Preparing to Navigate and Negotiate the Pitfalls of the Venue Contract
When planning a live event and trying to budget effectively, meeting planners may not realize what they can do to prepare on the front end to save time and money. During the planning process, companies commonly talk about equipment discounts, shipment costs, providing local labor and/or using in-house audiovisual to save money for the overall event budget. Although important items to consider, these types of savings occur much later in the overall planning, after the most important step in the process has already transpired – the execution of the venue contract.
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. Caveat emptor, or buyer beware, is a term I often use, and it is extremely fitting when it comes to signing the venue contract for an 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. The live event industry is seriously lacking in education for the meeting planner to help navigate and understand these pitfalls during the contract negotiation. Meeting planners need to know the red flags to look in the contract and how to address them, and once they learn to deal with these pitfalls, the event has a much greater chance of economic success.
During this process, it is important to understand that 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 holds the key to this source of revenue for the venue, and should use this to their advantage. When searching for a venue, the meeting planner is in an excellent position at this time to address the points of negotiation within the contract.
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. Before signing the contract, it’s extremely important to do the homework and 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 using 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. Hidden charges can exist in many forms, and it’s imperative to identify these charges up front and negotiate before putting ink to paper.
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: Often times, the event production company is brought into the planning process after the venue contract has been signed, with all the terms locked in place. Use the experience and knowledge of the production company, before the contract is signed, to review whether the terms will have any impact on their ability to hire quality providers at reasonable pricing for the event.
In addition, if you are planning a meeting and find yourself in the midst of a bad contract deal, find out who is in charge of the negotiation. Help them understand these points of negotiation, and how important they are to executing a successful event in the future. In some cases, the person negotiating the deal is not the person planning the meeting, and may not realize they have flexibility in negotiating the contract.
Simply put, an educated buyer has more options. Know before you sign. It will be much more cost effective to prevent these contract pitfalls from defining the outcome of your show than to deal with remedying them after the fact. 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.
