MPI-SEC: Advanced Hotel Contracts: Maximize Your ROI, Minimize Your Exposure

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MPI-SEC Advanced Hotel Contracts Maximize
Your ROI, Minimize Your Exposure

• We just pass the time in our hotel roomsAnd
  wander 'round backstageTill those lights come up
  and we hear that crowdAnd we remember why we
  came --Jackson Browne, Running on Empty,
  1977
• Tom Pasha, CONTACT Planning
• tpasha_at_contactplan.com

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Introductions

• Tom Pasha
• Hotels since age 15
• 14 Hyatts over 20 years
• 6-time DOS
• National Sales Director
• Founded CONTACT Planning, a national meeting and
  golf planning company
• Trains planners from
• The Hotel Side

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In this session

• TONS of Information!
• Very Interactive
• Ask lots of good questions
• Take lots of notes
• Contracts are critical to a great meetingheres
  the hotel side of them.

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Hotels Need Meeting Business!

• Hotels Depend on Groups and Meetings
• Higher rate
• Better catering, facility use golf, spa, gaming
• Prime time groups increase revenue
• Off-peak groups increase occupancy
• Hotels are designed with Group Meeting Space to
  fill rooms!
• What can you Negotiate? Everything!
• When you confirm the negotiations, its time to
  go to Contract.

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Hotels Contracts Confirm.

• Dates, Rates and Space
• Concessions and Considerations
• Reservations
• Payment and Billing
• Penalties Attrition and Cancellation

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Good contracts confirm your Space, Dates and
Rates

• Space General Sessions, Break-outs, Meals, with
  set-up and tear-down times, turn times, weather
  backups.
• Dates Make sure the program matches the rooms
  add staff arrival and departure dates VIP and
  speaker rooms
• Rates Rates are ALL the revenue streams of the
  hotel and include..

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Contracted Rate

• Much more than Room Rates!
• Be sure to Contract
• Room Rates (Sgl /dbl / trip / quad)
• Suites Rates (1, 2-bdrm suites?)
• Staff Rates
• Comp rooms 1/40, 1/45, 1/50?)
• Resort Fees (PP or Per Room?)
• Internet access fees Room and Mtg Space
• Parking Fees (Staff price / Comps?)
• Porterage Fees (Optional?)
• Housekeeping Fees (Optional?)
• Room delivery fees

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Contracted Concessions

• After the Room Block and Rate information,
  Concessions are next. Bullet-point format,
  include comps, upgrades, VIPs, meeting space, so
  everything is easily found and confirmed.
• Sample Concessions
• 1 per 40 comp room credit, calculated on a
  cumulative basis
• Three VIP upgrades to Junior Suites at the Group
  Rate for the duration of the conference
• One (1) two-bedroom VIP suite complimentary for
  the duration of the conference
• Complimentary wireless internet in all guest
  rooms
• Complimentary wireless internet in all meeting
  rooms
• Complimentary meeting space, based on the program
  and pick-up
• Complimentary Health Club Fitness Center for all
  attendees
• 10 off AV equipment
• 10 off Catered FB (Or current menu prices GTD
  for future year event)
• Additional guest rooms will be accepted at group
  rate based on space availability
• Group rate extended three days pre and post the
  event, based on availability.

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Reservations Items

• Reservation Method Individual, Rooming List,
  Housing Bureau
• Rooming List Due date-Cut-off
• Room Block Review Date 10 or 20, 3 to 6 months
  prior to Cut-off, not Event Day.
• Rooms received after Cut-off should be based on
  room availability at the Group Rate
• Rates available 3 days pre- and post-meeting
  dates, space available

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Payment and Billing

• Billing Master Account
• All Charges to Master
• M/A Room Tax, Ind. Incidentals
• GTD to corp Individual Payment at check-in
• Master Account Catering, Specified Staff Charges,
  per Rooming List
• Payment Pre-payment / Payment
• Credit Card Authorization Credit
  Application Form
• Special Forms Purchase Orders, W-9, Separate
  Invoice for every deposit due

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Contracts are Fun, But What Happens IF Things
Go Wrong?

• BIG THREE LEAST FUN TOPICS IN PLANNING!
• Attrition
• Cancellation
• Performance Penalties
• Remember that Planners and Hotels REALLY hate
  these conversations, so if you work as partners,
  you will avoid most problems.

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Avoid Penalties With Planning, Executing,
Follow-Through

• Planning
• Since you want a hotel to hold Definite dates,
  you have to make a Definite commitment
• Definite Dates, Rates and Space
• Get a Definite Commitment from
• VIPs and Speakers,
• Budget, FDA, all outside approvals
• Check for competing / similar events in
  advance
• Have your bosses sign a commitment memo
  or purchase order

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Executing to Avoid Penalties

• Communicate
• Before Cut-off Does your contract have a 3, 6 or
  9 month review? Does it show exact dates and
  percentages?
• Observe all review dates
• Follow-Through
• Keep in touch with the hotel
• Are your counts accurate?
• Dupes and Cancels
• Registration Vs. Reservations
• Rooms credited to the block
• Pre- and post rooms
• All banquet charges counted

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Attrition and Cancellation.

• EWWWWWW! Both Hotels and Planners HATE this
  topic!
• Book a group when youre sure it is happening!
• Contract an extended decision date, if youre not
  sure
• Contracts should have a sliding scale of
  cancellation dates the penalty increases as the
  cancellation date approaches the event date.
• Tell the hotel if its a continuing education
  block or a promotional block ask for a Courtesy
  or No Attrition block.

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Contracting Rooms Minimums and Attrition

• Negotiate and contract Rooms minimum at 80 of
  the block.
• Contract a Resell clause, so the hotel can
  re-sell the released space, and youll pay for
  what was not sold
• Contract a Re-book clause, so any Cancellation or
  Attrition fees are applied 100 to your next
  contracted date
• Whenever possible, any attrition or cancellation
  penalty based on Rooms profit, of 80, Not
  Retail.
• Determine whether cancellation is taxable --ask
  to see the tax code covering cancellation fees.

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FB Minimums and Attrition

• Base the FB minimum on your selected menu, not
  on the Average Check assigned by the hotel.
• Contract the minimum at _at_ 80
• Negotiate to have the FB minimum include Tax and
  Tip Inclusive
• Have meeting space rental include tax and tip, in
  the event of a fee.
• Have hospitality catering applied to the minimum
• Contract to pay the anticipated profit of the
  Catered FB, at 40, not retail.

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Re-Sell Clause?

• Most hotels have a version of this in their
  contracts they typically dont offer it, but
  will add it if requested make sure it is in your
  contract.
• If you are liable for a cancellation, ask for the
  hotels Daily Report or Flash Report for those
  days. Ask the hotel to compare it to their
  Annual Forecast for the cancelled days, to see if
  they were actually affected.
• Pay for the difference between the estimated
  revenue and the forecasted revenue _at_ anticipated
  Rooms profit of 80, not the 100 retail.

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Re-book Clause?

• If you re-book the same meeting within 6-12
  months of the cancelled dates, you should have
  the cancellation fee applied as a pre-payment for
  the new dates.
• Ask for 100 of the prepayment to be applied,
  sometimes youll get it, and others may be 25,
  50 or 75.
• Again, make sure it is clearly spelled out in the
  contract, before anyone signs anything!
• Make sure everyone signs and counter-signs
  everything.

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Attrition Clause Samples

• ATTRITION
• This Agreement is based on Groups use of the
  guestroom block as outlined above. However,
  thirty (30) days or more, prior to the first day
  of arrival, Group may reduce its guestroom block
  by a maximum of 10 cumulative. Thereafter,
  Group shall pay Hotel one nights guestroom rate
  and tax for each unused guestroom night based on
  the guestroom night commitment or the adjusted
  guestroom night commitment. No payment shall be
  due, however, for any night during the Group stay
  in which the Rooms Revenue meets or exceeds the
  Rooms Revenue as forecasted in the hotels Annual
  Budget.
• RE-BOOK CONSIDERATION
• In the event any attrition charges are posted to
  the Master Account for the above group, the
  entire amount will be applied as a credit towards
  any rebooking of this group within 12 months
  following the departure of this contracted event.

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THE Ultimate Attrition and Cancellation Clause

• Seminar / Education Meeting Review Date
• The ltgroupgt will have the option of reviewing the
  pick-up and registration performance of the group
  30 (45) days prior to arrival. At that time, the
  ltgroupgt may increase the block and space
  requirement, based on hotel availability or
  decrease and/or release the booking with no
  penalty.
• Any reductions or cancellations occurring within
  30 days of the contracted arrival date will
  result in a cancellation charge of ______ to be
  paid upon receipt of invoice.

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Contract Clauses to Request

• Be sure to Ask for
• Construction and Renovation clauses
• Entire Agreement
• Performance Clauses
• Waiver of Corkage for contractors
• Mutual Indemnification
• Lowest available rate over event dates.
• Resale AND Rebook Clauses

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Contract Clauses to Request.

• Construction or Renovation.
• Hotel acknowledges and agrees that there shall be
  no planned or scheduled alterations construction
  or renovations during the period of the meeting.
  For any renovations that would impact the
  successful completion of this event, the Group
  will have the option of postponing the scheduled
  event on a space available basis or cancelling
  the event at the hotel without penalty.
• Entire Agreement.
• The foregoing Agreement, set forth the entire
  understanding between the parties hereto and
  supersedes all prior agreements, arrangements,
  and communications, whether oral or written, with
  respect to the subject matter hereof. This
  Agreement may not be modified or amended except
  by the mutual and prior written consent of both
  parties. No additional Rental Fees, Minimums or
  other charges not specifically set forth in this
  contract can be added at a later date, without
  mutual agreement by both parties.

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More Clauses

• Performance Clause
• It is agreed that in the event of a problem in
  facilities or service, that the client will
  clearly identify the issue to the sales and
  convention service manager assigned the hotel
  will have the opportunity to remedy the
  situation. In the event that the proposed remedy
  is not mutually agreed upon as resolving the
  issue, the client reserves the right to negotiate
  appropriate and proportionate adjustments to the
  Master Account.
• Outside Contractors
• Catering, in-house electrical service and rigging
  are exclusive services provided by the hotel.
  The hotel agrees to waive any service fees, patch
  fees or other billing in the event the Group
  selects an outside contractor for
  convention-related services such as DMCs, Décor,
  Audio-visual services, etc. Standard and
  reasonable licensing and insurance will be
  required from any outside vendors.
• Mutual Indemnification
• Each party to this Agreement shall, to the extent
  not covered by the indemnified partys insurance,
  indemnify, defend, and hold harmless the other
  party and its officers, directors, agents,
  employees, and owners from and against any and
  all demands, claims, damages to persons or
  property, losses, and liabilities, including
  reasonable attorneys fees (collectively,
  Claims), arising solely out of or solely caused
  by the indemnifying partys negligence or willful
  misconduct in connection with the services
  contemplated by this Agreement. This paragraph
  shall not waive any statutory limitations of
  liability available to either party nor shall it
  waive any defenses either party may have with
  respect to any Claim.

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The Final Edit.

• Check that the client name, group name, hotel
  name and all contact information is accurate
• Check and double-check that space, dates and
  rates are accurate
• Set-up times, event turn-times, weather back-up
  rooms reserved, exact access times.
• Make sure all concessions are on bullet-points,
  not hidden
• Check to confirm the program is exactly as you
  want it
• Make sure all the clauses are clear
• Negotiate all Cancellation and Attrition clauses
• Check that the Resell and Rebook Clauses are
  added

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Ready to Sign the Contract?

• NOT YET!! Double-check everything! Its a real
  document (VERY real sometimes!)
• Make any changes before you sign the final
  contract once its signed, its done.
• Line-outs are legal date and initial any
  changes hotel to counter-initial changes
• For major changes, request a re-write
• Sign, date and scan or fax-return the contract,
  have the hotel send you a countersigned copy.
• Make sure you receive a counter-signed copy
  Legally, a contract without a countersignature is
  binding ONLY on the signer.

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And finally

• Hotels are in the Service business! They are NOT
  out to get you!
• Good negotiations lead to good contracts
• Contracts are critical, but be sure they are fair
  for both sides you want the group to be a
  success and for the hotel to want to work with
  your group!
• And, as always.

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Call me if I can help!

• Thank You!
• Tom Pasha
• CONTACT Planning
• Tel [phone]
• tpasha_at_contactplan.com
• www.contactplan.com
• www.full-contact-training.com
• www.tompasha.com
• www.meetingplannertrainingcamp.com
• And still those voices are calling from far
  away,
• Wake you up in the middle of the night, just to
  hear them say,
• Welcome to the Hotel California.