Force Majeure clauses are needed, but many suppliers would rather negotiate than enforce
It sounds simple: if something unforeseen and uncontrollable, that could not be reasonably anticipated, such as a natural disaster or war, makes it impossible for a company to fulfill a contract, the contract is nullified. That's the essence of a contract's force majeure clause.
Yet there is a lot of room for disagreement in "reasonably anticipate" and "impossible to fulfill," which is why planners and hoteliers so often dispute the wording of these clauses. Yet with a little goodwill and understanding, both force majeure clauses and their cancellation penalties can often be talked down, if not away altogether.
Hotels are "well adept at making last-minute changes and will do everything in their power to make sure the client and guests are well taken care of," says Melanie Walent director of sales, marketing, and events at the Hyatt Regency Boston.
One client who put Walent's property to the test this winter is Valerie Feeley, executive assistant to the CEO and administrative manager of Boston-based Acadian Asset Management, who had to reschedule her company's 250-person annual meeting twice in two weeks due to the city's near-record snowfall of 105.7 inches.
There is an extensive A/V setup to live-stream the meeting, and the firm's eight-member executive board does a live run-through the day before, Feeley says.
On Sunday "we made the call to go ahead and reschedule the meeting," Feeley says. "Otherwise we would have been charged for all the equipment rental on Monday." This turned out to be a good call, as Snowpocalypse actually hit Boston with a crippling two feet of snow in less than 24 hours. Two weeks later, she says, the event had to be pushed back again, by a day, due to a lesser blizzard.
When it comes to weather, "we work with our clients to mitigate damage on both sides," Walent says. "If the group is able to reschedule, that's fabulous."
Whether the Hyatt Regency Boston had to work with Feeley is another question. "When you sign a contract to hold a meeting in Boston in the winter it's kind of silly, and I say that with all due respect, to be surprised that there's bad weather," says Steve Rudner of Rudner Law Offices, a Dallas-based firm that specializes in representing hotels and conference centers in group sales contracts. "We should not be writing the force majeure clause to cover something which is expected and already reflected in the rate."
If all the attendees at a one-day meeting are flying in on a day when snow shuts down the airport, that's force majure, he says. If half are flying in and half are from the Boston area, that's a meeting with an attrition penalty.
"We cannot have it be the case that we hear something scary in the media and instantly run to a force majeure clause to cancel every meeting," Rudner says. "It's not fun to say this but we're living in a world with lots of scary things happening all the time and we have to be resilient and deal with them, the answer is not to just cancel every meeting because of every scary thing."
Destination Marketing Organizations
Several years ago, Albuquerque, NM, was hosting an international science and engineering fair for about 5,000 high school students from all over the world. "It was a weeklong event and during that time, one of the attendees, a little girl from India, came down with the measles," says Denise Suttle, assistant director of convention services at the Albuquerque Convention and Visitors Bureau and president of Event Service Professionals Association (ESPA). "Our communications department jumped into action. First of all, everyone had to be notified -- all the parents, the city and state health departments, and all of the employees of the facilities where it was taking place. Everyone had to be tested."
"A DMO is going to have the relationships and the contacts for public safety offices, emergency management offices, the mayor's office," Suttle says. "Those same contacts that we have to produce a great event are the very same contacts we would need to turn to in the case of an emergency."
The health departments set up mobile test units, and a local hotel agreed to put up the girl's parents, who flew in from India. "It was a unified effort to make sure everyone had the same information, that there was no panic at this potential health crisis in our city and our state," Suttle says. "It was the DMO that was the crux of the communications for that entire episode and it all turned out well."
DMOs are a "universal resource … if you need any services in a city during an emergency," says Joan Eisenstodt, president of Eisenstodt Associates, a meetings consulting and training company. "Most of the people or businesses that you're going to need are members of the DMO, and the DMO is going to be able to put you in touch with of them."
Destination Management Companies
While a DMO is the place to go to when a planner needs to book a large number of hotel rooms for stranded attendees, or get city agencies to help out with a health crisis, when it comes to rallying last-minute support from local suppliers such as restaurants, transportation companies, caterers, and smaller entertainment venues, a destination management company is a vital tool in the planner's arsenal.
"If we're flipping something quickly we will definitely engage our DMCs," says Proskey. "If you're moving from one destination to another and that group had an off-property event planned, we will rely on our DMC to say, 'Here are some places that will work for this,' and help set it up.
This past February, when Atlanta's generally mild weather was shoved aside by a pair of snow and ice storms in quick succession, a major pharmaceutical firm was running two separate but concurrent incentive programs. One program was a five-day trip for 1,000 at the Atlanta Marriott Marquis, and the other consisted of two waves of three-day programs for 400 and 600 participants, respectively, at the Hilton Atlanta.
Amy Johnson, president of AlliedPRA Atlanta, won the Association of Destination Management Executives (ADME) 2015 inaugural Achievement Award for Excellence in Risk Management & Crisis Management by helping alter the agendas of these programs to account for the weather which, though mild by Northeastern standards, was severe enough for the Governor of Georgia to issue a pre-emptive state of emergency, Johnson says.
The larger program required fast leg work, as a 24-restaurant dine-around was disrupted by some restaurants closing early, and some transportation companies were pulling their vehicles off the road in deference to the state of emergency, Johnson says. "We had to call every single restaurant, find out if they were open, and if they were, ask if they had more space for groups from restaurants that were closing," she adds. They did the same for the transportation companies.
One challenge Johnson faced was that the state of emergency was technically voluntary, so force majeure did not apply, meaning she had to negotiate down cancellation penalties with some vendors and restaurants on the cancelled portion of the dine-around schedule. A major one -- the Georgia Aquarium -- agreed to let the company apply the money spent (minus its food costs) to an event held within a year. This is something Sullivan says many venues are willing to do, particularly for DMCs they work with often.
Beyond the Weather
Increasingly, weather isn't the only emergency meeting planners have to deal with, says Debi Scholar, a strategic meetings management (SMM) expert with more than 15 years experience and co-author, with Susan Losurdo, of the Crisis Management Handbook: A Quick Reference Guide for Meeting Planners.
What's a minor snowstorm in
the Northeast can be a major,
city-paralyzing weather event
in generally temperate Atlanta
The key, she says, is having a written emergency plan in place, and holding emergency practice drills is even more important. In many cases, Scholar says, planners working on a critical, complex meeting with high-level stakeholders will include risk analysis and crisis management planning.
"But for meetings that might include 50 people who are associates … they pretty much expect the supplier or hotel to manage it."
The first, most vital part of any emergency plan is figuring out who will be part of the core emergency management team, says Maritz's Proskey. "That would include the client contact, the hotel contact, and it could include the DMC. Depending on severity, we could activate people back here in the home office -- if we need to rebook flights, or protect people."
Planners facing an emergency -- particularly if they haven't planned for it -- should turn to their hotel's convention services manager, the local CVB, and meetings industry associations of which they are a member, advises Eisenstodt, who teaches courses in risk management, contracting, and negotiations, as well as general meeting management.
"Planners have a tendency to try to prove how great they are by handling emergencies all on their own," Eisenstodt adds. "This is not a good idea."
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This article appears in the April 2015 issue of Successful Meetings.