Signing a contract is always a hair-raising and nervous experience. But signing a hotel, convention center or other facility's standard contract for your company could damage your organization's financial well-being. A standard contract protects the facility, not your company.
To protect yourself, ask to review the standard contract, but consider that as only a starting point. Then, negotiate with someone who has authority to make decisions and the authority to sign the contract on behalf of the facility, says Bonnie Wallsh, a certified meeting professional.
Too often, administrative professionals don't realize how much negotiating power they have, adds Tyra Hilliard, a meeting industry attorney and professor of event and meeting management at George Washington University.
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Plan for the unexpected
Hotels will overbook and "walk" guests to another facility, unforeseen events will force the cancellation of an event and other hazards will arise, so your contract should specify what the facility will do in those cases, Hilliard advises.
For example, the hotel might pay you $25 for every guest who is bumped to another facility (an incentive for it to move other groups first) and guarantee comparable accommodations nearby. You don't want your attendees bumped from a Marriott to a Motel 6.
If you aren't careful, attrition or slippage clauses—which compensate the vendor when attendance falls short of your expectation—become a windfall for the facility.
Event attendance history helps when estimating how large a room block you'll need. But keep in mind that many attendees who pay for sleeping rooms out of their own pockets seek better deals elsewhere and bypass your registration process.
So what's the best way to ensure you receive credit for every attendee? Create an audit clause, Hilliard advises, specifying how rooms will be credited to you. Example: cross-checking the rooms booked with your registration list. You want credit for rooms booked regardless of the rate paid. Some hotels credit rooms only at the group rate or higher. And while the facility should collect some money when you don't deliver the business you promise, you don't have to make it rich.
"Damages should be based on lost profits, not lost revenue," Hilliard says. For example, you shouldn't pay the full room rate for any rooms not booked, because the hotel won't incur cleaning and restocking costs. Also, you should receive credit for any rooms the hotel is still able to fill.
The contract terms for attrition should specify amounts and cut-off dates. If you provide a lower head count for meals before the facility orders food and schedules servers, you should receive a break.
Hilliard advises paying undisputed attrition charges immediately, but set a clause in the contract that no interest will accrue on disputed amounts until those issues are resolved.
If you often do business with the same facility, don't assume the contract language applies to each usage.
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Within your organization, establish a contract guideline specifying:
- What language is acceptable and what isn't.
- Who has authority to approve preferred contract language.
- If arbitration is required to resolve disputes.
Never accept liability by signing a contract, unless it's on behalf of the organization.
If you have the authority to sign a contract for your organization, put a notation such as "on behalf of ..., " "as an agent for ..." or at least your title to make clear that your signature is for your organization, Hilliard says.
Finally, make sure your boss knows the value of the work you're doing and ensures you have the time, training and authority needed to be successful, Hilliard advises. Someone who takes the responsibility for planning an event has "real power to make the whole organization look good or bad."
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- The worst phrase to use as you begin negotiations.
- Why “splitting the difference” is a losing proposition.
- Why win-win isn’t always a realistic strategy (and what to do when it’s not).
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