Why it's Important to Include Renovation Plans In Your Hotel Contract

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 concerning any particular legal matter.

In this video, Sean Whalin (Co-founder and CEO of HopSkip) sits down with Barbara Dunn (Partner at Barnes & Thornburg LLP, representing groups) and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) to discuss why it's important to include renovation plans in your hotel contracts and how to approach this topic with your hotel partner.

Why it's Important to Include Renovation Plans In Your Hotel Contract:

TL;DR:

• It's suggested to address property renovation plans and details in hotel contracts, whether it's a short-term or long-term booking.
• Ensure there is notice, discussion, and an opportunity to do something about property renovations in the contract language.
• Include a clause in the contract that requires the hotel to inform the group once they know what will happen with the renovations and how it will impact the event.
• Don't rely on a clause that automatically gets the group out if there's any renovation, as hotels are always planning renovations and may not know when or if it will happen.
• Discuss with the hotel what they're prepared to do to address potential disruptions caused by property renovations. Work with the hotel to create a contingency plan and a solution that works for both parties.
• Ensure that the hotel informs the group as soon as possible about any potential disruptions caused by property renovations.
  
  

Video Transcript:

00:00 Sean Whalin

We're seeing an increase in the number RFPs sent on the Hopskip platform.  Specifically asking hotels for renovation plans or details for any upcoming renovations. Why is it essential to ask about renovation plans and to document property renovation details in hotel contracts?

00:30 Barbara Dunn

I'll say it's important because construction and renovation can happen anytime, and it's a good thing. We all understand it's a good thing. We all understand that hotels having money to do projects and work is a good thing, a bad thing if it happens with the groups, with their in-house. That said, it's a contingency like any other. To be prudent planners and protect your organizations, doing what's in their best interest should always address the context in which there are plans underway or discussions underway, whether those are fully formed discussions or finalized or whatever the case may be or budgeted, or they have funding for the groups want to know about them. The last thing we want is an unhappy surprise. We've already talked about the transparency issues today, so it is important to discuss them. It is important to document it.

01:21 Barbara Dunn

What isn't necessarily important all the time is that you have to win the battle on your construction clause versus the hotel. At the end of the day, I want to know the important things that will be addressed. I want to know that we'll be made aware of the construction as soon as it might be finalized or put in place. We'll want to know what will be done about it, so to speak, in terms of resolving potential disruptions and the rest. We'll want the ability on the group side to decide how that might impact our meeting and how it might impact our ability to stay. Those are the essential components to me, and I think plenty of clauses exist. Lisa, you and I have worked together over the years on negotiating these clauses and having them in place.

02:07 Barbara Dunn

The troubleshooting comes into play when the thought is that there's no construction, and then something comes up. And again, we all understand that happens. When it happens, and the group finds out about it shortly before its meeting, the likelihood of its negative impact is certainly significant. That is critical to ask the question. Also, again, I'd say on the planner side, the group side, if the answer is, oh, no, we're not going to be doing anything else, don't think you can take that off your radar screen. You'll have to monitor it and ask and check, and that's okay. You'll want to troubleshoot it early to avoid a problem. I think, Lisa, from my standpoint, we have to assume whether the hotel is new, old, or everything in between, they might need construction or renovation. Addressing it at the contract, to me, whether it's a short-term booking or longer-term booking, is one of the critical elements that I think from the hallmarks you and I talked about over the years, notice, discussion, right, opportunity to do something about it.

03:12 Barbara Dunn

That means the language is flexible as long as those issues are addressed.

03:18 Lisa Sommer Devlin

I agree with Barbara. The thing that you have to understand is that every hotel is always planning the renovation. Every hotel is always planning a renovation. Just know that because in the hotel business, if you are not thinking about what you need to do to upgrade your facilities, keep them refreshed, and keep them nice, then your hotel is going to fall into one of those situations where the customers are saying, well, there's a deterioration in quality. We don't like your facility anymore. The problem is the fact that they're planning doesn't mean they know they're going to do it. I have had so many situations where a hotel was planning renovations for ten years before they could get the funding from their owners, before they could get the permits, before they could sign the contracts, all those kinds of things. I have also had situations where a hotel discovered a week ahead of time that it would happen.

04:08 Lisa Sommer Devlin

I see those construction clauses that say, if there's going to be any renovation, we cancel. That's not the solution. As Barbara said, you don't want a clause that says you must tell us if you're planning any renovation because they are, but they don't know when or if it will happen. NSO what you want, as Barbara says, is a clause that says once what's going to happen, you will tell us. You will tell us how it will impact our event, and then we will discuss what you're prepared to do as a hotel to address this. I will tell you that when hotels undergo renovations, they are prepared to do a lot to keep your business on the books. NSO, the clause that says if there's any renovation, we get to cancel, doesn't help you as a group because now you're scrambling to find a new place at the last minute.

04:56 Lisa Sommer Devlin

You may not get the facility you like; you may get different pricing. What does help you is to sit down with the hotel and say, what will you do for me? Usually, they are willing to do quite a bit. Now, there are certain circumstances where, of course, if the ballroom you will use is torn up, you will have to move. You need to know that as soon as possible. My hotel friends are very optimistic and always want to wait and see if it will all work out. I always tell them, don't DMO that, tell them sooner rather than later. Come up with a contingency plan. You can say our anticipated end date is October 1, and if by September 1 we think we'll be late, we'll let you know things like that.

05:41 Lisa Sommer Devlin

Please don't wait until October 1 to say it won't happen. The hotels are responsible for telling you about these things but don't just have clauses that automatically get you out if there's any renovation because if they're renovating the 15th floor. Your rooms are on the first floor, so that should be a basis to cancel. I know I keep beating the same drum today, but it's all about communication and working together to find the best solution for both parties.

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.