understanding hotel contacts - csae 2013/william harrington... · 9/14/2013 1 understanding hotel...

9/14/2013

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UNDERSTANDING UNDERSTANDING

HOTEL CONTACTSHOTEL 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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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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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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SLIDING SCALE CANCELLATION

In the event the [Group] should cancel their entireprogram, the following cancellation schedule willapply:

January 25, 2014-April 26, 2015 --50% ofanticipated 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



2. Clarifies Start Date for Liability


In the event the [Group] should cancel theirentire program, the following cancellationschedule will apply:

No cancellation fee is payable for cancellationsprior to January 25, 2014

January 25, 2014-April 26, 2015 --50% ofanticipated total revenue

April 27-August 26, 2015--75% of total revenue


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3. Liability Begins as Close to Event Date as

Possible


In the event the [Group] should cancel their entireprogram, the following cancellation schedule will apply:

No cancellation fee is payable for cancellations prior toJanuary 25, 2014

January 25, 2014-April 26, 2015 --50% of anticipatedguest room total revenue

April 27-August 26, 2015--75% of guest room totalrevenue

After August 26, 2015 –100% 0f guest room total revenue





Possible

4. Formula Based on Guest Room Revenue, not

Total Revenue

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SLIDING SCALE CANCELLATIONIn the event the [Group] should cancel their entireprogram, the following cancellation schedule willapply:

No cancellation fee is payable for cancellations priorto January 25, 2014

January 25, 2014-April 26, 2015 --50% ofanticipated guest room total revenue


After August 26, 2015 –100% 0f guest room totalrevenue

PROFIT MARGINS

Guest Rooms -70%-80%

Meeting Rooms -50%

Food -30%-40%

Alcohol-80%-85%




January 25, 2014-April 26, 2015 --50% of anticipatedguest room total revenue


After August 26, 2015 –100% 0f guest room total revenue

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Possible


Total Revenue

5. Never Asks For 100% 0f Revenue




January 25, 2014-April 26, 2015 --50% 40% of anticipatedguest room total revenue

April 27-August 26, 2015--75% 50% of guest room totalrevenue

After August 26, 2015 –100% 75% 0f guest room totalrevenue


In the event the [Group] should cancel their entireprogram, the following cancellation schedule willapply:

No cancellation fee is payable for cancellations priorto 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 guestroom total revenue


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Possible


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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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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1. Best Attrition Clause is the One That Doesn’t

Exist

2. Does Not Make Group Liable For More Than

75%-85%



Exist


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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Exist


75%-85%


4. Compensates Hotel Only For Lost Profit, Not

Revenue



Exist


75%-85%



Revenue

5. Is Not Coupled With Other Liabilities

Associated With Guest Room Pickup


1. Best Attrition Clause is the One That Doesn’t Exist

2. Does Not Make Group Liable For More Than 75%-

85%



Revenue

5. Is Not Coupled With Other Liabilities Associated

With Guest Room Pickup

6. Attrition Fee is Payable Following Event

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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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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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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. Not Mutual

2. Responsibility for Guests

3. Damage not tied to Negligence

4. 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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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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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


2. Don’t negotiate items individually

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NEGOTIATION



3. Know your bottom line

NEGOTIATION



3. Know your bottom line

4. Remember that you have to work with

these people

understanding hotel contacts - csae 2013/william harrington... · 9/14/2013 1 understanding hotel...

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