Partner with suppliers on next steps
The impact that the 2017 hurricane season had on the meetings and incentive industry in the United States and the Caribbean is deep and lasting. It’s now clear that more than a few destinations in the Caribbean were hit hard enough that their hotel and resort inventory won’t be able to recover in time to fulfill the group business that was on their books for late 2017 and early 2018.
For instance, Jack Ezon, a divisional president at Ovation Corporate Travel, noted that his team was already dealing with $18 million in displaced Caribbean business less than two weeks after Hurricane Irma swept through, and working to move that business to other islands. And by late September, several cruise lines had announced the rerouting of winter itineraries from some Caribbean ports to Mexican ports. Overall, the incentive business of early 2018 will be significantly affected by this year’s storms.
But that’s not all. Irma also left a path of disruption in parts of Florida and South Carolina. Hurricane Harvey disrupted events and properties in Houston. This will likely squeeze the availability of hotel and meeting space in those destinations for the next few months.
The storms also had a ripple effect on event business in destinations that were not directly hit. One example: Insurance company New York Life postponed a meeting in Austin during Harvey because that city needed to accommodate evacuees from the Galveston and Houston areas. But New York Life did contribute to the relief effort, donating 100 of its contracted guest rooms at Hilton Downtown Austin, plus meeting space and food and beverage at Austin Convention Center for evacuees and volunteers. New York Life also kicked in $500,000 for aid organizations.
On the flip side, many suppliers in affected destinations worked with their group clients to minimize the financial effect of the storm on their events. The American Planning Association’s Florida chapter held its annual conference in Daytona Beach in early September, but negotiated with Hilton Daytona Beach Oceanfront Resort to waive charges for early departures ahead of the storm.
Lessons for the Future
The force majeure clause (French for “superior force”) in most event contracts releases a group from its obligation to a property over the contracted dates if a natural event makes arrival impossible or triggers a declared state of emergency. But the host organization still has some decisions to make about the future of that meeting.
Kathy Gregoire, North American travel manager and executive coordinator for DSM Functional Materials in Elgin, Illinois, had a mid-September program in Charleston cancelled due to a state of emergency declared ahead of Irma. “The property asked if we could change the dates to early November and actually offered us a better rate because it was a slower time for them,” she says. “We could have just walked away, but of course we’ll do what we can to stay with that property.”
If, however, a meeting is time-sensitive and must be held before the property or destination is able to accommodate it, the organization could hold it elsewhere. John Washko, vice president of exhibition and convention sales for Mohegan Sun and a member of HSMAI’s Americas executive committee, says that properties picking up storm-affected business should not try to take advantage of the situation.
“If we can match the rate a group was going to pay at the original property, we should do it because the client is already budgeted for that event,” he says. “People remember if you go the extra mile for them, or if you don’t.”
From the other side of the table, Gregoire expresses the same sentiment: “In that situation, I would try to promise the original property that we’ll come there with another meeting as soon as we can.”
What about instances where a meeting isn’t set in a destination that’s closed due to a natural event, but the meeting suffers significant attrition due to a natural event elsewhere, such as in an airline’s hub city?
“The host organization has to run the numbers and see if it’s best to simply cancel the meeting on very short notice and pay the cancellation fee, and then work with the property to reschedule and perhaps get some of that cancellation fee applied to the meeting,” Gregoire says. “For many meetings with larger budgets, though, remember that there’s also the session speakers, the AV company, the special-event venues and other entities who are owed money, too.”
Alternatively, the group could hold the meeting and try to negotiate down the attrition fees that are due to the host property. In such cases, it’s also possible to add technology to the event, which allows people who did not make it on property to participate remotely in some or all sessions.
“If a client tells us that attendance is going to be way off because of a storm or some other incident, we work with them as best we can and maintain a long-term relationship,” Washko says. “There should be a spirit of partnership rather than a sense of threatening, even if the contract terms are clear.”
