It feels great to negotiate concessions as part of an event contract. Concessions, by definition, are a contractual agreement where one party provides something of value to the other party in exchange for something else. In the case of the events and meetings industry, one typically sees concessions offered in a venue contract, in recognition of the event host choosing the venue to host its event.
Venue contract concessions can be wide-ranging and are prioritized differently for each event. Examples can include:
- Complimentary guestrooms
- Complimentary or reduced-rate meeting space
- Free WiFi
- Discounted parking rates
- Complimentary shuttle service
Concessions like these can save event hosts money and make event planners look like rock stars.
However, planners need to know when the venue has the right to revoke contingent concessions – and when concessions are earned. Planners must be astute to the nuances in contract language and negotiate the best scenario for their event.
What is typical in a venue contract?
In negotiating hundreds of venue contracts with my clients, it is most common to see a scenario similar to the following one taken from an actual Canadian hotel contract.
In addition to including attrition clauses for both guestrooms and food and beverage – the following language was included in reference to a list of concession items: Hotel will provide the following concessions if at least 90 per cent of the minimum guest room revenue is received and at least 100 per cent of the minimum food and beverage revenue is received.
Let’s take this apart.
- The hotel’s attrition clause in the contract assures the hotel its full monetary expectations from both revenue sources (guestrooms and food and beverage) if the event fails to meet its numbers.
- The hotel’s concession clause language allows the hotel to revoke the concessions if the event host does not meet the performance markers of 90 per cent guestrooms and 100 per cent food and beverage.
When there is an attrition clause in the venue contract, how is this language about concessions acceptable to the event host?
Earned contract concessions
The act of paying attrition on guestrooms or food and beverage or both should the situation require it – makes the venue whole in terms of the monetary amounts that the venue was expecting from each revenue source had the event host fully performed the contract. Therefore, the performance of the contract is at 100 per cent for the revenue source(s) in question, and there should be no restrictions on the application of concessions. These concessions have been earned by the event hosts and should be delivered by the venue as pre-negotiated.
Contingent contract concessions
If the event host has been offered a venue contract whereby the venue has waived its right to collect attrition – or the event host has been able to negotiate attrition out of the contract – then it is appropriate for the venue to make concessions subject to performance. It is only good and fair business that event hosts need to meet minimum performance measures to unlock the pre-negotiated concessions.
So to all event hosts and event planners, the bottom line is this: When your venue contract includes an attrition clause or clauses, please negotiate that the concessions are not to be discretionary or based on performance. Please negotiate language that indicates that concessions are automatically delivered – you have earned them!