Hotel Contract Pitfalls
Volunteers plan many events and meetings, many without the help of a professional meeting planner. Volunteers too are asked to negotiate venue and hotel contracts, not always fully understanding the impact signing these contracts may have on an organization. In this post we’re sharing a handful of tips that will help volunteer planners look more carefully at proposals and contracts.
FOOD AND BEVERAGE (F&B) MINIMUMS
Most venues require planners spend a certain amount of money on food and beverage. It is important to know that the contracted amount is usually listed without tax and service fees. If your contract states you must spend $50,000, note that you will have to budget tax and service on top of that amount. Food and beverage minimums are however negotiable.
TAX AND SERVICE, THE ++
Many of the items planners purchase at the venue will be listed as “++” meaning that you will have to pay tax and service on top of the listed price. In some cases this can be 35% or more. Keep that in mind when reviewing the feasibility of your event at a specific venue, and when budgeting for your event.
When contracting for hotel rooms, hotels will allow for attrition. Attrition means an allowance of room nights you don’t have to sell before you are penalized for unused rooms. Standard attrition is 10% to 15%, but you can always negotiate for more. Room nights are the number of nights hotel rooms are occupied during your event. For example, if you contract for 50 rooms for 3 nights, that would be 150 room nights. If your contract allows for 10% attrition, you will have to sell 135 room nights to avoid penalties. Any room night left unsold under the 135 will be charged at the contracted rate.
Venues will allow planners to cancel a contracted event, but cancelling does not come cheaply. Before signing a contract review the cancellation clause in great detail and understand the impact cancelling an event may have on your organization. If you must cancel your event, do it as early as possible. The sooner you cancel the more time the venue has to resell the space, and your cancellation fees will be less than when you cancel your event at the last minute.
Always read and understand the fine print before signing any venue contract.