case study provides an opportunity for hospitality students and pro- Total Room Nights: 2100

fessionals to practice negotiation skills. The teaching note emphasizes PADD’s Room Rates: Based on PADD’s total program require-
the importance of identifying each party’s interests, creating alterna- ments, the Hotel confirms the following room rates for PADD’s
tives and options, understanding the concept of the best alternative to attendees (“PADD Rates”), excluding taxes:
a negotiated agreement (BATNA), as well as commitment. Single: $175.00

Scenario Double: $175.00

Additional Person: $20.00
Parents Against Drunk Driving (“PADD”) and El
Camino Lodge and Golf Resort Hotel Junior Suites: $250.00
Master Suites: $300.00
General Information for both Parties
All room rates are subject to applicable state and local
Strategic Meeting Planners, Inc. (“SMP”) is a meeting management
taxes (currently 15%) in effect at the time of check-in.
company that plans, organizes, and manages meetings, conferences,
and conventions throughout the United States and other parts of Commission: The Hotel agrees to pay PADD’s agent, SMP, a
the world for its clients. SMP offers its clients a full array of meeting- commission of ten percent (10%) on all used room nights.
management services, including strategic planning and budgeting; Complimentary Rooms: PADD will be entitled to one (1) com-
site selection; contract negotiations with hotels and other vendors; plimentary room night for every fifty (50) revenue-generating
marketing; accounting and other financial services; managing revenues room nights occupied. If Junior or Master Suites are occupied,
and disbursements; managing the registration process; and manag- they will be rated on a daily basis as three (3) units per night
ing the respective event onsite. SMP’s clients range from Fortune 100 and four (4) units per night, respectively.
companies to non-profit organizations, such as the American Kidney Cutoff Date: Reservations by attendees must be received on
Association and the International Society of Toxic Tort Defense Counsel. or before one month before the first day of the conference
One of SMP’s clients is Parents Against Drunk Driving (“PADD”), a (“Cutoff Date”). On the Cutoff Date, the Hotel will review the
non-profit organization with over 20,000 members comprised primar- reservation pickup for the Conference, release the unreserved
ily of victims of drunk-driving incidents and their families and friends. rooms for general sale, and determine whether it can accept
PADD’s primary mission is to reduce the number of drunk-driving inci- reservations based on a space-and-rate-available basis at PADD
dents by (1) raising awareness of the dangers of drinking and driving Rates after this date. The release of rooms for general sale fol-
through education and public service announcements and (2) lobbying lowing the Cutoff Date does not affect PADD’s obligation under
for legislation that would (a) provide harsher penalties for drunk-driving this Contract to use guest rooms.
offenders and (b) increase the fines and potential civil liability for estab- Rooms Attrition: The Hotel is relying on PADD’s use of 2100
lishments that sell or serve alcoholic beverages to minors or persons Total Room Nights. PADD agrees that a loss will be incurred by
who are obviously intoxicated. PADD also provides a support network the Hotel if there is a total reduction greater than fifteen per-
for those who have been victimized by drunk-driving incidents. cent (15%) in Total Room Nights actually used.
Three years ago, PADD decided to hold its Annual Conference (the If the room nights actually used by PADD are less than eighty-five
“Conference”) on three days of this year (the “Conference Dates”) [on a percent (85%) of the Total Room Nights, PADD agrees to pay, as liqui-
Wednesday, Thursday, and Friday one week before this negotiation], at dated damages and not as a penalty, the difference between eighty-five
the El Camino Lodge and Golf Resort Hotel (the “Hotel”) in Palmtreal. percent (85%) of the Total Room Nights and PADD’s actual usage of
PADD estimated that at least 700 people (excluding their spouses or any rooms, multiplied by the average PADD Rates for single/double rooms.
other traveling companions) would attend the Conference. After some At PADD’s request, SMP also contacted the Shooting Star Talent
negotiations, PADD, through the efforts of its agent, SMP, entered into a Agency (the “Talent Agency”) to see if one of its clients, Bart Napier,
contract with the Hotel (the “Hotel Contract”) providing in pertinent part: was available to deliver the keynote speech during the opening din-
Guest Room Commitment: The Hotel agrees that it will pro- ner of the Conference. Mr. Napier was formerly a star quarterback with
vide, and PADD agrees that it will be responsible for using, 2100 the Manisota Express of the Global Football League and founder of
single room nights as follows: Athletes-for-a-Higher-Calling. Mr. Napier is now in great demand on
Wednesday 700 the professional speaker circuit for his inspirational speeches on the
Thursday 700 importance of making good decisions in life, taking responsibility for
one’s actions, setting good examples for our youth, and using the trag-
Friday 700

32 Volume 6, Number 3
edies, failures, and other disappointments that individuals occasionally to meet its room commitment of 2100 room nights under the Hotel
experience in life as motivation to make positive impacts on society. Contract by 500 room nights, and since the 1600 room nights actually
Mr. Napier was available on that date to speak at the Conference. used was less than eighty-five percent (85%) (1785 room nights) of the
SMP told the Talent Agency about PADD, its members, and its mission. Total Room Nights for which PADD was obligated, the Hotel was en-
SMP also gave the Talent Agency some general ideas of what the speech titled to recover liquidated damages in the sum of $32,375 (1785 room
should convey. SMP and the Talent Agency negotiated a contract, which nights minus 1600 room nights = 185 room nights times the $175
PADD and Mr. Napier executed three years ago (the “Speaker Contract”), PADD Rate) under the Hotel Contract’s attrition clause. With PADD’s
shortly after the contract with the Hotel was signed. consent, SMP forwarded this letter to its outside counsel, who will rep-
The Conference began as planned, and SMP was happy to report resent PADD in this matter. Lawyers representing PADD and the Hotel
to PADD’s Board of Directors during their meeting that afternoon that have contacted each other, and they have agreed to meet in Palmtreal
they had over 800 registrations for the Conference and appeared to as soon as possible to try to resolve this matter.
meet their room commitment at the Hotel. Under the applicable state/provincial law, a provision in a con-
During the opening dinner that evening, Mr. Napier delivered a tract liquidating the damages for the breach of the contract is valid
riveting and inspiring speech that drew a standing ovation from those unless the party seeking to invalidate the provision establishes that
in attendance, and he stayed well after his presentation to mingle with the provision was unreasonable under the circumstances existing at
the audience, sign autographs, and have his photograph taken with the time the contract was made. If a party succeeds in invalidating a
PADD’s Board and other members in attendance. liquidated damage provision, an aggrieved party may nevertheless
recover any actual damages that it can prove, subject to any defenses
Afterwards, Mr. Napier retreated to the Hotel lounge to “catch-up”
that may otherwise be available to the opposing party.
with two players from Manisota’s championship team who now reside
in the Palmtreal area, Jimmy Beam and Tommie Collins. According to The applicable state/provincial law contains a new “dram shop”
witnesses, Mr. Napier and his friends drank tequila shots with beer statute, which provides that “any person who serves or sells an alcoholic
“chasers” until closing. At one point, after Mr. Napier stumbled into a beverage to an individual who was obviously intoxicated to the extent
cocktail waitress and caused her to drop her drink tray for a second that he or she presented a clear danger to himself or herself and others,
time, the manager had to ask Mr. Napier if he would kindly refrain from shall be liable for any damages caused by such intoxication.”
wearing his table’s decorative centerpiece as a helmet and re-enacting For purposes of this negotiation, assume all amounts mentioned
his famous “bootleg” touchdown run from the championship game. are stated in U.S. dollars.
The next morning, PADD members were shocked to read the
Discussion Questions
headline on the front page of their complimentary copy of the Palm-
1. Identifying relevant issues and subject matter for negotiation.
treal Tribune provided by the Hotel: “Football Star Arrested for Drunk
2. Identify the interests of each party prior to the negotiation.
Driving After Delivering Keynote Speech for PADD.” According to the
3. Strategize to create options and/or alternatives.
article, Mr. Napier had been arrested for suspicion of “driving while
4. What is PADD’s BATNA?
intoxicated” at 2:30 a.m. as he was turning from the Hotel’s parking
5. What is the Hotel’s BATNA?
garage onto the city’s main thoroughfare, and a subsequent breatha-
lyzer test indicated that his blood alcohol content was more than three
times the legal limit allowed under the applicable state/provincial law.
Outraged, 250 of the attendees staying at the Hotel immediately
packed up their belongings and checked out of the Hotel, refusing
to pay for the next two nights of the Conference. Disgruntled attend-
ees also began calling the Conference’s phone line, which was being
monitored by SMP, demanding that their registration fees be refunded
and threatening to cancel their memberships in PADD. The registration
averaged $250 per registrant, which included a ticket to the opening
dinner. Additional tickets for the opening dinner sold separately at the
door for $50. PADD’s annual membership dues are $200.
On the Monday following the close of the Conference, SMP
received a facsimile from the Hotel advising that PADD had failed

Journal of Hospitality & Tourism Cases 33