Appetizing contracts
“There’s been a trend towards rising food and beverage minimums in terms of money spent as well as some hotels requiring higher numbers of people at functions,” says John S. Foster, Esq., CHME, an attorney whose Atlanta-based firm, Foster, Jensen & Gulley, LLC, specializes in the legal aspects of meetings and conventions. Before you sign anything, Foster advises looking at the language used in the following areas. If you’re not happy with it, negotiate.
Attrition: “Once you’ve come up with a minimum that both parties can live with,” says Foster, “ask for allowable attrition in food and beverage that’s equal to allowable attrition of the guest rooms.”
What’s Included: Make sure you have a clear understanding of what goes toward that minimum. While coffee breaks, receptions, and meals should all be included, try to include such things as hospitality suites and F&B functions from sponsor organizations (who wouldn’t be there if not for your function).
Your Responsibilities: Make sure you are very clear on what your responsibilities are in different time frames if you fall below your guarantee (after allowable attrition). If you cancel something before the food is bought, you should be liable for less than after the food is purchased.
“Let’s say the profit margin on food is generally about 30 percent,” says Foster. “The other 70 percent is the cost of the food and labor. If a group books $10,000 worth of F&B and cancels it six months in advance, the hotel has not lost the full $10,000, but only $3,000—that’s the money that would have gone into their pockets. The other $7,000 would have been used to buy the food and pay for labor. So the hotel should only be entitled to the $3,000—what’s called the loss of profit.”
On the other hand, once the food has been purchased, it can’t be returned and if it can’t be used for another group, the hotel should be entitled to the full 100 percent that’s been lost, in this case the full $10,000.
Replacement Business: Make sure that the group damages are reduced if the facility is able to book replacement business after a cancellation. The difficulty is in defining replacement business. “It should be defined as any business that the hotel would not have been able to book if your event took place as scheduled,” Foster explains.
Why the clarification? Consider these circumstances: Your group has to move from a large room to a smaller room because of attrition. But now the hotel has moved another group that was already booked into that larger room. You should not be fully liable since the business has been replaced.
In today’s market, you are in the driver’s seat—but be fair. And pay special attention to changing attrition clauses and hidden costs. Source: Rejuvenate, the resource for planners of faith-based meetings
