Source: Robin Roth, Senior Contracts Editor
E-Specs: August 8, 2006

Groups have another cause for worry when a hotel undergoes a change in ownership - the specter of possible construction and remodeling. Of course even without a change in ownership, older properties are often in need of repairs and updating in order to remain competitive. How can your group be protected against disruption because of construction? 

The further out the meeting is booked, the more important it is to include terms in the hotel contract that protect the group against any adverse effects of renovation or remodeling. These are some important points that should be covered in the clause:

• Requirement that the hotel notify the group promptly of any plans for construction or remodeling to be performed prior to or over the meeting dates.
• Warranty by hotel that any such occurrence will not interfere in any way with Group’s use of the Hotel.
• Allowance for the group to be able to terminate the contract if it determines that construction or remodeling will interfere with its meeting.
• Time limit provided on group's ability to cancel after it receives notice of unacceptable construction or remodeling. This serves to fairly balance the needs of the group and the hotel. 

Challenges from the hotel may entail further negotiation. Edits that could narrow the terms might include a requirement to notify group of only "major" construction plans or a "reasonable amount of time" rather than "promptly.” More importantly, if the hotel asks that "materially" to be added before "interfering with the group's use," the group would be substantially more limited. "Materially" could be interpreted to mean that the group could not hold the meeting at all rather than have its meeting merely disrupted or disturbed. Also, if the hotel requires that the decision to cancel be made "mutually," arbitration may be required to resolve the matter. 

A strong and comprehensive clause covering the what-ifs if the hotel undergoes renovation will offer protection worthy of negotiation.

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