Good point, Olivant! It could be that Michael was testing Fredo. But a more likely explanation, IMO, is that, as we learned later, Fredo's usual assignment was to "run some Mickey Mouse nightclub." We also saw that he ran a brothel. And when Michael asked Fredo to "show them a good time," he replied, "My specialty, right?" So I think Michael expected his brother would know how to "entertain" important guests.