Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: June 22, 2004

Consider this sleep-losing scenario: A year before your annual meeting, you learn that the convention center doesn’t have all the space on hold that you thought they did. (Often times convention center contracts are signed within 18 months of an event occurrence.) You can't hold the meeting without using the center but you face enormous cancellation charges if the hotel contracts that you labored to put in place have to be canceled. With luck, you'll be able to work something out that will minimize your liability, and maybe you'll even be able to hold the meeting, but what can you do to prevent this from happening?

To protect against this nightmare, groups happily embrace a contractual Unavailability of Facilities clause. Here's a sample clause for hotel contracts:

Unavailability of Facilities Other Than Contracting Hotel
Confirmation at Hotel is contingent upon the [FACILITY NAME] (“Facility”) being available for Group’s use over the meeting dates. If for any reason the Facility is not able to provide the required facilities to Group, then Group may terminate this contract with written notice to Hotel without liability as long as such notice is taken within 30 days of notification of non-availability or limited availability from the Facility.

Most hotels find this kind of clause acceptable since they understand the requirements of the meeting. We are pleased that such a clause has been approved in all of our major chain template contracts. One chain agreed to it but only with an interesting twist. The hotel would pursue damages against the center, acquiring those rights from the group. The hotel would thereby recoup some lost revenue and in return release the group from cancellation charges it would owe the hotel.

Acceptance of the Unavailability clause is more problematic in the reverse- if the convention center is asked to allow cancellations if any of the hotels are unavailable. Convention centers argue that have no control over whether or not a hotel is available and they cannot afford to lose the revenue over an issue they can't control. Acceptance is more agreeable if the clause is limited to certain size hotels (say, primary hotels using 500+ rooms on peak), a time limit is included, and/or cancellation is restricted to events of Force Majeure at the hotel(s).

It is in the best interest of all parties to confirm all of the key facilities for a large meeting package during the same time frame.

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