Les Goldberg on Venue Contracts

Preparing to Navigate and Negotiate the Pitfalls of the Venue Contract
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The agreement of terms and signing of the hotel or venue contract is the major event in the planning process and can have a significant impact on not only the budget, but also the overall success of the event. It happens all too often that a meeting planner will innocently sign a contract with a venue without realizing the pitfalls that exist within the language, and ends up stuck with service fees, greatly inflated prices, and exclusives. Meeting planners need to know the red flags to look in the contract and how to address them. Once they learn to deal with these pitfalls, the event has a much greater chance of economic success.

The main goal of the hotel or venue is to sell food and rooms; this is their main source of revenue. The hotel wants “heads in beds,” and the meeting planner needs to take this into consideration when entering into a contract negotiation. The meeting planner needs to use this to their advantage.

After the hotel or venue has been selected and the contract is on the table, these are some things to consider:

Exclusive services: Understand the exclusive services in the contract that you will be obligated to procure from the venue. In most cases, exclusive services are typically power, rigging, and internet. If rigging is exclusive, ask about the cost of truss and motors and compare these to outside vendors. Become educated on the current market rates and negotiate them with the venue to ensure they are not overcharging you with inflated pricing and service fees. Many rates have been hiked up to accommodate the commissions paid to the venue. Ask to see the order forms for these services, and negotiate special show rates.

Extra charges and hidden fees: Look for additional costs that will later be added to your bill, such as charges for house sound, patch fees, or hookup charges for rooms with pre-installed equipment. One of the latest ridiculous fees surfacing is a “butler charge,” which basically translates to paying someone you did not hire to sit around and do nothing, acting as a liaison on the off chance you may need to ask for something from the in-house team. In other cases, some in-house hotel services may charge a fee for simply not using them, similar to a corkage fee.

Union Rules: When booking a venue, a huge cost to consider is the requirement of union labor. If a venue requires the use of union labor, these costs are not flexible and need to be worked into the overall budget. But, in some cases the hotel or venue will add language to the terms that requires the meeting planner to contract the union labor directly through the hotel AV provider at an inflated price. Review the labor rules of the venue carefully, as well as the hiring requirements, and recognize that you should not be obligated to hire the union labor through the hotel AV provider.

Outside Providers: Inquire about bringing in your own team to execute the event. In some cases, even though the in-house audiovisual company may not be an exclusive vendor, there may be consequences of using an outside provider. Ensure you have flexibility within the contract to research outside vendors and bring them into the facility without penalties, such as added fees for loading dock or elevator usage. In addition, do not allow the venue to hold the ‘reduced price’ of the exclusives as a bargaining tool to pushing their in-house audiovisual company on your show. Lock in reasonable pricing for the exclusives without any stipulations.

Ask an Expert: Use the experience and knowledge of the production company before the contract is signed, to review. It will be much more cost effective to prevent these contract pitfalls from defining the outcome of your show. In the wise words of Benjamin Franklin, “an ounce of prevention is worth a pound of cure.” Take the time, educate yourself, ask the right questions, and prepare to negotiate a reasonable contract. Don’t take no for an answer.

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