Clause:

All room revenue is commissionable at 10 percent to Smith Meeting services. Hotel agrees commission will be paid to Smith Meeting services within 30 days of settlement of the group master bill.

Effect:

A simple clause like this can (and has) put a hotel in a very awkward position. This standard contract clause can get complicated if the group discontinues its relationship with the independent/third-party meeting planner, Smith Meeting Services, before the meeting.

Groups and independent planners need to clearly understand at what point the independent planner's 10 percent commission is earned. Is it earned at the time the hotel contract is signed? Or only after the meeting dates have come and gone? The commission is payable to independent planners for specific services; what those services are should be spelled out in the contract between the group and the independent planner.

The hotel is contractually bound to the party with whom it executed the contract, so most hotels will honor a request by that signing party to change who gets the commission. If the group representative signed the contract, the group may request that it or a different independent planner get the commission. If the contract is signed by the independent planner, the hotel is most likely to pay the commission to the planner, regardless of changes in the relationship between the planner and the group.

If the group intends to retain the right to unilaterally change the party to which the commission is paid, the group should discuss this with the independent planner and add contract language to this effect.

Tyra W. Hilliard, Esq., CMP, is an educator, consultant, and lawyer on legal, risk management, and ethical issues. Visit www.tyrahilliard.com or contact her by e-mail at tyra.hilliard@gmail.com.