10 Essential Clauses For Hotel Contracts

Factors to consider when drawing up an agreement

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• Always identify the proper parties to the contract, which in the case of a hotel is who owns it, not who manages it.

• Specify that both parties agree to defend, indemnify and hold harmless one another in the event of a claim registered by a third party.

• Include a "quiet enjoyment" clause that protects against any form of disruption that materially affects the program.

Contracts will vary with a group's needs, but a comprehensive hotel agreement should always cover critical clauses. The following are the musts.

ADA requirements. Contracts for events in the U.S. should specify both the facility and the meeting sponsor who will be responsible for each requirement of the federal Americans With Disabilities Act (for details, go to ada.gov).

Attrition. Be very specific, detailing the right for your organization to be credited for all rooms, regardless of how they were booked by attendees, subject to verification.

Cancellation. Set forth obligations, such as dollar amounts, without the need to resort to litigation or arbitration, in the event one of the parties cancels. The clause also should address the circumstances under which the planner can cancel without liability.

Condition of premises. This clause requires the property to be in the same condition or better than it was at the time the contract was signed.

Dispute resolution. If you want to use binding arbitration (a good idea for offshore meetings), add a clause saying it is required, plus procedural rules, how the arbitrator will be selected and where the arbitration will be held.

Force majeure. This serves as protection against so-called acts of God (e.g., terrorism, extreme weather, labor strikes, cessation of transportation, outbreak of disease) that make it impossible for either party to fulfill a contractual agreement.  

The clause should outline the steps the selected facility will take (including emergency medical attention and evacuation) in the event a disaster, whether natural or man-made, occurs while your group is at the venue.

Find a sample clause at mcmag.com/article.aspx?id=39278. Always have such provisions vetted by legal experts.

Liquor liability. If alcohol will be served, require the provider to indemnify, defend and hold harmless the meeting sponsor in the event of any liquor liability claim. Also, require servers to be properly trained in alcohol awareness and intervention procedures, to demand age verification at their discretion, and to refuse to serve anyone who appears to be intoxicated.

Mitigation. This clause requires either side to lessen potential damages, whether for cancellation, attrition or other breaches of contract, by using a specific formula for how resales will be calculated, if necessary, as well as the dollar amount to be paid. For example, with attrition, the hotel might be required to make a "best effort" to resell unused rooms from the contracted block.

Notice. Spell out how and to whom notice of changes or cancellation, as might be required under the contract, is to be provided and when it becomes effective.

Unavailability of facilities.
Agreements for citywide events must include a clause that states the contract is expressly contingent upon the availability of the convention center and all hotels and suppliers contracted by the event sponsor; all parties must be named individually in the document. It also should stipulate that if any of these facilities becomes unavailable, the sponsor can cancel the contract without liability.