Q. Why do I need to set up “sub-blocks”? Can’t I just put everyone on one block? Wouldn’t it be easier to manage?
A. By allocating sub (smaller) blocks, you can better manage your inventory. For example, staff rooms may be at a discounted rate. Members may get a hotel preference compared to non-members or exhibitors. By setting up smaller sub blocks, you can easily see where each of these groups are relative to pick up and you may add or re-allocate where some groups may not be performing and others are in need of additional rooms based on demand.

Q. Why is it important to integrate registration information to housing/reservation info?
A. Two main reasons. 1, When the systems are integrated, the common info (name, address, etc.) most often will pre-populate to the reservation system eliminating the need to re-type it. This makes it easier to make a reservation at the time of registration. 2, Statistically when the systems are integrated, in-block reservations increase by as much as 25 to 30 percent and the pick-up will happen earlier.

Q. How do you determine what concessions to request? For example, If you have 5,000 room nights, what should the hotel comp be?
A. There really are no standards. Some concessions appear to be great but in actuality may not be as good a value. This varies with the meeting, venue, demand during the meeting dates in your city/venue. The key to concessions is to identify what value items are important to the group. For example: Comp rooms at 1:50 as opposed to 1:40. Looks good on paper, but if you have 500 room nights, you gain 25 more room nights. Sounds like a lot, but 10 percent on F&B, AV or power may yield a higher dollar return.

Q. Will hotels let you put that clause in typically? I’ve had push back.
A. Hotel clauses need to be vetted thoroughly by your legal or a competent authority. Once accepted by a major chain property (Marriott, Hyatt, etc.), these become much easier to get accepted at other properties within their respective brands. The “My legal won’t accept this” can’t be used in most cases when it’s been accepted previously by another in the chain.

Q. How do you get hotels to do the audit? We work internationally and we put wording in the contract that they must do so, but we receive push back when we ask them to audit, thus missing out on revenue. They think the job is too big and they usually claim they don’t have the staffing to do so.
A. Get it in your contract. This is a common practice and we’ve never had a hotel push back when we state that there will be an audit post-event and that credit will be given to those identified. Don’t budge on this. There are processes in place at the hotel level to accommodate this need.

Q. How is using a housing partner different from using a hotel’s “Passkey”-type system?
A. It’s all about focus. Most hotels/CVBs that will provide housing do it as an accommodation, not as their primary focus. That having been said, you don’t often get the “Turbo charged” version. Not that the system is dialed back, with a housing provider, you get the experience, system capabilities knowledge and PRIMARY FOCUS on housing to maximize your goals and objectives.

Q. Are there any cut-off date trends?
A. The more time to fill your block, the better. And if you capture and can share history of late pickup, you’ll have a much better chance of getting a shorter window prior to your event. Optimally, 30 days is the hotel “standard” and two weeks is the preferred.

Q. What percentage books after the cut-off date?
A. Studies have shown as much as 30 percent. Integration with registration can reduce this percentage.

Q. What incentives have you seen that get more participants to stay in the group block?
A. Athletic events use a “stay-to-play” model, where a participant must stay in the block to play in the event. Others offer a monetary penalty if someone is not in the block, or some offer a discount on the program to their exhibitors if they prove they have stayed in the block.

Q. Is it necessary for housing systems to have their own app for mobile devices like iPhone or Android?
A. No, it is not required nor needed. The Passkey system recognizes a mobile device and directs the user to a web-based, mobile-device optimized website. They are still on the Internet but the size and format of the screen is better for mobile devices and takes up less memory.

I agree. However, in the faith-based and trade show arena, a drop of 25 percent or more of the attendees due to some unforeseen occurrence could have fatal implications for a sponsoring organization. Here are a few questions you need to answer to determine if you should consider cancellation and interruption insurance:

➤ Does your show/event generate a significant amount of your annual revenue?

➤ Would a sudden, last-minute and significant (5 percent or more) downturn in attendance substantially impact your organization’s financial status?

➤ Could your organization cancel an event and not be significantly affected by the loss of profit?

All of these questions relate to the financial viability of the sponsoring organization. For those unfamiliar with this type of coverage, it protects your revenue—not your profits.

Here’s an example, based on a very realistic scenario: You produce an annual event with 2,500 attendees. Each registrant will pay $500 for registration. Your event has a trade show component; 150 exhibitors each pay $2,500. And don’t forget your sponsors: Add another $500,000. Between all of the above, you’ll generate $2.125 million in revenue. Your profit will be based on the difference between what you spend to produce the show and your revenue—an estimated $1 million.

Close to the start of your program, there is a health issue—say swine flu or SARS. Remember SARS? Your host city has a high number, or the highest number of documented cases. A renowned medical agency publicly recommends, “Don’t go there because there’s a chance you may get sick.” It isn’t an epidemic, but suddenly your attendance starts falling. You’ve already contracted and committed based on 2,500. Now it may be 1,700 or as low as 1,200. Your revenue projections now look like you may break even at best. If you had purchased an event cancellation/interruption policy, you can now get a good night’s sleep.

Here’s why: The insurance will protect your top-line revenue. You’ll be able to pay your bills, protect your income and remain financially intact. A claim of this magnitude will take a while to settle and requires an enormous amount of documentation and substantiation.

There’s a reason we don’t drive without insurance: risk. Ask yourself how much risk you’re willing to accept for your denomination, organization or company. The premium for this type of coverage is expensive. You have to plan for it, budget for it and apply for it each time you want it. It may not be best for everyone, but this is where you need to do your homework, assess your risk, discuss the upside and downside, and be prepared to live with your decision.

Industry associations—Meeting Professionals International, Professional Convention Management Association, etc.—have researched numerous providers and options and will serve as a great first step in determining which is best for you. So, take the time to make a well-informed decision.

Resort Fee
Resorts were the first property types to implement daily fees for services such as in-room coffee, bottled water, and access to the spa and fitness center. For rate-sensitive planners and attendees, these fees can come as a surprise, so it’s important to discuss resort fees during negotiations. Ideally, a hotel would agree to waive the fees or at least reduce the cost of such fees for groups. But the contract needs to include a specific provision regarding the resort fee, either that it has been waived or reduced to a certain dollar amount.

Many resorts also impose mandatory charges for bellman and housekeeping services. Again, the contract should include reference to any such charges and indicate whether they are mandatory or optional in order to avoid misunderstandings.

Walking
When a hotel is unable to provide an already reserved room it is always an unpleasant surprise. But in a resort setting, a walking situation can be disastrous. With little to no nearby options for alternate properties, a walk situation creates a significant problem. A planner, therefore, needs to include strong language in a contract regarding the possibility of a walk situation and address the hotel’s obligations if it occurs. Specifically, parties need to agree on what property or properties will provide rooms to walked guests and how those guests will get to and from the resort to the alternate property on an as-needed basis. The planner also should monitor the hotel room block and occupancy before a meeting to determine if a walk situation is likely. If so, the planner needs to negotiate with the hotel so another group is walked. If walking a group’s guests is inevitable, a planner should tell the hotel which attendees should be walked and contact those guests as soon as possible to inform them.

Walking does not always mean a hotel is oversold. It can mean that a hotel is “underdeparted,” or a previous group’s guests have not checked out as scheduled. Such extended stays are sometimes due to travel problems (weather issues in the person’s home city) or a postponed event (such as a golf tournament that gets rained out on the last day and is extended to the following day). In such situations, the meeting professional should remain in close contact with the resort to monitor the possibility of a walk situation so it can manage the process.

Facility/Services Assurances
One reason many groups use resort properties is the array of facilities and amenities offered. From conference centers to pools to golf courses to restaurants, attendees expect to have these options available. Sometimes, either due to financial or practical reasons such as construction or renovations, the facilities may not be available to the group. It is important to include reference in the resort contract as to the types of facilities and amenities available to the group at the time of contracting. Then, if any are not available during the meeting, a planner can challenge the situation and require the hotel provide alternate means of services and amenities or a discount.

Payment of Charges
While a group might be able to secure credit at the resort, most resorts seek prepayments. There is some flexibility in negotiating a reduction to a prepayment schedule, but it’s unlikely a group will be able to have prepayments waived altogether. Ideally, in order to ensure proper performance during the meeting, a planner should be able to retain a percentage of fees until after the meeting date.
Some resort contracts require the group to pay for charges incurred by an attendee and left unpaid. A planner who does not want to accept such financial responsibility should remove those provisions from the agreement.

Recreational Activities
Many resorts offer a variety of optional activities such as snorkeling, boat trips and wave runner rental, and it is important to address the liability concerns associated with such activities. Ideally, a person who chooses to participate in such activities understands the risks associated and signs a release and waiver of claims prior to participating. A release provides protection in the event the person is injured during the activity. If possible, the release and waiver also should include the group’s name so that the group has similar protection.

Crisis Planning
As with any meeting, it is incumbent that a planner prepare a crisis management plan for a resort meeting. The planner needs to find out if a doctor is available on-site or nearby to address medical emergencies. It is also important to know where the nearest hospital or clinic is located and how much time it takes to travel there. The plan should address safety and security issues because resorts often are located in remote areas with rooms spread throughout the complex. The meeting planner should work with the resort’s security team to ensure attendees are protected.

■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

While resorts can be a feast for both the mind and soul, they also can be a headache for meeting professionals. But with a little foresight and planning, planners can breeze through resort contracts and relax at the conclusion of a successful resort meeting. Read more about how resorts are catering to the faith-based market in “No Longer a Last Resort.”

Having a back-up plan is a necessity when coordinating air and ground transportation. Unless attendees are driving to a meeting or renting a car once they land, airport transfers are usually their first meeting experience. Air dictates ground, and ground gives the first impression. Understanding your attendee level and demographic is the first step in determining the most efficient, least expensive method of transportation. Does the group include your church’s pastor or executive staff? Are they mostly male members traveling with colleagues, or female members traveling alone?

If the attendees are important members of the congregation, consider hiring separate sedan cars on standby. If your event is an annual session hosted by the organization’s national headquarters, consider grouping members coming from the same city, state or chapter. Chartering a group flight can be less expensive in both airfare and ground transfers; a 55-passenger bus would be more economical than booking multiple 11-passenger shuttle vans.

However, it often is very challenging to arrange to fly a large number of people on the same airline, the same day, at the same time. If attendees are flying on different airlines yet landing during a similar time period, it is possible to group them on shuttles. Analyzing your flight manifest for potential groupings is crucial to cut down on cost. It’s equally as important to understand the airport’s terminal system and map out the distance between gates, concourses and baggage claim. If two delegates land in the international terminal, concourse E, and four land in domestic terminals, concourses A and B, it might not make sense to have all six attendees share a shuttle. Consider how long it takes to walk from gate to gate and how rapidly the airport’s transit system operates. Research airport information on the Internet by visiting the airport’s official website and by reading blogs and social media sites that provide traveler feedback. A group coordinator at the city’s convention and visitor bureau also might provide excellent information about travel time, both inside the airport and once attendees depart baggage claim.

Airport transfers are probably the most challenging to coordinate, not only because they are influenced by airline delays and slow baggage return, but also because attendees new to the city or airport might get lost trying to find their way to the main terminal. Attendees will walk by large directional signs and placards with their last name in big, bold letters, especially if they are reading email on their smartphones or are trying to read airport signage. It is important to provide concise directions from the gate to baggage claim in your pre-conference materials, and explain in detail who and what they are looking for once they reach baggage: Is it a meet-and-greet representative wearing a transportation company’s logoed shirt, or a sedan driver in a traditional suit? Be sure to include an emergency, off-hours phone number in case a flight is delayed or canceled. If you are using a travel agency to book group air, this company usually can provide an 800 number that is answered by a representative familiar with your group. If attendees are booking their own air, provide a meeting manager’s cell phone number or the number to the organization’s on-site office.

Once the delegates are safely to the hotel or meeting venue, make sure they are expertly shuttled to off-site functions. This coordination is a bit less challenging than airport transfers; generally, the entire group is meeting at the same location at the same time. However, if your conference uses multiple hotels, it’s important to time the shuttles so all delegates are arriving at approximately the same time. You can then start your meal functions and entertainment on schedule rather than waiting for a late bus to arrive. Translation: You save costs on multiple elements of the meeting and are not paying overtime charges to a demanding entertainer.

Monica Compton, CMP, is a writer and event-marketing consultant with Pinnacle Productions Inc., based in Atlanta. She has 19 years experience as a global meeting planner, managing a variety of programs both domestically and internationally.

1. Profile of your organization: Include size, scope (domestic/international) and website

2. Event description: Type of event or meeting, audience, field or industry, attendee demographics and expected attendance

3. Optimal dates, pattern and flexibility

4. Preferred location and property type: Single property, multiple hotel package, meeting space at or in conjunction with a convention center

5. Organizational contacts: Include contact person in case responders have questions.

6. Decision process: State clearly who, in what time frame, and what criteria will be used in the decision-making process; include decision date.

7. History: If not a first-year event, detail the past and future dates, cities and venues, dates and rates.

8. Guest room block: A day-by-day grid by room type with totals by date; list all suites, standard, club or concierge and staff room requirements

9. Rates: State your expected room rate or rate range.

10. Contract clauses: Include all items that your organization requires, e.g., complimentary site inspection rooms; VIP/airport transfers; sustainability practice compliance/participation; etc.

11. Overview of function space requirements: Attach or include a tentative agenda that indicates how the room will be used, what day and time, and any minimum requirements regarding size/square footage, 24- hour holds, ceiling height, power, load in access, rigging, etc.

12. Food and beverage: List all functions that include F&B at the venue that you’ll be selecting, as well as any off-premise events. If you have preferences for buffets or shared space include these as well.

The Hotel Disclosure Form

Attach a form that can be easily filled in electronically by those responding to your RFP. Include:

1. General information: Management team contact information, ownership, last renovation date, scheduled renovation schedule, age of the property, web address

2. Location-related information: Distance from airports, train stations, costs of transfers, parking and shuttle transportation

3. Hotel amenities: Indoor/outdoor pool area, fitness center, tennis, golf, concierge lounge, business center, spa, etc. Don’t forget restaurants: hours, seating capacities, price range and a brief description of the fare.

4. Guest rooms and guest room amenities: Check in/out times, wireless/wired Internet, in-room safe, complimentary turndown, 24-hour room service, coffee maker, smoking rooms, etc.

5. Union status: Is this a unionized facility? If so, what departments? When is the next collective bargaining scheduled to take place?

6. Financial considerations: Current taxes on guest rooms, resort fees, early departure fees, costs for T1 Internet in meeting/trade show space, current general menu prices for standard types of meals, cocktails, coffee (by the gallon); tax and service charges on F&B. Is the service charge taxable/non-taxable?

7. Function space: What outdoor areas are available? Are the air walls soundproof? Note: Always secure a complete list of all meeting/function space with capacities and dimensions.

8. Banquet functions: What is the current overset? Request a set of banquet menus with current pricing.

9. Audiovisual: Current contact for in-house provider

Convention Center Disclosure

When your meeting needs include significant square footage for large general sessions and trade shows, or when the need for concurrent session space might not be available in a hotel, the use of a nearby convention center is most likely your next option. Like the hotel disclosure form, this information is specific to the convention center being proposed for the event. Most of the same information gathered above will apply here. Make sure any and all fees and charges are fully disclosed.

1. Proposed room block(s) and meeting space — This part of the form is where the venue details the following to you, the planner/buyer:

a. Headquarter hotel proposed room block

b. Propossed rate structure for all room types requested

c. Proposed function space and its location (hotel or convention center) by event as detailed in the RFP document

2. If you are flexible with your dates and/or arrival and departure pat-tern, add a “Date Option No. 2” page. Do the same for overflow or additional room blocks at adjacent venues where applicable.

3. Lastly, include a section for any competing venue to communicate the concessions/inducements they are willing to provide your group. Stipulate that any and all concessions listed on the response form are not date-specific and apply to all dates proposed unless otherwise specified.

The development of a comprehensive RFP template might seem like a daunting task. There are many moving parts. By taking the time to fully illustrate all of the details of your meeting or event, you are showing your potential provider you want their proposal to be complete and thorough.

Kevin R. Johnston, CMP, a 25-year meeting industry veteran, is the executive vice president of PlanSmart by Collinson Media and Events, a complete meeting services organization providing global venue procurement, audiovisual production and marketing expertise for events, trades shows and conferences worldwide.

Is all usage protected?

As an original work of authorship, the U.S. Copyright Act protects music just as it does photographs, books, software, plays, artwork and many other forms of creative work. The creator owns the work unless the person created it in the scope of their employment, in which case the employer owns the work, or if there is a written agreement that the work is a “work made for hire,” in which case the hiring company owns the work.

Copyright protection consists of a bundle of rights, including the right to reproduce, distribute and display the work, the right to prepare works derived from the original and the right to publicly perform the work. Each of these rights can be licensed separately. When a copyrighted work is used without the owner’s permission, the use constitutes copyright infringement unless the use falls within one of the exceptions discussed later in this column. It is important to understand the distinction.

How can we get permission to play it?

When it comes to public performances of copyrighted music, a logistical problem is created by virtue of the large amount of individuals and organizations that may want to perform copyrighted material and the limited resources of the author to negotiate with potential licensees. As a result, performing rights societies (American Society of Composers, Authors and Publishers or ASCAP, Broadcast Music Inc. or BMI, and SESAC Inc. or SESAC) license public performance rights on a nonexclusive basis for performers. They license the music for public performance, collect fees, and pursue those who don’t have a license or pay the appropriate fees. These performing rights societies offer organizations a blanket license agreement in which the group can pay one fee per year for all music played during the year at the organization’s conferences and events. This blanket coverage is the simplest way for a planner to deal with this issue.

Are there any exceptions?

Yes, the U.S. Copyright Act provides exceptions including music played in the course of services at a place of worship or other religious assembly. Therefore, with regard to religious conferences, it is important to delineate between music played in the course of a religious service and music played at dinners, gatherings, etc. For non-religious services, a music license must be obtained. If you are in doubt, check with your attorney.

Barbara Dunn is an attorney and partner with Howe & Hutton Ltd., a law firm which specializes in the representation of groups in the meetings, travel and hospitality industry. She is presenting several educational sessions at the 2010 Rejuvenate Marketplace. She can be contacted at bfd@howehutton.com.

By Monica Compton, CMP

We’ve all heard the term “meeting planner perks.” It can refer to the non-event industry’s view of a planner’s life: luxurious stays in posh settings, business class airline seats and hard-to-secure reservations at a celebrity chef’s restaurant. In reality we know that those perks, if ever received, are rarely used, turned over to VIPs or often wasted. After all, do event planners in a fast-paced industry with an expected 24-hour availability to their organizations’ needs really have time to take a vacation?

For those who do, complimentary hotel stays and airline upgrades seem to be a well-deserved reward for spending 12 hours on the trade-show floor, lifting heavy boxes and not having enough time to eat. While hotel loyalty programs were created more than 25 years ago for frequent travelers, the concept of tailoring a program to target meeting planners is at an all-time high. In a lumbering economy, hotels are looking to entice planners with complimentary hotel nights, discounts on group meals and credits to their meetings’ overall bills.

Starwood Hotels and Resorts Worldwide customized its Starwood Preferred Guest program, the hotel group’s original rewards program for frequent travelers, and created a Starwood Preferred Planner program. Planners just don’t get points; they get Starpoints, implying a higher level of benefits for meeting planners over leisure or business travelers. The program is further expanded to offer Instant Meeting Awards, the ability to get up to a $1,500 credit on your group bill as long as you are a Starwood Preferred Planner with 15,000 Starpoints (and, of course, a signed hotel contract must be in place). But there’s a terms and conditions catch to get meeting planners to book with Starwood again. Starpoints earned for the group’s current meeting may not be redeemed toward that meeting. So if you haven’t reached 15,000 points, you’ll have to wait until your next meeting to earn the group bill credit.

InterContinental Hotels Group (IHG), the first company to introduce hotel points with its Priority Club Rewards for Holiday Inn in 1983, has also created a planner niche for its program. With the addition of one word to its title, the Priority Club Meeting Rewards becomes a program that awards planners for “qualified” meetings. Reading the fine print is also essential here. Planners must have a minimum of 10 rooms occupied in their block from a minimum of one night up to five consecutive nights depending on the brand in IHG’s portfolio of hotels. InterContinental and Crowne Plaza have an additional requirement that meeting-related food and beverage charges must be applied to the master bill.

IHG further adds the perk of giving planners different status levels depending on how many meetings they book. Similar to an airline’s status ranking, IHG bestows Gold Elite status to planners who host one qualified meeting in a calendar year and Platinum Elite status to those hosting two meetings per year. The benefits of status range from the gold level’s 10 percent bonus in points and priority check-in, ensuring your room and keys are ready upon arrival, to complimentary room upgrades and a 50 percent boost in bonus points at the platinum level.

Marriott’s Rewarding Events program also offers levels of elite status and allows planners to choose between hotel points and airline miles. For every $1 in total meeting charges, planners can earn three hotel points up to a maximum of 50,000 or 1 mile up to a maximum of 15,000.

Marriott’s limited-time Meetings Matter group promotion adds contract incentives and bonus points to its base
rewards program. For each meeting with at least 50 cumulative room nights booked and held by Dec. 31, 2010, a group will receive: 35 percent allowable attrition, one complimentary room night for every 35 paid rooms, and a 2 percent rebate off the master bill for each qualified meeting exceeding 100 cumulative room nights. This promotion also adds triple points for master bills paid with any Visa credit card up to a maximum of 150,000 total points.

Marriott, IHG and Starwood have all received Freddie Awards, honoring the best frequent traveler programs throughout the world for the last 20 years. Receiving an award by giving travelers rewards confirms the industry’s intense focus on points. But for meeting planners who are bound by industry guidelines and organizational policies, does redeeming points for personal gain step dangerously close to the edge of ethics?

Many of these points programs focus their advertising on the individual benefits rather than what the group receives. Marriott’s Rewarding Events section of its website sympathizes with planners that “times are tight, and budgets are tighter,” but it can be “business as usual for you,” urging planners to earn points toward free nights for “your ultimate getaway.” Starwood’s site tells planners that earning Starpoints will “bring you one step closer to your dream vacation.”

IHG ran a 2008 campaign for Holiday Inn Hotels and Resorts that masked the individual benefits by calling its promotion the M.B.A. (Masters in Business Accommodations), designed to engage the traveler and educate them “in the personality of the brand and our latest promotional offerings.”

So when do rewards points move from an acceptable gift to a breach of ethical guidelines?  Joshua Grimes of Grimes Law Offices, a firm specializing in associations and the hospitality industry, says there is no industry standard on points; however, many companies have policies that employees and contractors must follow.

“Sometimes these policies require people earning points for business travel to credit them to the company account,” Grimes says. “Other times the [individual] may keep them.”

Sheila Evans, director of sales Southern region for Hilton Worldwide, has clients who create a “house account” for points. Similar to an escrow account at a bank, Hilton holds the rewards points for use as the group books meetings. This ensures that the points are going to the company and not the individual planner. “Some clients use their points in company giveaways or donate them to their favorite charity,” Evans says.

Grimes says that most hotels have a policy allowing the meeting sponsor to designate who gets the points, the only condition being that the points will be paid to only one person or entity. “This means that any recipient may be designated,” Grimes says. “However, ethics considerations may dictate that the points should go to the meeting sponsor unless that sponsor designates another recipient.”

Evans says that it must be stated clearly, prior to the signing of the hotel contract, who will receive the points. “This is usually decided by the meeting planner or the person booking the program,” Evans says.

Ethical considerations can be stretched further when a planner bases a destination or venue decision on the rewarding of points. Kyle Greer, program manager for the Society of International Business Fellows (SIBF), books properties based on how they fit his organization’s needs, not by their points program.

“Our key concerns are location, meeting space and service level,” Greer says. “It is critical [that] we pull off high-caliber meetings and events, and we’ve yet to find that a point system helps in any way.”

Paulette Hopkins, president of The Hopkins Alliance, puts a clause in her contracts listing the designated representative who will receive the points. “But it has never been the decision-breaker [over another property],” Hopkins says.

While Grimes says there is no legally correct answer, under the federal Sarbanes-Oxley law, the points would have to go to the company or organization sponsoring the meeting. “Otherwise, there could be an implication that the planner chose a particular hotel because he or she was personally earning points — a suspect incentive because it doesn’t benefit the meeting sponsor,” Grimes says. “The best policy is for the planner to give the company the points, or to disclose to the company that the hotel is offering the points and seek approval from company officials to keep them.”

Monica Compton, CMP, is an event specialist with Pinnacle Productions Inc. based in Atlanta. She has 18 years experience as a global meeting planner, managing a variety of programs both domestically and internationally.

In addition to inconveniencing so many passengers, the recent airline flight cancellations had a significant impact on the meetings industry. We had a number of clients contact us to say that their meeting had been affected as a result. Some were unable to hold their meetings, as they could not get their attendees to the destination. Others arrived at their destination but found that no rooms were available because the previous group’s attendees had not been able to depart and stayed over as a result. In other instances, function space was not available because the previous group had extended or adjusted its meeting times. This brings up the burning question: What are the duties and rights of a group when a flight cancellation impacts a meeting? The short answer is: It depends on what the contract says, if anything, about transportation interruptions.

Provisioning Up

The group’s duties will be evaluated against the contract’s force majeure provision. A force majeure provision should be included in each and every contract signed in connection with a meeting. There are three components I focus on when reviewing the provision. First, I review the grocery list of items that could occur such as acts of God, weather, strikes, wars, threats or acts of terrorism, travel advisories or diseases. It is important to ensure that transportation interruptions or flight delays or cancellations are included on the list. It is also important to include a catch-all provision at the end of the list such as the following: “or any other cause beyond the parties’ control.”

The second and most critical component is the standard of impact. If any of the items on the list occur, what has to happen to performance in order to trigger the protections of this provision? Does performance have to be rendered impossible? Or illegal? Inadvisable? Commercially unreasonable? Depending on what requirement is included in the contract, the group may have a difficult time exercising its right to cancel the agreement without liability. Standards such as “inadvisable,” “commercially unreasonable” or “materially affected” make it easier to invoke protections for the group, especially with respect to flight cancellations. Another option is to specify a certain percentage of attendees who would be discouraged from attending the meeting. Based on surveys of passengers affected by flight cancellations, this option offers another way of establishing that the group has met the requirements of the provision.

The third and final component is defining what will happen if the group could cancel its contract without liability due to force majeure but chooses to perform the contract anyway. The provision should state that in such an event, the hotel will waive room and food and beverage attrition fees related to a smaller meeting and honor any lower room rates. For example, if the flight cancellations meant that only 50 percent of the group’s attendees could travel to the meeting, the force majeure provision may give the group the right to cancel the agreement without liability but the group can elect to hold the meeting and not be subject to attrition fees for a lower utilization of its room block.

Groups also may want to consider purchasing event cancellation insurance for their meetings. Typically, the following are considered “covered events” under the policy: adverse weather conditions, non-appearance of a principal speaker or entertainer, terrorism (but only to the extent the event meets the policy’s parameters in terms of proximity and timing), labor disputes, airline cancellations due to adverse weather conditions or labor disputes, and floods.

Typical exclusions include financial cause or lack of support for the event, war or military action, government action and terrorism outside of the bounds of the policy. By having such insurance in place for revenue-producing meetings, the group can ensure that no matter what the liability under the contract, the group’s revenue from the meeting will be protected.

Rights

The group’s rights under the hotel contract in the midst of transportation interruptions also will be governed by the contract. In this instance, however, what the contract says is often not as important as dealing with the practical issues. For example, if the prior group has not departed due to flight cancellations, the hotel may not have enough rooms to honor your group’s reservations. In the event that a guest overstays their reservation dates, the hotel generally has two choices: Evict the guest or assume a new contract exists and charge the guest on a day-to-day basis. Since eviction is a rare consequence in the event of overstay (eviction is a consequence in the event of a guest’s violation of law or hotel policy), hotels typically treat the overstay as a new contract. That said, the hotel has no other option but to relocate the incoming group’s guests. Since a hotel room reservation is a contract, the hotel must provide alternate accommodations to the guest. That may mean “walking” the guest to any other hotel or, if the contract includes a “walk” clause, the terms of that clause will govern in such an event. It is important to include parameters in the clause such as the type of alternate hotel (nearby and equal or better quality), and reimbursement of transportation to and from the hotel and the alternate hotel as needed. Some groups request that the guest be returned to the hotel as soon as possible and receive upgraded accommodations along with an apology letter. Bottom line, if it appears likely that a walk situation will occur, the group must monitor the hotel’s relocation practices to ensure they meet the terms of the contract.

As life imitates art, I recently found myself in a walk situation caused by bad weather in another part of the country. While it appeared that the hotel had appropriately followed walk procedures, its method of dealing with guests who were being relocated was less than professional. Front desk managers were not adequately trained in basic customer service in such a situation and, as a result, many attendees were upset about the situation. In order to avoid this outcome, planners should work with the hotel’s front desk staff to ensure attendees are treated appropriately.

With regard to function space, the group’s rights are governed by the contract but once again, if the previous group does not vacate the space, the incoming group has the practical problem of securing its required space. As compared to sleeping rooms though, the group should have more leverage to insist that the hotel move the previous group. Function space is rented on a daily basis for specified hours. If a group exceeds the hours it reserved, the hotel has the right to remove the group from the space. Again, it is important for the incoming group’s planner to work closely with the hotel to ensure that this situation does not arise in the first place. Planners can undertake a number of measures both in and out of the contract to ensure that if transportation interruptions occur, they will be properly poised to minimize their duties and maximize their rights.

Barbara Dunn is an attorney and partner with Howe & Hutton, Ltd. in the firm’s St. Louis, Mo., office. She specializes in hospitality law and is a session speaker at the 2010 Rejuvenate Marketplace in Louisville, Ky., Oct. 18-21. For more information about Rejuvenate Marketplace, visit RejuvenateMeetings.com.

BY CHRISTINE BORN

Have you ever thought of holding your annual conference at a resort? We know, we know- – faith-based groups are usually very frugal and don’t want to give the appearance of being extravagant, especially in the wake of what has come to be known as the “AIG” effect, named for the big insurer that staged a lavish meeting after receiving government bailout money. But, besides the savings now being offered by upscale properties, some planners are discovering other advantages to holding their meetings at resorts.

Luxury resorts have joined the discount battle, offering low rates, eliminating attrition fees and adding freebies in an effort to attract whatever meetings there are in a shrinking economy. They are targeting faith-based and other SMERF groups often considered tight-fisted and priced out by upscale properties.

Seasoned planners may be familiar with this scenario. After the events of Sept. 11, 2001, and the subsequent slump in corporate travel, hotels briefly wooed SMERF groups, which are considered reliable through good times and bad. The market flipped again in 2006, as prices climbed, hotel construction boomed and the corporate meetings market returned with a vengeance. This time around, optimistic predictions are for a bounce-back in the second half of 2010, so if you’ve ever wanted to book your meeting at a resort, now’s your window of opportunity.

“If there are any resorts that were on your ‘wish list’, they now may be a good possibility for your event,” says David Gabri, president and CEO of Associated Luxury
Hotels International (ALHI).

“The economy and the shift in business travel have created more inventory at hotels and many have opened up, relaxing food and beverage minimums significantly and allowing some groups to enjoy amenities they might not have had access to before,” Gabri says.

While admitting that corporate groups traditionally account for a greater expenditure per attendee, especially for incentive meetings that often include golf and spa packages as well as big bar tabs, Gabri notes that resorts have always been interested in “all good business.”

He suggests that savvy meeting planners use this lag period to establish longer-term relationships with resorts, contracting through 2011 where possible. “This year, anyone can write their own business anywhere,” he says. “In 2010, there will be a little less availability, and resorts will lower group ceilings as the leisure visitor comes back. It’s a typical supply-demand curve.

“It’s an important time for planners to work with the sales managers of choice, so when the tide turns, they’ll be remembered,” Gabri says.

Service Priority
Great service is one of the reasons even budget-conscious groups are interested in resorts, says Kevin Hillmich of PCH Hotels & Resorts, known as the Resort Collection of Alabama Robert Trent Jones Golf Trail. “Across the country, resorts are being more competitive with the values they are adding, but we want to lead the way in satisfaction,” Hillmich says. “We are trying to put an offer on the table that will give them the incentive they need without sacrificing any service or attention to detail.”

PCH resorts are offering giveaways – similar to those at many resorts – for free night stays, spa treatments for attendees who register by a certain date and other early-bird specials that planners can use in their event brochures to build interest and attendance.

Alex Doyle, vice president of 21st Century Group, a global hotel site-selection company, says resorts are offering very liberal attrition rates (25 to 35 percent slippage), no charges for meeting space, very low if any food and beverage minimums and, in some cases, a 3 to 20 percent rebate back on the total master account. “Resorts are trying to remove any obstacles for attracting business,” he says.

Offers like these may draw budget-conscious faith-based planners not intimidated by the use of “resort” in the property name. (One sales manager, who did not want to be named, related a story about a corporate planner who booked with the property and then requested that the “& Spa” portion of its name be removed on all materials related to her meeting.) Once they book a resort, these daring planners are likely to reap benefits beyond affordable rates.

With families cutting back, planners of faith-based events are finding a positive repercussion of the recession – families are using the conferences as their vacation, boosting attendance. “We are seeing many groups negotiating group room rates for three days before and after events,” Doyle says. “This is actually a bonus for the resorts as well, since they realize more total room nights.”

With all the amenities available at resorts, planners are cutting less popular programs and food events, resulting in savings and allowing attendees to choose activities they prefer on their own dime.

“Besides asking for discounts on F&B prices (we are seeing menu pricing guaranteed for the rest of 2009 and even 2010), planners should ask for coupons for meeting attendees to receive 10 to 20 percent discounts in hotel restaurants, and even a dollar amount dining credit for those who come early and stay late,” he advises.

Privacy is a big issue for faith-based groups, Doyle adds. “Most require dedicated space for prayer gatherings and those requirements can be demanding on a hotel. We work with many different resorts and almost all understand the nuances of faith-based groups. In many cases, these groups use more upscale resorts during the off-season, so the staff understands how to service these gatherings.”

Serenity is an appealing selling point for faith-based meetings, says Renee Wilhite, director of sales and marketing at Chateau on the Lake Resort & Spa in Branson, Mo. “The whole environment keeps people focused and in the right state of mind to absorb what they need to absorb,” she says. “Resorts keep everyone on property for the conference portion, but allow attendees to make it a family vacation. We’re seeing this a lot more.”

On the Plus Side
Wilhite reports that some groups have actually exceeded expectations this year in terms of numbers. “There are a lot of meetings that people aren’t going to give up,” she says. They are also using the spa more, which she attributes to the stressful economy. The resort has responded by offering stress-free seminars during breaks and complimentary spa treatments.

“There’s a lot they can do to offset their budgets,” Wilhite says, suggesting pre- and post-event extensions at group rates, cutting meeting agendas, and giving group members more time to relax and be with their families.

North Carolina’s historic Pinehurst Resort attracts small retreat groups attracted to the quiet setting in the state’s green Sandhills region. “It’s almost like coming home,” says Beverly Stewart, director of sales, Conventions & Visitors Bureau – Pinehurst, Southern Pines, Aberdeen Area, N.C. The resort can accommodate meetings of up to 1,000 and Stewart says groups are now more aware of their negotiating power. “We are open to anything,” she says. “We work group by group; some require more hand-holding because they generally are not professional meeting planners, but they are very rate conscious and have specific requirements. We help them meet these, so they can be successful.”

All of the property representatives agree that if the dates are right, they will make the meeting work – for the short term. “There are still meetings for 2009 that have not been confirmed,” Doyle says. “We are working on meetings for 2012 and 2014, yet these are the larger conventions that need to plan further out.”

Will there be room for faith-based groups when the corporate meetings and leisure travel markets rebound? “That is the $64,000 question,” Doyle says. “The resorts will continue to show flexibility as long as the market remains soft. We suggest to our meeting clients that they take advantage of the present situation. Once a recovery takes hold, all of the special offers go away”.

Resort Advantages

1 Vacation atmosphere for families that want to extend stay beyond conference may cinch decision to attend.

2 Stress-free atmosphere may add extra appeal in these trying times.

3 Controlled environment is an advantage for faith-based groups that want to keep attendees on property and limit exposure to potentially offensive activities or media.

4 Current values offer opportunities to incorporate amenities that reward attendees.

5 Planners can realize budget savings by eliminating some programs and meals, and allowing more free time and choice for attendees who are using event as a vacation opportunity.

By Christine Born

It’s a roller coaster out there. The state of the U.S. economy and financial markets, the swine flu threat, and the plethora of special deals being offered by the hospitality and travel industries are shaking up the usually stable business of planning faith-based conferences. Many faith-based organizations pay for their delegates to attend their annual business meeting, but their investment portfolios have taken a hit like everyone else’s. As a result, meetings may be canceled or downsized. And, for meetings still going forward in these volatile times, negotiations are more demanding as destinations compete for what business remains and planners try to lock in the best deals, while leaving wiggle room for the unknown terrain ahead.

We asked Barbara Dunn, an attorney who specializes in hospitality law, for some advice on canceling meetings and negotiating attrition fees. She also talked about the impact current marketplace conditions are having on new contracts. She began our discussion by distinguishing between two separate challenges: 1) Contracts already in place for existing meetings that might be canceled completely or renegotiated based on partial performance; and 2) new contracts that are being negotiated today, in an environment where faith-based meetings are being viewed more favorably than in the past.

Canceling, Renegotiating Existing Contracts

What can be done when the pickup is so low that the group can’t afford to have the meeting, or budgets force cancellation? How can damages be minimized and relationships protected?
First, you need to do some soul-searching and decide from the organization’s standpoint whether you need to have the meeting. Will cancellation hurt the purpose of the organization? Can the meeting be done and the mission accomplished on a reduced scale?

Then, check the contract. Are there any provisions that would allow cancellation without a fee? If the answer is no, then shift to fee negotia tion. Think of the cancellation fee as your maximum exposure. Your leverage for concessions is that you could walk away, but you probably won’t.

How soon can you make the decision to go forward with the meeting or not?
The closer to the date you cancel, the higher the fee. In today’s climate, the hotel may jump at the opportunity to rebook your meeting in lieu of a cancellation fee if you can reschedule within six months to a year. Hotels are desperate to keep business on the books now.

You may be able to negotiate rate adjustments and attrition fees for future bookings. Hotels may offer a percentage back to the master account or a commission back to the group, something that previously was only offered to a third party. What is important to your group – meal cost, transportation? Talk to the hotelier; the time is ripe for deals. They’re interested in making your meeting work.

How much hotels will credit toward future meetings depends on the size of the group and when you want to rebook. Even though they want business, hotels are reluctant to book beyond 2010-2011. We are seeing shorter booking times, no matter what size the group is, even for citywides.

If the group decides to go ahead with the meeting as scheduled, but wants to adjust the room block and F&B, how should the planner proceed?
If you have signed a hotel contract, check to see if the contract has a room block adjustment provision. If there is none, contact the hotel to discuss an adjustment. If the parties agree to adjust the room block, an addendum should be added to the contract reflecting the change and the impact the new room block has on the attrition fee. For example, if the contract language states that you are responsible for using 80 percent of the contracted room block, the addendum should note that the revised room block is the “contracted room block” for purposes of the attrition fee provision.

Negotiating New Contracts Now

Are there contract provisions that have taken on more importance as a result of current events?
Definitely. The “rights of cancellation” clause should be very specific and inclusive. I call it the “get out of jail for free card.” Today, many non-profits are having an identity crisis; some are being forced to cancel meetings and are finding they are vulnerable.

A “force majeure” provision [see "Terms to Know"] needs to include a grocery list of contingencies. It also needs to set a standard of impact that is less than the usual “impossible” or “illegal,” which is the hardest, highest example to meet. In most cases, economic conditions in the current climate won’t qualify under force majeure. The swine flu scare won’t either, even though the president issued a travel advisory. Most standard force majeure clauses would require that travel be declared illegal – something we all learned after 9/11.

Alternative standards could include “commercially impracticable” or “inadvisable.” Commercially impracticable means most business minds would agree that the meeting is impractical. I would add “inadvisable from a safety, health or financial standpoint.” These standards make it easier to invoke protections for the group.

Some groups are now including another component in their force majeure clauses stating that if the group could cancel under the provision but chooses to go ahead with the meeting, the hotel will waive room and food and beverage attrition fees related to a smaller meeting and honor any lower room rates.

If the group has to cancel the meeting for any reason not covered in the contract, the contract should state that cancellation fees be determined on a “sliding scale” basis. Under this “liquidated damages” provision, the farther out from the meeting date the cancellation notice is received by the hotel, the smaller the cancellation fee; the closer the notice is received, the higher the cancellation fee. Cancellation fees can be based on a percentage of total room revenue, total room and food and beverage revenue, total lost profit on rooms, total peak night room revenue or many other options.

In addition to specifying the cancellation fee, you should require the hotel to attempt to resell the rooms and refund to the group any revenue collected by the hotel for resold rooms over the meeting dates. You may also want to include a provision stating that in lieu of paying a cancellation fee, you can contract with the hotel for the same or similar-sized meeting to occur within a certain time frame.

Finally, the provision should state that the cancellation fee is the exclusive remedy for the group’s cancellation for reasons not otherwise permitted under the contract (e.g., force majeure).

What about protection from problems that arise with the properties themselves, such as bankruptcy and change of ownership?
It’s important to include comprehensive language regarding property construction or renovation. Ultimately, site delays should be included as a reason to cancel and should cover any public areas, restaurants, amenities, services, etc. Some hotel chains include mutual cancellation fees, but that’s like comparing apples and oranges. The numbers [the hotel's losses] have nothing to do with what it costs the group in trying to find new space for its meeting. The decision to cancel should not be mutual; you should retain the right to make the decision based on what is best for your group.

Before the swine flu, labor disputes were the issue we were talking about [in the hospitality community]. When providing for labor problems, you should include other factors and contingencies besides a strike. In San Francisco, information picketing had an impact on meetings; some groups were forced to cancel events [either because they did not want their attendees forced to make a decision about crossing picket lines or their organization was supporting the picketers]. In today’s economy, you also may face problems arising from bankruptcy and financial difficulties of properties. Closings, ownership changes and property deterioration need to be covered in your contract.

In the latter case, you should keep collateral material to prove property deterioration if a dispute arises. Take site visit photos and keep Web site pages to show what the property looked like when you booked it. If your group is particular about a brand, then reference it in the contract, so you’re covered if there is a change in management and a reflagging of the property.

What other best practices do you advise regarding attrition fee provisions?
First, make sure you are comfortable with your total room block. In fact, book ultra-conservatively these days, remembering that it’s always a good problem to go shopping for additional rooms. Usually, you can negotiate a minimum pickup that represents 80-90 percent of the total block. That minimum room pickup number should be stated in the contract.

Next, specify how the attrition fee will be calculated [total rooms used, no matter how they were booked or at what rate, etc.]. Finally, if attrition fees are charged, the contract should require the hotel to provide documentation verifying the fee, including a list of guests during the blocked dates and an accounting of the total number of rooms available for sale during that time.

Groups often struggle with deciding which food and beverage events they will hold at the hotel and how many people will attend each event. You should consider guaranteeing a minimum amount of the total food and beverage revenue generated over the entire period. That gives you flexibility to add, change or cancel events so long as the total number meets the mini mum amount. That way, if it doesn’t, you will only pay a fee based upon the difference between your guaranteed minimum amount and your actual revenue amount. The contract should state whether the minimum amount is inclusive or exclusive of all tax and
service charges.

How do conference center contracts differ than hotel contracts?
Conference centers have daily pricing. Obviously, you’re not concerned about rooms, but you do have the same food and beverage issues. Basically, there is the same approach with contracts. Conference center contracts are pretty contained, but I might look at adding a bit more to adapt to current conditions, such as force majeure and indemnification.

We’ve discussed renegotiations based on good relations, but what happens when serious disputes arise?
I prefer to keep contracts pretty open as to how to respond to disputes; otherwise you tie your hands to one form of dispute resolution, that is arbitration or mediation. By leaving the dispute resolution method open, all dispute resolution options are open to the parties. There’s a lot of heavy handedness in some hotel contracts, and groups that mainly use volunteers are often not experienced in handling negotiations. We can help them understand how it works, but it’s their decision [whether to go forward with legal action].

What other protections should groups seek in their contracts?
“Indemnification” is another risk management clause that helps minimize exposure to financial liability. Such clauses are a way of shifting risk to the party that can best control it. With hotel contracts, it is important to protect your group against the negligent acts of the hotel’s officers, directors, employees and agents. Hotels, in turn, will ask you to indemnify the hotel against any negligent acts committed by your group.

If you are concerned with competitive groups or groups that may be considered inappropriate meeting at the hotel at the same time – which can be a big concern for faith-based and youth events – you can seek to include a provision prohibiting the hotel from reserving space for such groups without your consent.

Many hotel contracts include miscellaneous or boilerplate provisions at the end of the contract that you should watch for, such as the hotel’s ability to assign the contract to another entity without the group’s consent, or whether the prevailing party gets its attorney’s fees paid from the non-prevailing party.

When planning an event for any organization, consult your attorney regarding any contract before signing on the dotted line to be sure that you are fully aware of the risk, benefits and potential liabilities.

Rate Protection in a Fluctuating Climate

The current economic environment makes it difficult for groups to negotiate rates for future events when no one can predict how low (or high) they may go. What recourse do you have when you discover, as you get closer to your dates, that your negotiated room rate is higher than those promoted by the hotel over the same dates? How do new rates affect your attrition fee agreement? How do you address the issue of special discounted rates often found by attendees on the Internet?

Previously signed contracts:
If you already have a contract in place and learn that the hotel is offering lower rates, you should address this issue with the hotel. If you don’t get any satisfaction, don’t give up.

“Leverage your connections,” says attorney Barbara Dunn. “Involve all your stakeholders – the convention and visitors bureau (CVB) and the hotel chain’s national sales office. The CVB sold you on their city and they want you to come back. And while brand loyalty counts in some cases with hotels, keep in mind that brands are not the same. Real estate investment firms may own individual properties; they’ll look at the bottom line and won’t care if you come back.”

Press all parties to correct the situation, she advises, by either honoring the same rate for your group’s attendees or ceasing to offer the lower room rates. Whatever the remedy you agree on, make sure to add it as an amendment to the contract.

In all cases, you should work closely with your attendees to ensure they are reserving rooms within your room block and receiving the correct rate. It is also important to periodically check the hotel’s reservation line to make sure your attendees are receiving the correct rate. If there is a problem, the hotel should be notified immediately.

Contracts in negotiation:
“You need to include strong rate protection clauses in contracts and be diligent in monitoring rates,” Dunn advises. “If a meeting is scheduled to take place two or more years in advance, you can agree on a discounted rate for the current year and then agree on a maximum percentage increase for each year leading up to the meeting year.”

In addition to ensuring that rates can be confirmed, the clause should specify what the hotel would do if it lowers rates over your blocked dates. In certain markets, properties may want to limit the rate protection clause to state that it will not offer any lower group rates, except for corporate or airline crew rates, or that the hotel will not offer lower rates on its Web site or toll-free reservation line.

“It’s important to keep in mind that it is unreasonable to include language covering Internet offerings,” Dunn says. “The hotel does not control the Internet rates, many of which are offered by wholesalers such as Priceline.com.”

The attrition clause should state that all rooms sold to your attendees would be credited toward any attrition fees regardless of the rate paid or method of reservation. That way, you will even receive credit for those rooms reserved through Internet wholesalers.

Terms to Know

CUTOFF DATE
This is the date that the hotel releases your room block back to general inventory, typically 21-30 days prior to arrival. Hotels may blind cut your block, meaning they may look at your meeting history and internally hold fewer rooms than your minimum stated block. You should consider adding a damage clause to protect you from blind cutting.

FORCE MAJEURE
The French term is defined as a “superior or irresistible force.” The purpose of a force majeure contract clause is to protect the parties in the event that a part of the contract cannot be performed due to causes which are outside the control of the parties and could not be avoided by the exercise of due care. Typically, force majeure events include Acts of God, superseding governmental authority, civil strife and labor disputes.

In the world of meetings, the force majeure clause was catapulted into the spotlight following the events of September 11, 2001. Since then, the force majeure clause has become the topic of much debate centered around: the listing of calamities that could occur, the standard of impact such a calamity has to have on a party’s performance in order to excuse such party from performing the contract, and the net effect if such party chooses to perform the contract despite force majeure.

INDEMNIFICATION
To indemnify means to guarantee against any loss or damage that another might suffer. Indemnification provisions in contracts are used to protect both parties against the negligent acts of the other. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft and flooding, which are specified by the terms of the contract between the company and the insured. Cancellation policies can be purchased for meetings but may not include everything. There are earthquake exclusions in California, snow exclusions for northern cities and hurricane exclusions in Florida. In these cases, special coverage programs may be available, such as Florida’s complimentary Cover Your Event Insurance for events scheduled during the traditional height of the hurricane season. Also, diseases such as SARS are no longer covered by insurance, so planners are advised to include a communicable disease clause in their contracts.

LIQUIDATED DAMAGES
When the parties to a contract agree to the payment of a certain sum as a fixed and agreed upon satisfaction for not doing certain things specified in the agreement, the sum is called liquidated damages. Liquidated damages are used when the parties are unable to calculate the actual amount of damages. To be enforceable, the damages amount must be reasonable and they must not constitute a penalty, i.e., give the party more than they would have received had they performed the contract.

REQUEST FOR PROPOSAL (RFP)
A Request for Proposal is not a contract. To be a contract, there must be an offer made and an acceptance of that offer. RFPs are considered to be invitations to make an offer. What comes in response to the RFP, such as a contract issued by a hotel, is the offer. If the group accepts the offer on the terms it was made, it becomes contract. Any change to the terms, e.g., lowering the room rate or increasing the room block, constitutes a counter-offer that must then be accepted by the hotel to become a contract.