The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.
In this video, you'll learn how to approach if a competitor is booked at the same hotel as your group. How to navigate if a competitor is in violation of your competitor clause? How to go about adding a competitor clause to your contract at your event hotel.
Check out what Barbara Dunn (Partner at Barnes & Thornburg LLP, representing groups) and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) have to say in Legalease With the Ladies- powered by HopSkip!
Lisa: Hi, I'm Lisa Sommer Devlin, an attorney that represents hotels and resorts.
Barbara: Hi, I'm Barbara Dunn, an attorney that represents groups in connection with their meetings, convention, and trade show contracts.
Lisa: And this is Legalease with the Ladies, powered by HopSkip. In this video, we're going to talk about competitor clauses in event contracts. It's typical in the industry to see a clause in a contract that says, ‘Venue will not host any of our competitors over the dates of our event and if the venue does, then, we are allowed to cancel without liability.’ Sometimes, those clauses include a list of competitors. Sometimes, they just say, anybody in our industry. And the bottom line is, that's really not the way to go with the competitor clause. The first thing you need to think about when you're dealing with competitor clauses is why don't I want the competitor here at this time, because that's really going to drive how your clause goes.
There could be the possibility that you don't want the competitor in house at the same time, because you don't want them hearing about your secret things that you're discussing during your meeting. You don't want the competitor mingling with your attendees in the bar after hours or things like that. On the other hand, it could be that you don't want the competitor in the house at the same time because you don't want them drawing away from your meeting attendance into their attendance. A completely different scenario, and so the first thing you need to think about when you're addressing these competitor issues is, why don't I want this competitor and what do I do to protect myself from that?
If it's a competitor situation where you don't want somebody hearing your secrets, saying, I can cancel if you book these other people isn't necessarily going to help you. Because in this world of espionage and computer hacking, if your competitor wants to find out what you're doing in your meeting, there's a million ways they can do it other than scheduling an event at a hotel at the same time. Nevertheless, if you think that that's important because you don't want people mingling, you really need to have a list of stated competitors that can't be in the hotel at the same time. Naming it by industries is not a good idea, because you have to remember that the hotel has salespeople locally, nationally, potentially, worldwide that aren't going to know who isn't allowed to be at your event at the same time.
If they do make a mistake, instead of having an automatic right to cancel, then, you should have the clause say that the parties will sit down and work out whether or not it is still possible to go forward with additional security or something of that nature. Or if necessary, you can cancel. Then, on the flip side, if it's because you don't want people having events that are going to compete with your event and draw your attendees away, your first consideration should be, where am I scheduling my event? If you're worried about competing events, taking your attendees, it might not be a good idea to have your event in Manhattan because there's a hotel on every corner. Even if you eliminate the competitors from the hotel, they could book the hotel next door and still drive your attendees away.
So, maybe you wanna move your event to another place where there's less opportunity for that to happen. So, those are the kinds of main considerations you need to think about in competitor classes. Now, Barbara, I know you work with lots of trade associations. What do you do when you're dealing with these clauses?
Barbara: Lisa, when it comes to the competition and competing groups clause, certainly fall into two camps with many of the associations out there. First is that may have groups which in fact are what they would deem to be competitors. And specifically, they may have groups that are trying to piggyback on their meeting. Meaning that they don't want to be an exhibitor or sponsor but they want to draw attendees in to a hospitality function or otherwise known as the suit casing of showing their wears in hospitality space within the hotels. So, that's the first item, I think.
The second piece is a related item and that is the concept of a conflicting group. So, not necessarily competitive yet equally as problematic for groups. If there's an organization in house that is against whatever the group is doing. So, it's an animal rights group that's against a group that's in-house to deal with the food industry as it relates to animal, fats, and etc. So, whatever the case may be, there's a whole bunch of examples of course but those are important as well. So, competing groups or conflicting groups I think both are important to address. But to your point, Lisa, being as specific as possible really is key. It's difficult to say no other organization in the food industry.
Yeah, you have no idea or another salesperson has no idea that, you know, ABC company is really in the food industry. By the time everybody figures it out, it's too late. It's too close to the meeting. So, I'd focus on certainly the competing groups and the conflicting groups and I try to get my clients to really focus on those with as much specificity as they can. But then, the other point is that what if someone is booked in violation of that provision, what will happen? You mentioned the party sitting down together to talk it out to work out a resolution. I think that's a good strategy. In other cases, the group might seek to have the hotel terminate the contract.
One thing you see often in citywide contracts. So, a large association that's coming into town with many thousands of persons needing taking over the hotels. A lot of hotels will agree to include language in the contracts for other groups or folks who wanna book hospitality space over those dates to say that they're not part of the group's meeting. That if they are, if it's come to be known that they are part of the group's meeting, that the hotel can cancel without liability. I think that's really reserved for those larger city-wide meetings where we would anticipate the piggyback. Then Lisa to your point if you’re dealing in your meeting at a location where there's lots of options nearby. I think whether you try to lock it down at the hotel where you're hosting events or really try to address the issue. Otherwise, it's still a problem. And it's something that the groups often take a lot of different ways, or tacks if you will, to try to address the problem. Both in terms of competitor groups as well as those conflicting groups that groups are concerned about. Lisa, I know hotels are no strangers as well to conflicting groups and issues associated with that as well.
Lisa: I mean, we all have lots of funny stories, funny to us but not funny to the people involved where we had booked groups that turned out to be conflicting because of who they were or what they represented. But a lot of times, you'll see these clauses that say, you agree, you will not book any other group that will embarrass or conflict with our values. Well, it's like, well, you're a financial services group. What embarrasses you or conflicts with your values? You know, you really need to lock down what kinds of groups by name you're not going to look at the same time. Another thing is to be reasonable. Sometimes, I'll see these prohibited competitor lists literally be 80 names long of organizations that can't come into the hotel. And this is for an event where the group itself is only booking 20 rooms out of a 500-room hotel.
You know, it's not reasonable to prevent a hotel from booking other business simply because you're concerned about those issues. You always have to remember even if hotel doesn't book other group business. Those people can be reserving guest rooms on the internet and the hotel has no idea that they're there. So, again, a conversation is important being reasonable about picking your venue so it's some place that you can manage that competitor issue and being very forthright about what it is you're concerned about, so that you can come up with a clause to work together on those kinds of things.
And I think Barbara touched on something that I think is very important and it's not necessarily just citywide or suit casing. But having a separate clause when you've got group A that you know does not want certain things to happen and it's difficult to determine who might be falling into those circumstances. And a great example is big sports events like the Super Bowl. They'll come into a city and book a lot of hotels and they will tell the hotels; you can't book any Non-Super Bowl rooms over the same dates. And in the meantime, the hotel gets a wholesaler that says, I'm looking for a foreign travel company and it turns out that they're not being honest and they're trying to resell those rooms to people wanting to come to the Super Bowl.
If you have in all your contracts with all your other business over those specific dates, you verify that you are not booking these rooms for the Super Bowl and if you are, we can cancel your contract, that can be very helpful. That's something Barbara mentioned that I think is not used often enough and that is a very good way to manage these kinds of situations. Barbara, anything to add?
Barbara: No, Lisa, I would just say, going forward, groups should really consider both again, what groups might be competing whether they're nonprofit or for profit and really making sure that list is tight. As you suggested, there are a number of for-profit organizations, corporate organizations that have extensive lists associated with that and yet, there are some that have a very small list. So, really looking at what makes sense is the broadest way to address it. Also, one workaround here is putting in the hotel shall not knowingly book these rooms. I think often, that is a good way to sort of fence or limit the scope of a provision in order to make it acceptable for both parties. So, that's something to think about as well. And then, on the whole competing or conflicting group issue, that again is a bouncing ball certainly that could change by the moment who is or isn't conflicting.
So, I think it's important here again to keep the lines of communication open; make sure that if there is a concern about either a competing group in house or a conflicting group in house, that the group addresses that with the hotel early and often. You know, it's not just at the time you negotiate and sign the contract, every day leading up to the meeting where there's a possibility of again, a booking of a competing group or otherwise is really a day that could be used to address the issue. So, really doing the periodic check-ins, I think is a really good strategy for both the groups and hotels to manage this issue of competing groups or conflicting groups.
Lisa: I agree. Thanks, Barbara and thanks for listening to our Legalease with the Ladies video powered by HopSkip. Please leave your comments and questions below and we'll look forward to seeing you in our next video.
The information provided in this video does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information in this video may not constitute the most up-to-date legal or other information. Readers of this website should contact their attorney to obtain advice with respect to any particular legal matter.