Nine Essential Hotel Contract Clauses

Meetings & Conventions: Planner's Portfolio May 1998
May 1998 PLANNER'S PORTFOLIO:

The Law & the Planner

BY JONATHAN HOWE


Nine Essential Hotel Contract Clauses

Even the simplest agreement must cover these key points

In the old days lawyers were scriveners - they were paid by the word. Thankfully, times have changed, and nobody likes a contract too thick for a staple to hold. Still, even the most streamlined agreements must include certain provisions to adequately protect you and your organization. Here's my "top-nine" list.

1. ADA Requirements
   Contracts must specify who is responsible for meeting requirements of the Americans With Disabilities Act. Unless otherwise stated, both parties are mutually liable for the failure of the other to comply. The clause should hold the facility responsible for public areas, sleeping rooms, rest rooms, etc. The meeting sponsor, meanwhile, should be held responsible for meeting room layouts, accommodating attendees' special needs (e.g., providing a sign language interpreter or materials in oversize print).
2. Cancellation
   Many planners believe that if there is no cancellation clause in the contract, they are free to cancel. Nothing could be further from the truth. In today's market, you've got to address what happens if one of the parties cancels. Cancellation clauses should clearly set forth the obligations of the parties without the need to resort to litigation or arbitration. Some contracts let either the facility or the meeting sponsor out of the agreement upon the payment of a set amount of money or other terms. Others allow only the planner to cancel under certain circumstances, such as changes in ownership or management of the property, renovation or construction that may adversely affect the meeting, or deterioration of the facility.
3. Attrition
   Attrition clauses impose a duty to meet room block requirements. Without an attrition clause, the planner's organization could be fully responsible for all rooms booked. And watch out for what I call the triple-whammy: paying for unused sleeping rooms, meeting space and lost food-and-beverage opportunities. (For more on attrition clauses, see page 48.)
4. Mitigation
   A mitigation clause requires either side to lessen potential damages. In other words, the hotel may be responsible to make a "best effort" to resell unused rooms in the block. In some situations, a mitigation clause may not benefit either party if there is a sum certain - or set dollar amount - for purposes of cancellation or attrition.
5. Condition of Premises
   This requires the property to be in the same condition or better than it was at the time the contract was signed, and to maintain its current "star" or "diamond" rating by any specified rating service. For independent hotels belonging to organizations such as Leading Hotels of the World, Preferred Hotels or Associated Luxury Hotels, failure to maintain that status also may be grounds for terminating the contract without liability.
6. Dispute Resolution
   If you want to use binding arbitration (which I recommend for offshore meetings) you need a clause that spells out not only the requirement of arbitration but the procedural rules, how to select an arbitrator and where the arbitration is to be held.
7. Attorney's Fees and Interest
   This states that if any issue requires an attorney's involvement, the prevailing party recovers its attorney's fees. This clause should be rather detailed in stating what fees are recoverable and whether interest may be collected on the contested amount.
8. Liquor Liability
   If alcoholic beverages are to be served, require the caterer to indemnify, defend and hold harmless the sponsor of the meeting in the event of any liquor liability claim. Also, require that servers be properly trained in alcohol awareness and intervention procedures, and also that they demand age verification at their discretion and refuse to serve alcohol beverages to anyone who appears to be intoxicated.
9. Hold Harmless
   Both parties agree to indemnify and hold harmless one another in the event of any claim registered by a third party. For instance, if an attendee slips and falls at the property, and sues both the hotel and the planner, this says there will be no finger-pointing.

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.