
REBELS WITHOUT A CLAUSE
Some hotels are cutting attrition and cancellation clauses,
but at what risk to planners?
When negotiating with airlines, no meeting planner commits his
or her organization to filling X number of seats. Rather, they
arrange a discount off the basic fare in hopes attendees will use
the favored airline. In turn, the meeting planner might receive
site-inspection tickets or other perks based on the group’s seat
pickup. The planner has no liability for empty seats.
Today a number of planners are using similar tactics to book
hotel rooms. Having been bitten by large attrition charges, they
are no longer making commitments for rooms. Rather, they are
letting the market dictate the pickup and letting hotels compete
directly with each other in order to gain the heads in beds.
As an alternative to the usual contracted block rate, a small
but growing number of meeting planners are asking hotels for a
certain percentage off the lowest published room rate. In exchange,
the planner will list the hotel and group rate in the conference
brochure and expect attendees to book accordingly. But, planners
are not accepting responsibility for any lack of room pickup.
Without a reserved room block, there is no traditional contract
and no attrition clause. The new type of contract deals with rate
discounts, meeting room rental and F&B, but without any
responsibility put on the planner to fill beds.
This kind of agreement gets you off the hook for attrition, but
keep in mind there are other costs the group might incur by dealing
in this manner. Without an established room block, don’t be
surprised if the convention center hikes the rent and hotels charge
for meeting space. They need to guarantee a certain amount of
income from the meeting somewhere in the paperwork.
Also, what to do if attendees can’t get rooms? Surely, they’ll
become upset and blame the planner. Furthermore, citywide programs
might risk running into conflicting and competitive events at the
same venue during the same time.
SAY IT IS SO
In some cases, hotels are taking the initiative to reduce risks to
planners. Recognizing clients’ fear of committing to room blocks in
anticipation of war in the Middle East or elsewhere, a few chains
have pledged to eliminate attrition or cancellation fees this year.
This is to entice meeting planners to book without the risk of
paying the price if the event can’t take place.
But be warned: Simply signing a deal without attrition or
cancellation clauses isn’t good enough. To avoid the charges
altogether, the contract must include a statement that no attrition
or cancellation fee will be assessed.
The clause must be very specific and allow the planner, should
numbers not materialize, to go forward with reduced numbers or to
cancel without any liability. If this is left unsaid, a court could
find the lack of such a clause, coupled with an affirmative
assertion of a room block, as a breach of contract resulting from
the failure to pick up the rooms.
HERE TO STAY?
As major hotel partners back away from charging for cancellation
and attrition, the market might stick to the traditional mode of
booking rooms, rates and dates, rather than mirroring the more
open-ended kinds of deals made with airlines.
Whether this is merely a temporary Band-Aid or a lasting
approach to room blocks remains to be seen. What is clear is that a
deal that sounds too good to be true probably is. If a hotel
promises you won’t be taking a risk, always put that promise in
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 firstname.lastname@example.org.
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