Meeting News - August 11, 2008 - (Page 42)

chapter 1 2008 meeting planners handbook when it comes to client programs, where the sales staff might pick up an expensive dinner tab, or a show that includes sponsor events that are traditionally hosted at the hotel—this category of expenditures can be significant. But planners shouldn’t expect to have their cake and eat it, too. If you can negotiate rates and other line items by leveraging ancillary spending, you should expect some additions to your cancellation clause based on these charges, too. As for my friend, she flagged the charges based on the hotel’s expected ancillary spending and insisted upon their removal from her contract. The hotel acquiesced. In the end, she did not have to cancel, but, as all meeting planners know, better safe than sorry. Protect Your Programs From Attrition Penalties If you’re anything like me, seeing the word “attrition” in a contract instantly brings up feelings of uneasiness; it means making a financial commitment to a property based on estimated future attendance—and accepting responsibility for damages should attendance fall short. Sometimes, I have only 100 participants at my boutique conferences and trade shows, so my own attrition risk is minimal. But I do have colleagues who, like many of you, hold the reins to very large events that attract thousands of attendees. It is an inexact science, often based on past history, but if planners don’t fill their contracted room block they can face steep penalties. Understanding what’s both fair to your group and what’s enforceable by the hotel is key to coming up with an attrition clause that makes you feel comfortable. HERE ARE A FEW TIPS TO CONSIDER: Avoid agreement to the “standard” contract. Before you do anything, assess whether your program circumstances justify an attrition or performance clause. q Total room pick-up. State in the contract that all rooms occupied by your group will count toward your room pick-up—regardless of the rate paid. q Base damages on lost profit. Revenue and profit are different— attrition penalties should never be calculated on 100 percent of revenue. q Find some balance. Don’t agree to pay for attrition damages and meeting room rental unless your guest room-to-space ratio is out of balance. q Reasons To Tailor Force Majeure Clauses I remember it like it was yesterday . . . I had a program located in the southeastern U.S. in August. The group was on site when we got the weather report: Tropical storms were brewing in the Caribbean and picking up speed. Hurricane-force winds were likely to hit my coastal destination city the following day. Attendees and exhibitors were clearly concerned—so concerned that about half changed their flight arrangements and hopped on planes to anywhere just to get out of the area. Like any good planner, I sat tight and briefed my team every hour with weather reports and evacuation plans. But I also had to make dramatic, last-minute changes to my program regarding how to move forward with F&B events, room nights, ground transfers, and a thousand details. It was a nerve-wracking process, to be sure. My headquarters property was extremely accommodating, given that the circumstances were totally beyond anyone’s control. But in the middle of reorganizing my program, the force majeure clause in my contract was not exactly the first thing on my mind. I just wanted to minimize the damage to my program. After the storm passed, though, I certainly thought twice about how to protect my programs better from these kinds of unexpected events, and I got a pro to help me refine my force majeure clauses. 42 MeetingNews August 11, 2008 How often do you avoid destinations during times of year when weather may interrupt your meeting (i.e., places where hurricanes, tornadoes, and snowstorms are known to occur)? Corporate Planners Often 38.2% Always 20.8% Never 9.3% Sometimes 31.7% Association Planners Always 21.3% Never 12.1% Sometimes 30.4% Often 36.2% Source: MeetingNews survey of 400 meeting planners WHAT IS FORCE MAJEURE? A force majeure clause isn’t meant to be an “easy way out” for either party of the contract. This important contract clause addresses the very real challenges today: q Political upheaval or terrorist threats q Sudden and destructive weather (hurricanes, earthquakes, tsunamis, snowstorms) q Infectious diseases, such as SARS or avian flu q Power outages q Major strikes and labor disputes www.meetingnews.com http://www.meetingnews.com

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Meeting News - August 11, 2008

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