Checking Into A Good Deal
(Or Think Before You Ink II. See Think Before You Ink I)

Our advice in contract negotiations is to be fair. Everyone should make money on the deal. The task is to blend fairness with good service, room rentals and F&B for the best deal for your program. Keeping these rules in mind, here are the final contract negotiating issues and comments.

Charges for Required Space
If you've agreed to use a particular property and defined the function space, the next task is to determine the proposed rental charges. As with most other areas of contracts, charges for meeting and function space are negotiable. However, before you simply refuse a price, you need to do some homework. Meeting and function space rental is a separate budget item from guestroom accommodations for most properties. To negotiate the reduction or elimination of the charges, you should do the following:

Compare proposals from other properties competing for your meeting or event. Pay close attention if one of the properties is offering you complementary rental space, and remember to ask them why they are offering the deal. In most instances, you will discover that there is a large group in town filling up many of the sleeping rooms, but holding most of their events in a nearby convention center. Then, take this knowledge to your property of choice. Let them know that you know there is a large "city-wide" group in house and that other bidding properties have listed their function and meeting space as comp. You will find that the initial fee will either be removed or significantly reduced.

When fees are less likely to be reduced or offered complimentary, you should demand to know what is included with the rental fees. Do they include labor charges? Do they include special service and or equipment? What is the property's inventory for the equipment? Make certain the staffing/labor committed to in the contract is sufficient for the size of your function. A sit-down dinner requires more wait staff than a buffet. A general session with projection imaging for a group of 600 requires more staff than for a meeting of 50. Then, find out if the labor or equipment charges can be reduced or eliminated by holding a food and beverage function in the hotel. In this case, make certain that the additional F&B event and the reduction in rental fees are of comparable value.

Food and Beverage
This is the second heaviest negotiating hammer in your bag, so know it well and use its value properly in your negotiating. Up front, be specific with your requirements. If you are ready to select menus, then do so. If not, give the hotel a budget number. Provide the property solid back-up on your past F&B experiences with this event. This gives you negotiating clout. The food and beverage figures are a separate part of the property's budgeting. Bringing F&B to a hotel is good, and the earlier you can specify your requirements the better the hotel can plan the most timely purchase of your F&B. That gives the hotel better control over its costs, which means you can negotiate for more favorable F&B numbers or look at reducing fees elsewhere in the contract.

Promotional Materials and On-Property Signage
If promotional materials are not in the contract, get it defined. What is the property's policy on signs and promotional material be placed in and outside the property. Do they permit banners? What are the size and style limitations? What do you require? Do you want the welcome sign of the hotel or convention center to proudly display your event in the rolling marquee or throughout the property's video screens, including those in the guestrooms? If your program requires signage, rolling marquee and banners, then be prepared to negotiate. Most likely you can get this service without charge, but you should have an idea of what the promotions are worth to you. Are you willing to do something for them? The extra demanding items -- like large banners, etc. -- may cause some tension.

Exhibition Space
You should know your requirements, and most importantly, your exhibitor's requirements. What types of electric current are available? How accessible is the space to each exhibitor? What are the labor costs, union contract requirements and shipping and receiving capabilities? How secure are the storage areas? What security will be in place during the program? Are doorways large enough for your exhibitors? What is the per-footage charge for the space? What are the weight limits for the floor(s)? It is very helpful to talk to three recent exhibitors (meeting/ event managers) and get their comments and advice. Finally, make sure you are properly addressing risk management, including insurance, security, party responsibilities, etc. You can loose more than your shirt at these events.

Competition/in-house
The greatest threat to holding a successful meeting may come from the other groups that are holding events at your location. You simply must know what else is scheduled at the property and how will it impact your group. Will you have the biker's week convention in your hotel with your group (Southern Baptists)? Make certain that you know the mix. Are your meeting rooms sound proofed, or do they reduce the potential for noise traffic between meeting rooms? Have you tested it? Have you asked references about their experiences? Make certain that your group is not going to be lost in importance and service attentiveness. Place a service level requirement (SLR) clause in your contract if you're concerned. Be willing to negotiate its cost.

Renovation, expansion and new construction
Make sure that these issues are addressed in your RFP response and contract requirements. The condition of the hotel should be the same or better than when you visited. (See site examination) Renovation or construction should never interfere with your event - period. If the property can't promise this, you may want to select another. A term in the contract for guest's enjoyment is "assured quiet enjoyment."

Parking
Understand how the parking fees are charged. Will it be full day with unlimited in and out or full day with no in and out? If your group is in-house all day long and the hotel has a $15.00 per day unlimited in-and-out, then suggest a $10.00 full day with limited in-and-out. If the hotel has no control of the parking, then let your guests know in advance. If parking is restrictive, as with some large city hotels, then obtain as many slots for your group as possible. Make certain that your allotment of slots is equitable, and is defined in the contract as equal to that of all other guests.

Compliance
Always make sure the property is legally compliant with the Americans with Disabilities Act, and local, state and federal safety codes. Check into the property's insurance and indemnification, and if you can, obtain a written acknowledgment of the property's compliance in your RFP. Require the property to provide their last date of "audit" or compliance certification. Be cautious because many sales managers can't answer these questions, and many properties don’t have the confidence to put their compliance into the contract. When this problem arises, take notes and send a copy to the sales manager relative to the "stated status" of compliance. If a guest is afraid of heights or the possibility of a fire, see if the property can place him or her in a room on the lowest floor and as close to a staircase as possible? While these precautions may be necessary for only a few individuals, they should go into the contract.

Risk Management
Indemnification of your client's or your company's legal liabilities for damages, injuries and acts is an integral part of the contract. What happens when a bartender gives your guest too much to drink and there is an accident? Where does the hotel's liability stop and yours begin? What are the property's security policies? What responsibilities rest with the hotel if your guest falls over a tear in the carpeting? Each party should assume responsibility for its own actions and for items within their control. Understanding these issues and clarifying them in a contract may require your attorney's assistance.

Property Sold and Management Changes
REIT buyouts and hotel management changes are occurring on a regular basis in today's marketplace. Your contract should guarantee that the new owners or management companies fulfill the terms of the agreement. You should also have the right to re-examine the property.

Accounting/Billing
Invoice, master account billing procedures and acceptable payment terms should be defined in the contract. In cases of collecting commissions due, the procedures should be defined. A contract should require the property's management to meet with you and your meeting planning personnel to review the bill. These meetings should be held at the conclusion of each meal, event, function, day, or at the end of your stay, but prior to your departure.

Within eight hours of the conclusion of your event, a "preliminary bill" should be available for joint review. Supporting each charge should be an authorized and signed voucher. Don't forget to include in the contract a discount for "early payment." Many large companies routinely take 60 to 90 days to clear their expenses. Hotels know this. If you can expedite the process, then your chances of obtaining a discount are good.

What State Rules?
Where your contract is "in-force" can make or break you, if you litigate any issue. Most contracts are in-force in the state of which the property resides. The local and state laws for serving alcoholic beverages should require full compliance by the property as an added clause into this section of your contract.

Termination/Cancellation
What's the difference? They terminate, you cancel. While contracts normally cover cancellations of a future program, they rarely include a clause defining the property's responsibility to you. Hotels have been known to terminate due to natural disasters. They may abandon you if they land a larger, more lucrative meeting. The contract should stipulate that the property must relocate your event at an equally comparable property at their cost to negotiate the deal equal to your deal with them. At a minimum, they should also pay for new mailings so you can inform your attendees of the change.

If you are forced to cancel, the contract should provide specific wording requiring the property to make every effort to sell your rooms first. The property should credit any realized income to your cancellation fee, thus reducing your losses. There should be no tolerance for double-dipping. Termination and cancellation issues are generally set to dates prior to the actual event dates. Know the cutoff dates and understand your exposures.

Who signs?
Are you authorized to sign a contract for your company or client? If not, you may place yourself in extreme risk by signing. You must be a legally designated officer of the organization or legally identified as an agent for the company in order to sign. If you are an agent, sign as agent for the principal company. Designate your signing authority clearly.

Finally think before you ink. The contract is not a contract until both parties sign. Make certain you understand the terms and have adequately addressed the issues of risk to the satisfaction of your management and client.