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

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@contactplan.com

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…” 1

In this session… • TONS of Information! • Very Interactive • Ask lots of good questions • Take lots of notes… • Contracts are critical to a great meeting…here’s the hotel side of them.

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, it’s time to go to Contract.

Hotels Contracts Confirm…. • Dates, Rates and Space • Concessions and Considerations • Reservations • Payment and Billing • Penalties: Attrition and Cancellation

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…..

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 6

Contracted Concessions After the Room Block and Rate information, Concessions are next. Bullet-point format, include comps, upgrades, VIP’s, 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 F&B (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.

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

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

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.

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: • VIP’s and Speakers, • Budget, FDA, all outside approvals • Check for competing / similar events in advance • Have your bosses sign a commitment memo or purchase order

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

Attrition and Cancellation…. • EWWWWWW! Both Hotels and Planners HATE this topic! • Book a group when you’re sure it is happening! • Contract an extended decision date, if you’re 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 it’s a continuing education block or a promotional block; ask for a Courtesy or “No Attrition” block.

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 you’ll 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.

F&B Minimums and Attrition • Base the F&B minimum on your selected menu, not on the “Average Check” assigned by the hotel. • Contract the minimum at @ 80% • Negotiate to have the F&B 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 F&B, at 40%, not retail.

Re-Sell Clause? • Most hotels have a version of this in their contracts; they typically don’t 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 hotel’s 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 @ anticipated Rooms profit of 80%, not the 100% retail.

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 you’ll 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….

Attrition Clause Samples • ATTRITION • This Agreement is based on Group’s 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 night’s 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 hotel’s 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.

THE Ultimate Attrition and Cancellation Clause • Seminar / Education Meeting Review Date: • The <group> 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 <group> 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.

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

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.

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 DMC’s, 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 party’s 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 party’s 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.

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;

Ready to Sign the Contract…? • NOT YET!! Double-check everything! It’s a real document… (VERY real sometimes!) • Make any changes before you sign the final contract; once it’s signed, it’s 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.

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….

Call me if I can help! …Thank You! Tom Pasha CONTACT Planning Tel: 407-891-2252 tpasha@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.” -- The Eagles, Hotel California, 1979

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