When contracting with hotels, there are several options to consider that can make the process more efficient and consistent across your organization. Here, I’ll unpack each option’s advantages and when you should consider each one.
Let’s start with master service agreements (MSAs), also known as general services agreements (GSAs), which work well when you have an ongoing relationship with a hotel or other venue. For these, both parties negotiate the terms and conditions that will apply to the relationship for a specific period (three years is typical). The MSA will include standard legal terms as well as agreed-upon terms for attrition, cancellation, force majeure, and so on. Events booked at the property under the MSA simply need to complete a “term sheet” or banquet event order outlining the space, dates, and applicable rates. This will dramatically cut down your contracting time and legal fees because the contract terms are set up front.
An MSA is not the same as a chain-wide agreement, though the two are sometimes confused. A chain-wide agreement is a master services agreement on steroids, in which an organization negotiates terms and conditions that apply to any event at any property within a hotel chain. These are time-consuming and difficult to negotiate; once complete, it’s an ongoing effort to educate the individual properties, and issues can arise when hotels move from brand ownership to a franchise arrangement. Only the largest organizations with sophisticated strategic meetings management programs should consider this approach. Even then, the investment in legal resources might not be worth it in the long run.
Another approach is to work with custom contract templates, which are developed by large organizations to reduce or even eliminate the need for legal review during the contracting process. In this case, rather than signing “hotel paper,” an organization asks hotels to sign its contract, which includes language specific to the organization. For the event host, it drives efficiency, improves protection, and reduces cost. Practically speaking, custom templates are used by organizations with multi-million-dollar event portfolios; otherwise, hotels won’t consider it. A custom contract template is different from an MSA in that it is proposed as the starting point for all venue negotiations, including properties or destinations not routinely used by an organization. There are situations where the property won’t accept such a template, and planners will need to weigh the importance of getting the venue they want against the extra time and risk of using the hotel’s contract.
If your organization isn’t big enough for a custom template, a contract addendum could be a good solution. In this case, an organization accepts the hotel’s contract but includes other clauses of its own or alternative language to the clauses in place. Such addendums might address a room-rate guarantee, a preferred attrition and/or cancellation calculation, service standards, or a room-block audit. Addendums can help streamline the contract-review process and protect the interests of the organization, while facilitating the striking of unfavorable clauses and inserting more favorable ones. My attorney friends would want me to mention that you shouldn’t confuse an amendment (which alters an element of an existing agreement) with an addendum (which is used to clarify or add elements not included in the original agreement).
A final option to consider, especially if resources are limited or you plan only a few meetings a year, is what I’ll call a “clause catalog”—a collection of preferred clauses that a planner can use as a starting point for negotiations. Instead of offering an addendum, the planner would use this as a “cheat sheet” for redlining a hotel’s contract. For example, it could include a “best-case” attrition clause allowing cumulative performance and damages based on lost profit, rather than per-night performance and damages based on lost revenue. The catalog could include clauses relating to service standards, room-block audits, room-rate guarantee, or any other that is important to the procurement process.
Regardless the approach you take, be sure to seek advice from an attorney, preferably one who is experienced with meetings and events. Happy contracting!
Therese Jardine is principal and founder of Strategic Event Procurement. Before launching her own company, Jardine spent 18 years with Microsoft, most recently as senior program operations manager, Microsoft Events and Studios. https://strategiceventprocurement.com