Surprises are a common occurrence in our lives. Some surprises are good — a first class upgrade, complimentary hotel suite or a thank you gift basket. Other surprises, unfortunately, are not so good – canceled flight, getting “walked” at a hotel, or a page of extra surcharges on a hotel bill. Yet even those surprises – both good and bad – pale in comparison to a significant charge, lost room revenue and waiving disputed charges.
So, what’s the best way to avoid surprises? Don’t let them happen! This starts with careful review of contracts. I can’t stress this point enough: review each contract carefully. Even if you see the brand name and say, “I know this contract inside and out as I’ve worked with this hotel for years,” or “the hotel told me it was the same contract I signed a few years ago” – stop and review the contract carefully. Step away from the computer, review a printed copy away from your desk, away from the distractions. And don’t be fooled by the subheading title. Just because the subheading says “Function Space” does not mean it cannot contain a provision that says that the group waives its right to a jury trial – a fundamental dispute resolution provision. Bottom line, clauses don’t always “live” where they are supposed to live; sometimes the clause ends up in a diƯerent provision intentionally but most times it’s not – it’s just sloppy drafting. Further, many “short form” contracts which seem easy/short are anything but – one reference to linked terms and the group is hit with a whole host of provisions which are not favorable and, worse yet, those terms change at any time and the group is bound to such revised terms.
All this is so overwhelming – let’s pause for a moment and soak in the basics.
Negotiation Strategies
Trust but always verify. Language, contract templates, etc. which you have been told your group has agree to in the past may not be what they seem to be. Start with the premise that the past does not matter. Today, this meeting, this new contract is different. The meeting itself is different. Therefore, start fresh.
When someone says, “but this is the same contract you agreed to 2 years ago therefore you have to agree
to it now,” – the proper response is “who cares!” It’s a different world, it’s a different meeting and therefore
the contract should be different.
Use Contract Template Whenever Possible
Template contracts – on any side – foster uniformity and consistency which, in large organizations, is critical. Exceptions can and will hurt you. That’s something that many of you have, unfortunately, experienced in your own organizations. And no one wants to be the person that they are talking about later – “can you believe they signed that contract….accepted those terms” etc. So start with clauses that you know…that you are comfortable with….that your organization’s “legal eagles” have drafted/endorsed….that are “battle-tested”. Then, if there are revisions oƯered to the template language, you are comfortable discussing knowing that you are coming from a place of strength.
Offer Compromises
Among the key negotiation strategies is being able to close the gap – -that is oƯering “compromise”language to the other side. Hear their concerns and answer the concerns with revised language. Often –more likely than not – the compromise language will be welcomed and accepted. In that way, everyone feels like they “won” the battle.
Cover All Contingencies
Yes I understand that many think that there is no way that “this thing or that thing” will happen therefore why spend precious bandwidth in a contract to negotiate the contingency language. Yet we have all lived the situation of something that no one ever thought would happen does, in fact, happen. So address it now; don’t leave any contingencies to chance.
Train Staff and Educate Clients/Customers
Each of us plays a unique role in any contract negotiation. Information, training, clauses, offering compromises, etc., all come with training and discussion. Educate yourself and others that you work with so that they are empowered to get the best contract possible for the group. Talk with one another regularly; have internal discussions as a group; participate in industry events. Each of those activities will help to enhance your knowledge and allow you to share that knowledge with others.
Ask, Ask, Ask – If You Don’t ask, You Don’t Get
Don’t focus on whether you can obtain a certain term in the negotiation; instead, ask how you can obtain it; what is the best argument to say that you need this provision, why the other side must accept it in in order to finalize the negotiation.
Always Move Toward Daylight
During contract negotiations, pause regularly. Take in the sights. Soak in what has been accomplished and summarize those items which are outstanding. Put them in context and explain what needs to be done to close the gap. Negotiations are hard enough let alone left for someone else to help to figure out what’s outstanding in the negotiation. Do yourself and your organization a favor and help finalize negotiations by pausing and summarizing.
Negotiate With Your Feet if Necessary
Always remember that in any contract negotiation you have power no matter how weak you believe your power is; you have one ultimate tool in your tool box – you can walk away. And while you do not want to utilize this tool recklessly, you must always consider using it. Sometimes sooner than later. In the interest of fairness, consider sharing with the other side when you will use it and why. Work toward avoiding it but if needed, exercise it. Remember that negotiations are not personal; they are about the organization you represent.
Focus on Common “Gotchas” in Contracts
Moving too fast – Not reviewing contracts; not proofreading, not comparing against previous versions.
Ignoring inconsistent/incorrect terms –NOne provision says that the group can unilaterally reduce its room block and another says that any adjustments must be mutually agreed. Which one is it? Whichever side you are on, know this: the door is now open for the other side to say that your argument is wrong. And in the end, neither party may be correct. Instead, both parties bought themselves an argument for the lawyers and courts/to decide.
Failing to include all negotiated items in contract –Once again, stop. Pause. Take it all in. What has been discussed/approved/oƯered in the past? Are all of those items included in the contract? If they are not, remember this: unless those terms are in the contract as signed by both parties, they are not legally enforceable. That truth has been an unpleasant surprise for many. And while lawyers and business people will work hard to say that it does not matter, that those terms should be enforceable, they are up against one key legal fundamental: if it’s not in the contract, it’s not enforceable. As such, don’t leave your organization in this position. Stop, pause and double-check.
Accepting “linked to” documents –Not only are those terms binding, they can change and the other side is bound to those changes. Bottom line, it’s worse than fine print.
Fees, including “hidden” and surcharges –Beware of the word “current” – except in the instance of taxes which can be modified by governmental authorities, surcharges, administrative fees, service charges can be changed unless there in language specifically prohibiting such changes.
Limitation of Liability – Beware of provisions which state that the “sole remedy” or maximum liability for another party is capped or subject to a maximum. In the face of such restrictions, the other party is taking a risk. If the clause is triggered, the maximum liability – no matter what the circumstance is capped. Unfortunately there is no way of assessing whether taking on that risk is reasonable.
Catering Minimums – Beware of provisions which state that if the guarantee is not made when due, the group must pay damages based on the estimated number of attendees listed in the function space agenda or that a surcharge is due.
Waiver of disputed charges – Often tucked in the master account provision is a statement that the group has a specified amount of time to dispute charges but what’s new is that often that statement is accompanied by a big gotcha: if the group doesn’t dispute the charges within such time period, it waives the right to dispute such charges. So if that date is missed, tough luck. You are bound to those charges.
Right to cancel future events at the hotel – Beware of contracts which provision that in addition to damages relating to the meeting which is the subject of the contract the hotel has the right to cancel a future meeting booked at the hotel and collect cancellation fees from the group.
Attrition Fees – Beware of attrition fee provisions which require the group to exercise reduction before the meeting or, if it does not do so, it waives the right to the reduction and attrition will be based on the original block. Also beware of attrition based on “per night” or “nightly” attrition vs. cumulative.