After a tumultuous half-decade, with the in-person meetings and events pandemic shutdown followed by unprecedented supplier-chain, inflation and labor issues, a shifting landscape has brought new venue contract issues to the fore while amplifying existing ones, such as continuing legal battles over resort fees.
And the current seller’s market exacerbates all of these issues and puts even more on the negotiating table.
Hot-Button Meetings Contract Issues
Joshua Grimes, principal of Grimes Law Office and a leading advocate for meeting and event planning organizations, said resort fees— he recently saw a resort fee of $65 per day being passed on to guests—and other surcharges are a current hot button, with ongoing litigation challenging Marriott International about the adequate disclosure of such fees. The hotel giant recently settled a lawsuit brought by the Colorado Attorney General’s Office that required it to disclose such “hidden” or “junk” fees to guests.
These “junk fees” are also morphing outside of their traditional meaning or purpose.
“We’re now seeing service charges added to cancellation damages and attrition damages,” Grimes said. “It’s just sort of getting to be a bigger and bigger and bigger thing, even for groups that are doing individual check-ins.
“I’ve been saying for a long time that you should weigh out all the mandatory fees in the contract and then have a clause that says [the group won’t pay fees] other than the fees that are in this contract,” Grimes added. “And if a hotel has, say, a 26% service charge, I suggest that they commit to that 26%, because if they say ‘26%, subject to change’ and then your meeting comes around a year from now, how do you know it is not going to be 35%?”
Some venues are also rolling out new policies regarding what is perhaps the scariest potential budget buster of all: attrition penalties.
“Now, attrition [is sometimes] being determined per day, and even food and beverage attrition per day, instead of cumulatively over the course of the room block,” he said.
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Other Major Contract Concerns
Other contract issues that have come to the fore include the core quality of hotels—especially relevant in a hospitality industry still grappling with a labor shortage— and concessions that are tied to achievement in the room block.
“Which really is inappropriate because in just about every contract, if you don’t achieve the room block, you’re paying attrition,” Grimes said. “But the venue also wants to say, ‘if you don’t meet 80% of your room block, we reserve the right to take away some of your concessions,’ which really doesn’t make much sense.”
Accessibility issues also are increasingly becoming a major contract concern and vary widely by venue and even the locality of the meeting.
Grimes also stresses that organizations holding meetings should be more aggressive regarding cancellation, or “walk,” terms.
“I’ve been recommending for a while that there needs to be a ‘cancellation by hotel’ clause that is as aggressive as the hotel’s, granting specific liquidated damages a group would get if the hotel cancels,” Grimes offered. “When I started out in this business it wasn’t all that necessary, but now hotels are more willing to cancel for a bigger piece of business.”
Force Majeure, Revisited?
A recent court case, Avantax Wealth Management, Inc. v. Marriott Hotel Services, may have altered the cancellation and attrition landscape—in favor of meeting and event planning organizations—because it found that force majeure would be in effect if it was reasonable to cancel at the time the decision was made, which may result in many organizations and venues reexamining their force majeure contract language.
At the time this article was published, the U.S. was in the throes of a general election, when spirits run high in an increasingly polarized country, bringing incongruent groups sharing a property and security issues to the fore. These types of potential conflicts—and most notably the current Israel-Hamas war—can also require clauses specific to the security of attendees and property be included.
The ‘DaddyLand’ Dilemma
One recent, and potentially litigious, issue was the onsite termination of the DaddyLand LGBTQ circuit party at a Dallas Crowne Plaza because another group on property felt their attendees were offended.
The owner of the hotel forced the cancellation of all DaddyLand events over the weekend of the booking, citing complaints from members of the Alpha Kappa Alpha Sorority about the attire of some DaddyLand attendees. Complicating the matter was the fact that DaddyLand had convened at the property before, so there was little mystery about how attendees would be attired.
As a result, DaddyLand attendees had to scramble to find other accommodations or simply abandon the event entirely.
“There’s things that both the group and the venue ought to do,” Grimes said about the DaddyLand situation. “If they have a code of conduct, they need to publish it in the contract [or elsewhere], because in this case, apparently there were issues with the attire of the guests. I didn’t see an allegation that the guest attire was illegal or that it violated the norms of the hotel, and I don’t know that that is a [legitimate] reason to cancel a contract.
“Similarly, unless it’s an emergency, the group should be notified if they’re in violation and given an opportunity to cure the violated behavior,” Grimes added. “In this case, I don’t think it was about the attire. I don’t understand why they didn’t give them an opportunity to fix it, to get people to dress differently. All these things can lead to, if the group was kicked out, a wrongful breach of contract.
“Another defect here is that evicting individual guests, even if they’re part of the group, is generally outside of the group contract because the hotel, assuming the guests paid the hotel directly, comes in under state lodging laws,” Grimes added. “You can’t just evict the guest unless they are violating the law or some published code of conduct. This makes it important for the group and the hotel to put some statement about what the meeting is about in the contract.”
Like many other legal issues arriving from meetings and events, being transparent on both sides of the contract can alleviate expensive litigation headaches down the road.
“If you’re a group with sensitivity toward other groups, you should either ask for a contract clause saying that a.) You’re either taking all the function space in the hotel, or b.) You have the right to approve any other groups that will be occupying function space during your meeting, or the hotel will take steps to make sure that your group and your attendees are separated from others,” Grimes said. “This is like a competitor clause that many corporate meetings have where you can’t have a competitor in the property.”
The Latest Legal Issues
Following are recent contract issues that have gained in prominence, according to attorney Joshua Grimes.
More Stringent Contract Terms
- Concessions tied to room pick-up
- Daily food and beverage minimum (not cumulative)
- Lower attrition allowances
- Daily attrition damages
- Attrition calculated at cut-off, not after event
- Full pre-payment required
Pricing for Hotels and Services
- Some hotels are experimenting with extra charges for certain services, which may include daily housekeeping, use of pool, internet, porterage, health club, mandatory gratuities, “Employee Wellbeing Fee,” etc.
- These fees may be in addition to or in lieu of resort fee/destination fee.
- This reinforces the need to confirm inclusions in meeting contracts and also consider the possibility of additional charges.
Force Majeure Clause
- If force majeure conditions exist, consider the option for a group to continue with a reduced-size meeting, with rooms and F&B attrition waived, or rescheduling.
- If canceled, include the time frame for return of payments.
- Determination of force majeure means neither party is liable for the other’s expenses.
- Resist venue/supplier attempts to recover costs.
Sample 'Impossibility' Clause
Having an “impossibility clause” is a critical part of a meeting and event contract. Attorney Joshua Grimes offered the following clause for consideration:
If unanticipated events beyond the reasonable control of the parties (including, but not limited to: acts of God; declared war in the United States; government regulations in effect 60 days or less before the Event dates that would prevent the Event from taking place as contracted; terrorist attacks in the city in which Hotel is located; or curtailment of transportation either in the city in which Hotel is located or in the countries/states of origin of the attendees that prevents at least 40% of the attendees from arriving for the first peak night of the Event) any of which make it illegal or impossible to perform under this Agreement, the affected party may terminate this Agreement, without liability, upon providing written notice to the other party.
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