In our 20+ years providing city-wide housing services, we have seen our share of hotel contracts. We have identified five hotel clauses every meeting planner should strive to include, both for protecting themselves and maximizing their room blocks.
1 - Lowest Rate Clause
Attendees are more motivated to book in the group block if a discounted rate is offered specifically for your event. When contracting with hotels, the only way event planners can guarantee their room rates are the lowest is to include a “Lowest Rate Clause” in the hotel contract.
A Lowest Rate Clause prevents hotels from advertising lower rates to the public over the contracted dates of your room block. Your housing provider can then monitor travel booking sites, hotel direct sites, etc. to ensure rates offered outside of your contracted block are not lower than the rates you are offering attendees. If rates are being offered lower than yours, the hotel must remove those offerings or lower the rates for all of your guests.
If a lower rate clause isn’t in the hotel contract, the hotel is allowed to advertise lower rates which can potentially put your organization at risk for attrition.
2 - Walk or Relocation Clause
Like airlines, hotels frequently overbook – booking more reservations on a given night than rooms they have available. If all booked guests do show up, hotels will “walk” some of their guests. The inclusion of a strong “walk clause” will either protect your attendees from being walked, or make sure they are treated quite well if they are.
A good walk clause makes it in the hotel's financial interest to select someone who isn’t part of your group to walk. To get the motivating effect you want, your walk clause should require the hotel to relocate your attendee to a comparable property, pay for the walked guest’s first night or as long as the guest is displaced, and provide complimentary transportation – think UBER or LYFT allowance. This does not guarantee your attendee won’t be walked, but your attendee will be very appreciative that you have their back. With no such clause, your attendee is just another guest, perhaps paying a lower rate than the guest they choose not to walk.
Also, make sure that any walked room nights are included in the group’s room count/usage for purposes of determining concessions, rebates, pick-up, or any contractual requirement based on room night production you may have outlined in your hotel contract.
3 - Audit Clause
An audit clause allows the housing provider to compare the names on your event registration list with the hotel’s guest list over the days of your event to identify any of your attendees who booked their room in one of your contracted hotels but did not go through you or your housing company. The audit clause should specify that any correlating room nights found in the audit will be counted toward the group’s final pickup, ensuring the group receives credit for the necessary financial concessions. Without an audit clause, the hotel is under no obligation to allow an organization or the housing provider to perform an audit. Lack of an audit clause can potentially result in lost revenue and accurate room night history for future years.
Specifying that an audit will occur, who will be performing the audit, and what the audit process will look like are all important details to include in an audit clause.
4 - Post Cut-Off Clause
As many as one-third of all attendees make their hotel reservation less than 30 days out. At the same time, contracted cut-off dates – the date the hotel(s) can take all your unsold rooms back and offer them to the public (Cut-Off) – are frequently 30 days out. Perhaps, this is a holdover from the past when people booked further in advance. In any case, the likelihood of filling your room block goes up the closer you push the Cut-Off date to your event date. Adding a post cut-off clause to your hotel contracts allows your housing provider to continue accepting new reservations after the cut-off date if rooms are available. Keeping reservation channels open longer will help capture these last minute reservations resulting in a better experience for attendees and greater pickup.
In addition to increasing your pickup, a post cut-off clause will benefit your attendees who book their rooms close to the event start date. Instead of searching for a room at the last minute and booking at higher rates, they can still book through your housing channels and get the group discounted rate.
5 - Method of Reservations
Hotel room block contracts should include the method by which your attendees will make their reservations with the hotel. If you plan to use a housing provider, you should require that the hotel not accept reservations for your event from any other source. Specifying the name of the housing provider and housing fees you are expecting the hotel to pay at this time saves you time later. If you don’t know who you will be using at the time of the contracting, you can indicate a Housing Provider will be designated by a certain date – before housing opens. If the hotel is providing you with a confirmed room rate, you should specify the applicable housing fees and housing policies in relation to using a housing provider.
As a housing provider, Orchid.Events works with clients in a consulting role in reviewing hotel contracts and recommending hotel contract clauses necessary in order to maximize hotel room blocks. For additional information about our convention housing services, please visit our website.
