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In a heartbeat, the industry has turned from a buyers’ market, where hotels and other venues were eager to host all comers, to a sellers’ market, where both occupancy and demand are high. This compression makes it difficult for meeting planners to find the space they need, much less get any concessions during the negotiation process. (See also "The Tough Task of Booking a Meeting," for a discussion on how compression, staffing shortages and rising costs are affecting site selection.)
Various political issues, such as gun control and abortion legislation, also are affecting where organizations choose to meet, causing contracts to balloon with new wording. During a recent “Ask the Attorney” webinar with M&C’s longtime legal expert, Jonathan T. Howe Esq., founder of the Howe and Hutton law firm in Chicago, he gave the following advice for navigating the challenges of the current market.
Politics
Let’s say new state laws about hot-button issues have given your group a reason to seek a change of venue. If you have a “political-correctness clause” in your contract, and it specifically mentions abortion- or gun-related legislation, or any other issue that concerns your group, you’re in good shape.
But can a political-correctness clause be invoked if a law hasn’t taken effect but might? “That leaves us in quicksand, much like we had with Covid, when decisions had to be based on what was in effect at the time of the meeting,” says Howe. Contract clauses should instead specify a time frame, such as 90 days out, when the group can cancel or reschedule based on intended legislation, even if it might not be enforced at the time your meeting is held.
“Pandemic” Clauses
In a similar vein, if you want to get out of an event because disease numbers are rising (Covid, SARS, Zika, you name it), don’t write it into the force majeure clause, which only applies at the time the event is supposed to take place. Instead, you should be writing in the date by which you can cancel or renegotiate when there is the prospect that you will not get full attendance. “We need to build in the ability to make a change, when that change is in the best interests of both parties,” says Howe.
Service Levels
As hospitality jobs continue to sit unfilled, planners naturally are worried their attendees will notice a drop in the service or amenities offered at the host hotel. Are all the food outlets open? Can you get room service? As a planner, what services do you require for your participants? Put it in writing.
“We’re getting very suspicious of what service levels we can anticipate at the hotel,” notes Howe. “We want some assurance that the hotel will be able to perform properly.”
So until the employment situation improves, delineate exactly what you need for a successful event. Don’t assume because a hotel is a certain brand, it will live up to pre-2020 expectations. “We need to get down to the nitty-gritty of how performance is going to be given and when it’s going to be given and who’s going to do it,” he says.
Remember, also, that some hotels don’t own the eateries or services such as the valet — a restaurant company might run that outpost and maybe the hotel has outsourced the valet. In that case, in order to get the service levels needed, the planner will have to deal separately with these companies.
Cross-Checking for Attrition
Many planners are having trouble verifying which of their attendees are staying at the contracted property, leading to a lot of uncertainty around attrition. Your attrition clause should state that you have the right to audit; if a hotel refuses to accept that clause, push back or go elsewhere.
“Put that in now,” Howe says. For the hotel that balks at allowing the clause, remind them that if you end up in court, you’re going to get it in discovery, anyway. “Why make a fuss of it now?”