Thursday, March 30, 2023
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Venue Contract Conditions to Watch

By Teresa Kenney

Hospitality attorney Greg Duff has noticed a paradigm shift in the sales contracts his clients send him. The founder of Garvey Schubert Barer’s national hospitality, travel and tourism practice, he says, “Either the contracts have more terms or conditions than I have seen in the past, or those terms that have been somewhat common in the past have been revised to be more difficult.”

Duff shared the pros and cons of some of the newer provisions he’s seeing:

» Fees Clause: Venue acknowledges and agrees that the payment provided for in Contract constitutes Venue’s entire remuneration for its performance of the Services under this Agreement. Venue will not be reimbursed for any additional charges or expenses of any kind without the express prior written approval of an authorized Group representative.

This is one clause that Duff approves of. “I’m in favor of this because it brings certainty to the relationship,” he says. “We all know what we will be charged and what we will be charged for. That limits the possibility for dispute later.”

» Requests for Services Clause: Venue expressly acknowledges and agrees that it shall not perform any services hereunder unless and until venue has been issued a purchase order for the services by group’s corporate travel department.

“The fact that a purchase order needs to be issued just isn’t practical because changes happen continually throughout an event,” Duff explains. Instead, Duff suggests the group or planner provide a process by which minor changes could occur and be approved during the event.

» Personal Data: Venue and Venue Personnel shall at all times comply with Group’s instructions regarding Personal Data, as well as all applicable laws, regulations, and international accords, treaties, or accords, including without limitation, U.S. Department of Commerce’s Safe Harbor program.

Duff says provisions such as these are becoming more and more complicated, in some cases filling multiple pages within the contract. “These provisions are assuming a level of understanding that rarely occurs at the sales director level [at a venue]. … If you put a million things in a contract and the venue simply signs off on it, what good is it?” he explains. It may prove effective for a lawsuit later, but that’s after the damage is done.

» Security Procedures: Venue shall … use its best efforts to secure Personal Data through the use of appropriate physical and logical security measures. … Venue shall use reasonable user identification or password control requirements, and other security procedures as may be issued from time to time by Group in relation to Personal Data.

“This is very technical in nature. Who is your audience? Is the director of sales going to understand this? If you are the type of group that is going to have that level of security requirement, consider lock-down procedures and keep your own information on your own computers. … Groups need to be reasonable and practical,” Duff says.

» No Gratuities: Venue shall not offer or give any Group employee, contractor or agent any gratuity, payment or other personal benefit or inducement with a view toward securing business from Group … or otherwise take any action that is or may be perceived as inconsistent with the United States Foreign Corrupt Practices Act (FCPA).

“[This condition reflects] a complete lack of understanding of how the hotel sales process works,” says Duff. With this provision, a venue’s practice of hosting a lunch for prospective groups, offering complimentary rooms in exchange for room blocks, or even issuing loyalty program points for attendees could all be perceived as being a violation.

In the end, when it comes to writing contracts, Duff says, know your audience.

“The point here is: Recognize the audience and the purpose of the contract,” he says. “It is important to work with someone who has a working knowledge of these provisions and their purposes. If you don’t know what a term means, why are you using it in the contract?”