Please note: This story and referenced webinar are intended for educational purposes only and do not replace independent professional judgment. The panelists and the Event Leadership Institute are not engaged in rendering legal, accounting, or professional services. If you or your organization require expert assistance, you should contract the services of a professional.
- Be a fully informed planner: read the entire contract, ask questions, and hire a hospitality attorney if you need assistance in reviewing, negotiating, or renegotiating a contract.
- For contacts carried over from pre-pandemic, find out if key aspects of the venue have changed, like new ownership, brand, or construction that would coincide with your event.
- Force majeure clauses should specifically mention COVID-19 and its variants.
- Carefully review attrition clauses to ensure they are based on lost profits, not the total booking, and that hotels do not take away concessions if the planner misses the attrition number.
- For hotels that have yet to reopen, give them a deadline after which the planner will assume the contract is canceled.
As meeting planners try to schedule new events or rebook events canceled during the throes of the pandemic, they face a legal landscape that’s only getting trickier.
It’s far more difficult to negotiate or renegotiate contracts in 2021 than in 2020, noted hospitality strategist Joan Eisenstodt of Eisenstodt Assocs., LLC. Last year, all meetings and events were on hold. Now there are a slate of new issues to deal with—and the venues themselves may or may not have reopened.
How to navigate these issues and others were the topic of the recent ELI webinar, Your New Venue Sourcing Strategy: The New Legal Landscape for Event Contracts, with Eisenstodt and veteran hospitality attorney Josh Grimes of Grimes Law Offices, LLC.
Groups are ready to schedule events but need solid contracts to help them feel comfortable, Grimes said. Hotels are trying to make up for a year and a half of lost revenue, but certain clauses and high rates can discourage planners because of the potential liabilities. He advised that each side should think about their “must-haves” and “like-to-haves” and to be prepared to walk away if the terms don’t feel right.
The most important thing is to be a fully informed planner, Eisenstodt said. Read the entire contract, ask questions, confirm whether the brand or ownership has changed, and hire a hospitality attorney if you need assistance in reviewing, negotiating, or renegotiating a contract.
Here’s what the experts had to say on specific clauses:
- Force majeure: Grimes said this is the top clause people ask about. The language here should specifically mention COVID-19 and its variants because typically force majeure only refers to unforeseen events, and by this time everyone is aware of COVID. He noted that some force majeure clauses only cover situations where it’s “illegal” or “impossible” to have the meeting, not “impractical” or “inadvisable,” which may better describe the situation. Grimes suggested a timeline for when you can make a determination about whether force majeure exists. Traditionally, that would mean a day or two before the meeting, but in today’s reality, you may consider 30, 60, or 90 days before the event.
- Cancellation: The timeframes have remained the same as pre-pandemic, Grimes said, but the amount that hotels want has grown. One way hotels are doing this is by changing the percentage of total anticipated revenue from beyond just the rooms and food and beverage to other ancillary revenues such as golf greens fees. Carefully read the language to see if it’s acceptable to you. Another tip: Make sure there is a clause covering a cancellation by the venue.
- Attrition: Carefully review attrition clauses to ensure they are based on lost profits, not the total booking, Grimes said. Planners should also ensure that hotels do not take away concessions if the planner misses the attrition number. On the other end, make sure you have the ability to increase your room block, Eisenstodt advised. “There are hotels that may be open but don’t have all floors open because of staffing,” she said. “If you have a room block but they can’t fulfill, that has to be acknowledged in the discussion around attrition.”
- Health and safety: See what the hotel is offering and attach those policies to the contract, Grimes said. The contract should also address what happens in the case of an outbreak, such as who pays for an attendee to quarantine at the property. If you’ve changed to a hybrid meeting and will take up a smaller footprint, Eisenstodt suggested asking if there will be other groups in house at the same time. That group’s policies for masks, testing, or social distancing could have an effect on your group.
- Renovation/construction: Some hotels have deferred renovations because of financial issues caused by a lack of business. Grimes said to consider a clause that states there will be no renovation or construction work during your meeting unless you were told about it before you signed the contract. If you determine that a renovation that’s announced will interfere with your meeting, you have the right to ask for changes or cancel and treat it as cancellation by the hotel. Eisenstodt also suggested asking whether the hotel has upgraded its HVAC systems to ensure high standards of air filtration.
Some planners may find themselves in limbo with an event on the books at a hotel that has yet to reopen. “At a certain point, the group needs to take matters into their own hands,” Grimes said. He suggested the planner act aggressively and give the hotel a deadline to reopen, stating that if it’s not met the planner will consider the contract canceled and demand a return of the deposit.
Eisenstodt offered this final advice for planners: “Know what you want and be assertive.”
Listen to the entire conversation here. Also available is the first part of this webinar series, What Does an RFP for Hybrid Events Look Like?