How to get the best performance from performance clauses
I get a lot of questions about negotiating contracts with hotels. Among the more popular is around “out clauses” for performance – the contract language that determines what happens if a hotel doesn't provide the level of service and product expected.
Crafting a workable clause takes just a little bit of effort, and if done right, will lead to a more productive relationship with your hotel partner and ultimately a better executed meeting.
... and they lived contractually ever after.
Crafting the prenup – getting both parties to agree
I've seen my share of out clauses that try to do too much, leaving big holes around expectations and ultimately ending with a very difficult negotiation with the hotel. One big reason for this is the general lack of specifics that define what is – and isn't – good performance. More importantly, just using the words “out clause” can set hotels back on their heels a bit.
So, here are some tips to make your contract and hotel “perform” to your expectation.
Tip 1: Change “out clause” to “performance clause”
Everyone makes mistakes, and you don’t really want your hotel thinking that you’ll fire them at the first sign of an error. Every successful event is a partnership, and hotels are far more likely to agree to terms when they know that both sides are working toward the same goal. Some tips to establish your performance clause:
- Define the goal: If you do a post-event survey, you may want to agree on a minimum rating that would define overall success – specifically the parts of the survey the hotel can control.
- Define those points that you believe make or break a program: Timeliness of events, check-in, guest room readiness, etc. Every group has its own hot-button issues; make sure that they’re captured here.
- Set some measurements around each. A great place to start is by asking the hotel for their own standards around each point. This “brings them to the table” and helps guide the discussions. Plus, you might be surprised how highly accountable they are to their own performance.
Tip 2: Hold a Nightly Debrief
Set a time at the end of each day to discuss the specific “Hits and Misses” for that day with the Convention Services Manager or Hotel Manager. (Hits are things the hotel did well, and misses are areas for improvement.) This should be a mandatory meeting and should be scheduled well in advance of your arrival to give the hotel leadership ample time to clear any conflicts. Tie those hits and misses to the specific items in the performance clause. Covering this ground each day helps the hotel leadership quickly adjust and deliver better for you the very next day. This meeting is the glue that holds the performance clause together and ensures accountability.
Is a performance clause right for every contract? That depends. Most often I see it with first-time or multi-year agreements where a group returns year after year. But that doesn't mean you can’t include portions of this strategy in every contract.
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