With the continued growth in size and scope of conferences and trade shows and the trend for organizations to host their conferences and trade shows together, many planners may be finding themselves for the first time having to work with a convention center as a venue for the conference or trade show as opposed to holding the conference or trade show at a hotel.
Convention center license agreements are not often “user-friendly” documents to review. Many are quite lengthy and vary from one another. As most convention centers are owned by governmental or quasi-governmental entities, such as cities, there are additional constraints and regulations when negotiating such agreements.
While there are a myriad of legal issues surrounding convention center license agreements, following are my top 6 legal issues to address in convention center license agreements:
1. Confirmation of Space, Dates, Times, and Rates – License agreements should include a detailed summary of the space to be utilized by the organization including the room names, dates and times from move-in through move-out. It is important to note that the center may not reassign any of the contracted space without the organization’s prior written consent. Further, the rates for such space should also be detailed in the agreement. Some centers oƯer flat fee rates while others base rates on total square footage. Most oƯer discounts based on food and beverage expenditures (see 2 below). If the rates are based on total square footage, it is typical to exclude oƯice space and other non-revenue generating space from such calculations.
2. Exclusive Services – Planners should carefully review which services are exclusive to the center – meaning that those services may only be provided by the center’s vendors. Often these are safety- related services such as rigging, electrical and plumbing but can also expand into non-safety services such as food and beverage, business center services, computer rentals, and floral.
Planners may find success in negotiating out of exclusives for non-safety services. Note that the organization will need to enter into separate contracts with each of the vendors. It is often helpful to get copies of those contracts prior to signing the convention center license agreement.
3. Food and Beverage Minimum/Discounts – As an incentive to host food and beverage events at the convention center rather than the hotels, most convention centers will oƯer discounts to the license fees based on the total amount of food and beverage expenditure at the center. Often these provisions are not clearly written so planners should take extra care to ensure they fully understand the provision. Also, if the group will have sponsors or aƯiliate groups (“ICWs”) holding food and beverage events at the center, it is important to ensure that any food and beverage revenue generated by the ICWs is credited toward the group’s total food and beverage expenditure.
4. Insurance – License agreements often contain very detailed insurance requirements which are much diƯerent from those required by hotels. It is important to provide the organization’s insurance broker with a copy of such requirements before the contract is signed to confirm that the organization can meet the requirements and, if not, the organization can try to negotiate changes to these requirements before the contract is signed.
5. Indemnification –While many planners are accustomed to mutual indemnification clauses in hotel contracts, mutual indemnification provisions in convention center license agreements are a rarity. Often, the centers are restricted from indemnifying the organization due to state or local laws because the center is owned by a governmental or quasi-governmental entity. Having said that, it is important to always ask that the indemnification clause be made mutual as more and more centers are oƯering some level of mutual indemnification. Also, it is critical that the organization’s attorney review the indemnification provision which obligates the organization to indemnify the center. There are many tricks and traps in such provisions which are important to identify and try to revise such as “sole” indemnification.
6. Rights of Cancellation – Just as with hotel contracts, there are many reasons which an organization would need to cancel the license agreement. One reason may be for business reasons – in other words, the organization decides not to host the event. License agreements typically include a sliding scale cancellation fee provision similar to those in hotel contracts. Often, there is not a provision that the center re-license the cancelled space and if it does, to credit back cancellation fees to the organization so it is important to ask for such a provision. It is also important to include the instances in which the organization would need to cancel the license agreement without liability including force majeure, construction, labor disputes, or unavailability of headquarters hotel(s). For force majeure, often the provision is written one-sided in that it only applies if something happens to the convention center – not if the organization or its attendees cannot travel to or use the center. Thus, the provision needs be made mutual and should include reference to performance being “commercially impracticable” in addition to (or in lieu of) being impossible or illegal. It is also critical to include a construction clause which requires the center to notify the organization of any
planned construction and its plans to ensure there will be no impact on the organization’s meeting. If the parties cannot agree on such plans, the organization should have the right to terminate the license agreement without liability. Other rights to cancel without liability to address in the license agreement include strikes or labor disputes at the center and the unavailability of the organization’s headquarter hotel(s). these requirements before the contract is signed.
Just as every hotel contract may diƯer, convention center license agreements are much the same and
require careful review by the organization as well as its legal counsel. One final note….many convention centers have very detailed policies and procedures or guidelines for use of the building. It is important for the organization to review those along with its decorator to ensure there are no concerns which would impact the conference or trade show.
As always, be careful out there!