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4 Clauses to Re-Examine in Your Meeting Contract

To avoid unpleasant surprises, you should zero in on cutoff dates, attrition calculations, prepayment requests, and disputed-charge rules. Here’s what a meetings-industry attorney wants you to know.

As if convention and exhibition planners don’t have enough things coming at them, there’s this: On average in 2023, 45 percent of conference attendees delayed registering until four weeks or less before an event, with 20 percent registering between one and 14 days out.

That’s according to a new Registrations Insights Report from Maritz that examined 360,000 attendee registrations across 30 trade shows over the past few years. (Read a detailed analysis of the report here.)

This registration trend complicates the work of planners as they negotiate contracts for room blocks at hotels. Barbara Dunn, partner at Chicago-based law firm Barnes & Thornburg LLP, represents many nonprofit groups and trade associations in their dealings with hotels and venues; she says the Maritz data comports with what her clients are seeing.

However, Dunn notes that “there are a few levers in a contract that can be maneuvered” by planners to keep guest rooms available in the block closer to the event’s start date, while also minimizing the chances that attrition charges come into play. This effort requires tweaking the terms of four clauses commonly found in hotels’ group contracts these days.

30-Day Room-Release Cutoff? Let’s Make It 14
Dunn says “the first lever a planner could maneuver is the cutoff date” when the group must release guest rooms to be sold at a rate higher than the group’s contracted rate. “Coming out of the pandemic, we’ve seen 21 days become the more common term” instead of 30 days, she finds. “But a planner can often get that room-release cutoff down to 14 days—especially if the group agrees to market to attendees that the cutoff is 21 days out.”

Further, Dunn recommends that planners “press to have the group rate still apply after the cutoff date for anyone attending the event. Hotels will often qualify that by saying the reservation must be within the same guest-room type,” but an agreement can still be reached in most cases.

New Baselines for Calculating Attrition? Um, No
According to Dunn, “more hotels are slipping into their attrition calculations the stipulation that the group must ‘affirmatively reduce the block’ at some point prior to the meeting,” often 60 days out, in order to get the benefit of any reduction in the block when pick-up percentages and attrition charges are calculated. Dunn refers to these as “use it or lose it” provisions, and they can be problematic for groups given current registration trends.

To illustrate the point: If the clause requires the group to reduce its room block 60 days before the meeting in order to get the benefit of the “slippage” allowance (let’s say 20 percent), a group might not have enough information at that time to know whether it will need to reduce its room block, and decline the opportunity.

In that case, “the group might think that attrition charges will be based on 80 percent of the block—essentially, that the 20 percent slippage will be factored in regardless of whether they take the reduction,” Dunn says. “But instead, attrition charges will be based on 100 percent of the room block,” which brings a much higher probability that the group will pay some attrition charges.

In short: “Get that ‘affirmatively reduce the block’ clause out of the contract,” says Dunn. Instead, base attrition charges on the minimum room block regardless of whether the group reduces the block beforehand.

Also, watch out for language “that limits which guests will be counted towards the group’s room block, such as stating that only those guests who booked into the ‘official block’ will be counted toward group’s room block,” Dunn adds. “Make sure to fight for credit towards the block for every room, regardless of what an attendee paid or which channel they used to reserve the room.”

AM0524BarbaraDunn.jpgLastly, Dunn (in photo) advises that planners make sure that attrition is not calculated on a nightly or per-night basis; instead, it should be calculated on a cumulative basis that accounts for the total number of rooms used over the event dates. In particular, people leaving a day early can cause the room count to fall below the nightly minimum; “if attrition is calculated on a per-night basis, a group would have to pay some attrition for that night even if the room count was well above the minimum on the other nights,” says Dunn. Using a cumulative basis for attrition, though, allows rooms used on other nights to offset the shortfall.

Pre-Paid Attrition? Not Happening
As planners examine the attrition clause in a hotel contract, “they're probably focused on the percentage and the other usual things, and their eyes may start to glaze over,” Dunn says.

But more often these days, “there’s a seven-day ‘prepayment of estimated attrition’ clause hanging out in the last sentence or two of that section,” she notes. So, “I warn everybody who reviews contracts to do it when their mind is fresh and read every line closely—and get that clause out of the contract. Attrition charges can only be calculated post-meeting after the actual numbers are collected.”

Waive the Right to Dispute Charges? Yeah, Right
Another problematic clause popping up in more hotel contracts lately states that if a group does not dispute charges within seven days of receiving an itemized bill from the property, it waives the right to do so.

While a planner could insist on having at least 14 or 21 days to examine the group’s bill for accuracy, “the key is to remove the waiver language,” says Dunn. “It's one thing for them to say you're going to be on the clock to make corrections, but most clauses don’t say exactly what happens if you don't meet that deadline. Giving up the right to dispute a charge that you can prove was wrong is a big ‘gotcha’ in a contract. Don’t leave it in there.”

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