9/14/2013
UNDERSTANDING
HOTEL CONTACTS
Bill Harrington
General Counsel
The Canadian Real Estate Association
WORDS
Now therefore this agreement witnesses that in
consideration of the mutual covenants and agreements
herein contained and the sum of one dollar ($1.00) of
lawful money of Canada and other good and valuable
consideration paid by each of the parties to each of the
other parties hereto (the receipt and sufficiency of
which is hereby acknowledged), it is agreed between
the parties as follows:
WORDS
The parties agree as follows:
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9/14/2013
CONTRACTS
Contract = Intention + Promises + Offer + Acceptance
GENERAL RULES
1. Nothing in life, including contracts, has to be
fair
2. Breach = Liability for Damages
3. Damages = Profit + Out of Pockets
4. Revenue is Not the Same as Profit
GENERAL RULES
5. Liquidated Damages Cannot be Excessive
6. Penalties Are Not Allowed
7. Duty to Mitigate
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9/14/2013
THE BIG ONES
CANCELLATION
CANCELLATION CLAUSE
Should this booking cancel, in its entirety, or any part
contained in this agreement, the [Group] will be liable
to the [Hotel] for one hundred percent (100%) of the
total night’s accommodation, food and beverage and
meeting room rental to alleviate the losses suffered by
the Hotel…
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
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9/14/2013
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will
apply:
January 25, 2014-April 26, 2015 --50% of
anticipated total revenue
April 27-August 26, 2015--75% of total revenue
After August 26, 2015 –100% 0f total revenue
Signed –June, 2012
Event –October 2015
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
2. Clarifies Start Date for Liability
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their
entire program, the following cancellation
schedule will apply:
No cancellation fee is payable for cancellations
prior to January 25, 2014
January 25, 2014-April 26, 2015 --50% of
anticipated total revenue
April 27-August 26, 2015--75% of total revenue
After August 26, 2015 –100% 0f total revenue
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9/14/2013
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
2. Clarifies Start Date for Liability
3. Liability Begins as Close to Event Date as
Possible
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will apply:
No cancellation fee is payable for cancellations prior to
January 25, 2014
January 25, 2014-April 26, 2015 --50% of anticipated
guest room total revenue
April 27-August 26, 2015--75% of guest room total
revenue
After August 26, 2015 –100% 0f guest room total revenue
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
2. Clarifies Start Date for Liability
3. Liability Begins as Close to Event Date as
Possible
4. Formula Based on Guest Room Revenue, not
Total Revenue
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9/14/2013
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will
apply:
No cancellation fee is payable for cancellations prior
to January 25, 2014
January 25, 2014-April 26, 2015 --50% of
anticipated guest room total revenue
April 27-August 26, 2015--75% of guest room total
revenue
After August 26, 2015 –100% 0f guest room total
revenue
PROFIT MARGINS
Guest Rooms -70%-80%
Meeting Rooms -50%
Food -30%-40%
Alcohol-80%-85%
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will apply:
No cancellation fee is payable for cancellations prior to
January 25, 2014
January 25, 2014-April 26, 2015 --50% of anticipated
guest room total revenue
April 27-August 26, 2015--75% of guest room total
revenue
After August 26, 2015 –100% 0f guest room total revenue
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9/14/2013
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
2. Clarifies Start Date for Liability
3. Liability Begins as Close to Event Date as
Possible
4. Formula Based on Guest Room Revenue, not
Total Revenue
5. Never Asks For 100% 0f Revenue
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will apply:
No cancellation fee is payable for cancellations prior to
January 25, 2014
January 25, 2014-April 26, 2015 --50% 40% of anticipated
guest room total revenue
April 27-August 26, 2015--75% 50% of guest room total
revenue
After August 26, 2015 –100% 75% 0f guest room total
revenue
SLIDING SCALE CANCELLATION
In the event the [Group] should cancel their entire
program, the following cancellation schedule will
apply:
No cancellation fee is payable for cancellations prior
to January 25, 2014
January 25, 2014 October 25, 2014-April 26, 2015 -50% of anticipated guest room total revenue
After April 27, 2015 -August 26, 2015--75% of guest
room total revenue
After August 26, 2015 –100% 0f total revenue
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9/14/2013
ELEMENTS OF A GOOD CANCELLATION CLAUSE
1. Establishes Sliding Scale
2. Clarifies Start Date for Liability
3. Liability Begins as Close to Event Date as
Possible
4. Formula Based on Guest Room Revenue, not
Total Revenue
5. Never Asks For 100% of Revenue
6. Option of Date Change Instead of
Cancellation Fee
CANCELLATION CLAUSE
Should this booking cancel, in its entirety, or any part
contained in this agreement, the [Group] will be liable
to the [Hotel] for one hundred percent (100%) of the
total night’s accommodation, food and beverage and
meeting room rental to alleviate the losses suffered by
the Hotel…
THE BIG ONES
ATTRITION
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9/14/2013
ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best attrition Clause is the One That Doesn’t
Exist
ATTRITION
“The Group will not be liable for utilization of
the entire room block or any guest room
slippage”
ATTRITION
We agree to allow for a 15% reduction in the
Anticipated Room Night Revenue Figure, provided that
you make a written request for that reduction between
now and 60 days prior to your arrival date. At the
conclusion of the meeting, we will subtract the rooms
revenue derived from your meeting (excluding revenue
derived from pre and post program stays) and the
amount of any permissible attrition you have taken
from the Anticipated Room Night revenue Figure set
forth above.
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ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best Attrition Clause is the One That Doesn’t
Exist
2. Does Not Make Group Liable For More Than
75%-85%
ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best Attrition Clause is the One That Doesn’t
Exist
2. Does Not Make Group Liable For More Than
75%-85%
3. Understandable Calculations
ATTRITION
If the Group fails to utilize 80% of the room block, it
will pay to the Hotel as liquidated damages, an amount
equal to 75% of the Group’s single room rate multiplied
by the difference between 80% of the room block and
the number of rooms utilized.
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9/14/2013
ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best Attrition Clause is the One That Doesn’t
Exist
2. Does Not Make Group Liable For More Than
75%-85%
3. Understandable Calculations
4. Compensates Hotel Only For Lost Profit, Not
Revenue
ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best Attrition Clause is the One That Doesn’t
Exist
2. Does Not Make Group Liable For More Than
75%-85%
3. Understandable Calculations
4. Compensates Hotel Only For Lost Profit, Not
Revenue
5. Is Not Coupled With Other Liabilities
Associated With Guest Room Pickup
ELEMENTS OF A GOOD ATTRITION CLAUSE
1. Best Attrition Clause is the One That Doesn’t Exist
2. Does Not Make Group Liable For More Than 75%85%
3. Understandable Calculations
4. Compensates Hotel Only For Lost Profit, Not
Revenue
5. Is Not Coupled With Other Liabilities Associated
With Guest Room Pickup
6. Attrition Fee is Payable Following Event
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9/14/2013
THE BIG ONES
MITIGATION
MITIGATION
In the event of cancellation, we will attempt to resell your
Group’s room block. In the event of the resale of the entire room
block, no cancellation fee will be payable.
ELEMENTS OF A GOOD
MITIGATION CLAUSE
1. Applies to Both Cancellation and Attrition
2. Imposes a Positive Active Obligation to Mitigate
3. Credit is Given For Each Resold Room, Not Just
If Entire Room Block is Sold
4. Hotel Required to Provide Proof of Efforts and
Evidence that Room Remain Unsold
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9/14/2013
THE BIG ONES
TERMINATION/FORCE MAJEURE
FORCE MAJEURE
1. Make Sure It Is In Contract
FORCE MAJEURE
1. Make Sure It Is In Contract
2. Mutual
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FORCE MAJEURE
Acts of God
•
•
•
•
Hurricanes
Fire
Tornadoes
Locusts
FORCE MAJEURE
•
•
•
•
•
•
Acts of Third Parties
War/Terrorism
Strikes
Government Regulations
Civil Disorder
Curtailment of Transportation Services
Bankruptcy of Hotel
THE BIG ONES
LIABILITY
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9/14/2013
LIABILITY-BAD CLAUSE
The Group shall indemnify and hold the hotel,
and its employees, agents and representatives
forever harmless from all personal injury,
property damage or loss, arising out the
performance of this agreement by the Group,
your guests, invitees, agents, delegates, or
representatives.
LIABILITY
1.
2.
3.
4.
Not Mutual
Responsibility for Guests
Damage not tied to Negligence
No Allowance for Contributory Negligence
LIABILITY-BETTER CLAUSE
The Group shall indemnify and hold the hotel, and its
employees, agents and representatives forever
harmless from all personal injury, property damage or
loss, arising from the negligence of out the
performance of this agreement by the Group, its
employees or independent contractors, your guests,
invitees, agents, delegates, or representatives. provided
that such damage is not in any way caused or
contributed to by any act or omission of the
employees, agents or representatives of the hotel.
Mirror clause for hotel negligence
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9/14/2013
ODDS AND SODS
Room Rates
Fixed
If future, formula for calculation
“Shouldered rooms” added to room block
No group to be offered lower rates
No individual from your group to be offered lower
rates
• Cancellation and other charges collected by hotel on
individual reservations to be credited to room block
•
•
•
•
•
ODDS AND SODS
Free Stuff
•
•
•
•
•
One free room for every 40-50 rooms booked
Cumulative v. Non-cumulative
Free upgrades
Free or discounted staff rooms
Free or discounted hotel facilities
ODDS AND SODS
Meeting Space
• Complimentary based on guest room pickup
• No attrition
• Setup costs
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9/14/2013
ODDS AND SODS
Food and Beverage
Performance addressed in one separate clause
No tie-in to guest rooms or meeting rooms
Lost profit only
Liability tine frames should be close to the
meeting
• Credit for resold functions
•
•
•
•
NEGOTIATION
1. Request For Proposals
NEGOTIATION
1. Request For Proposals
2. Don’t negotiate items individually
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9/14/2013
NEGOTIATION
1. Request For Proposals
2. Don’t negotiate items individually
3. Know your bottom line
NEGOTIATION
1.
2.
3.
4.
Request For Proposals
Don’t negotiate items individually
Know your bottom line
Remember that you have to work with
these people
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