Meetings & Conventions: Planner's Portfolio July
2002
July 2002
PLANNER'S PORTFOLIO:
The Law & the Planner
By Jonathan T. Howe,
Esq.
CAN YOU SKIP AN ATTRITION CLAUSE?
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 [email protected].
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