Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: June 30, 2003

It is often difficult to negotiate changes to indemnification and other legalese in a convention center lease. Usually the terms are one-sided in favor of the center and, naturally, groups often request reciprocal indemnification. It seems reasonable to hold each party responsible for its own negligence, so why are centers less flexible than hotels? Ken Fischang*, who has worked at two convention centers, helped provide the following answers:

Most centers are less flexible because they are owned by governments, and changing official government language is difficult. Also, most centers operate at a loss. They exist to draw business to hotels, which generate tax revenue. Centers do not carry liability insurance because it is too expensive and because centers offer only function space that has specific uses (meetings, meals or exhibits). The user is required to buy the insurance and cover all parties’ liabilities. Hotels, which are privately owned and insured (a hotel MUST carry liability insurance), can afford to be more flexible. Center leases - and licenses, which are more restrictive than leases - are written by attorneys in extreme language to deter litigation and to give the center more control.

There are two bright spots in the picture. Relationship counts because the more business potential a client represents, the greater the chances that some of the less flexible issues can be negotiated. Sales people at the centers often have clauses in stock that have been approved by the city attorneys with "levels" of strength. It can’t hurt to try to negotiate for less stringent terms. Also, centers should be more negotiable now due to supply and demand. About 10 million square feet of exhibit space has been added in the last three years. See this link for more information: http://www.chicago.il.org/CONNECTIONS/competitive_analysis2003.html. Overall, the climate is right to try to win the terms you want.

*Kenneth J. Fischang, CHME, CMP, is Executive Director and Chamber Vice President of Tourism & Marketing in Kalamazoo, Michigan

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)