Good news: The outbreak of Covid force majeure cancellations and postponements that plagued the industry in 2020 did not lead to a rash of precedent-setting lawsuits. Most meeting planners found ways to move ahead, even if there were some tense moments and damages paid. Now, the question is how to build contracts moving forward.
Phoenix-based hotel attorney Lisa Devlin sat down for some rapid-fire questions about what is and isn’t working today and offered her prescription for a win-win solution to trading contract clauses.
“It’s a big deal,” Devlin said of the struggle to share risks around a possible pandemic redux. Following are no-go conversations and possible win-win alternatives.
Covid Cancellations
No-gos: “Everyone wants to include epidemics in clauses that say they can cancel without paying any damages if pandemic conditions change, and so far, hotels are saying, ‘No’,” Devlin reported. “Don’t put pandemic in your force majeure clause because we are still in the middle of it. That doesn’t help you. Negotiate a clause about what will make an event financially important to go forward and negotiate based on that.”
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Win-win: If a group has concerns, call the hotel and talk about it. When groups cancel at the report of a Covid surge even if the hotel is open, then they are left fighting over who should pay. Instead, talk about concerns of people canceling and negotiate at what point it doesn’t work. A lot of times it is a business issue and not a force-majeure issue. “Bad attendance is not a force majeure; it is attrition,” said Devlin.
She suggested including a clause that says if a government restriction is in place within 60 days of an event, then the company can be excused.
Fee Negotiation
No-gos: Dropping all fees. Because it is a seller’s market right now, a lot of the urban fees and resort fees that were in place before the pandemic may be harder to negotiate away. “I’m seeing higher rates and know that is hurting groups, but there is a lot of demand. Hotels are taking a stricter approach than a year ago.”
Win-win: Some of the new fees, such as administrative or protocol fees, might be easier to justify removing, as they could be considered part of the cost of doing business.
Staffing Levels
No-gos: Clauses calling for “standard staffing” levels. That is difficult to define. Same with stipulating that staff must be “fully trained.”
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Win-win: Be specific about the staff-to-attendee ratio. “I have seen hotels give financial compensation when lack of staff, including an event coordinator who quit the day before the event, led to poor service,” she said.
Hologram ‘Em In
No-gos: Get out of damages clauses around key personnel or keynote speakers not being able to attend due to flight delays or other problems, as that would require canceling the entire event on a moment’s notice.
Win-win: Do itemize the essential elements and ask for a discount on a big screen to hologram the person in or some other accommodation.
Built-in Flexibility
No-gos: Renegotiating attrition the week of the event when it would be difficult for the hotel to resell those rooms in some parts of the country.
Win-win: Build in flexibility dates to six or nine months out to review, and release to accommodate uncertain demand.
Political Cancellations
No-go: Political cancelation clauses. “It is not reasonable to expect a hotel to let your event go because of something the legislature did,” Devlin said.
Win-win: “If politics is a big deal to your group, go to a safe place or cut a deal with the hotel, so if a group has to move because of politics, they will pay half the cancelation fee,” she suggested.
