Assignment 3 Hospitality Contracts
Problems
1. ABC Corp decides to hold its 2024 conference at the H–Town Hotel. The attrition clause and related terms of the contract between the parties follow:
Event Dates: January 5 – 6, 2024
Guest Rooms: This Agreement ABC Corp (“Customer”) and H–Town Hotel (“Hotel”) applies to the following block of guest rooms (the “Room Block”):
Jan. 5 Jan. 6 Totals
Traditional Guestroom 70 70 140
Attendees Room Block Total 70 70 140
Total Guest Room Night Commitment: Customer’s total Guest Room Night Commitment is 140.
Rates: Hotel will provide the confirmed guest room rates below for the Room Block (the “Rates”):
Attendees Room Block:
Rooms Single Rate Double Rate
Traditional Guestroom $110 $110
Attrition:
ABC Corp (“Customer”) agrees a loss will be incurred by Hotel if Customer’s actual usage is less than 80% of the Guest Room Night Commitment.
If Customer’s actual usage is less than 80% of the Guest Room Night Commitment, Customer will pay, as liquidated damages and not as a penalty, the difference between 80% of the Guest Room Night Commitment and Customer’s actual usage, multiplied by the average group room rate, plus applicable taxes.
How much will ABC Corp owe H–Town Hotel under the attrition clause if they have 35 attendees, each staying both nights?
2. Bartender’s Association Conference at Highball Hotel. The Bartender’s Association Conference is to be held at the Highball Hotel. Some of the contract terms are as follows:
XYZ Hotel will hold the following block of rooms for Bartender’s Association’s (“Group”) use (“Room Block”):
Date Type No. of Rooms
05/24/2023 Single/Double 150
Highball Hotel will provide single/double rooms at the Room Rate of $100 per night.
The Anticipated Room Night Revenue shall be defined as the total Room Block of 150 room nights at Room Rate of $100 = $15,000*
Highball Hotel agrees to allow for a 15% reduction in the Anticipated Room Night Revenue, provided that you make a written request for that reduction between now and 60 days prior to your arrival date. At the conclusion of the meeting, we will subtract the room revenue derived from your meeting (excluding revenue derived from pre and post program stays) and the amount of any permissible attrition you have taken from the Anticipated Room Night revenue set forth above
One February 28, 2023, the Bartender’s Association delivers to the Highball Hotel a written request for a 15% reduction in the room block, which reduces the Anticipated Room Night Revenue to $12,750 ($15,000 * 15% = $2,250; $15,000 – $2,250 = $12,750).
(a) If the Bartender’s Association has 100 actual attendees at the conference, how much (if any) will they owe for the attrition fee? Show your calculations.
(b) What would the Bartender’s Association owe as the attrition fee if they did NOT request a reduction in the room block in advance.
