Risk Management: Suppliers Save the Day

In an emergency, savvy local partners are a planner's best resource

Patrick Sullivan

Earlier this year, a blizzard -- pre-emptively nicknamed "Snowpocalypse" -- was headed for New York City. The National Weather Service had predicted more than two feet of snow overnight; flights were canceled across the board, the mayor ordered all non-emergency vehicles off the road, and the governor even ordered the subway system shut down for the first time in its 110-year history. Yet while Boston and other parts of the Northeast were clobbered, New York City ended up with between four and eight inches of snow, considerably less than dire.   

Nevertheless, the storm was severe enough to create emergency circumstances for a client of Patrick Sullivan, president of AlliedPRANew York, a destination and event management company running a midtown Manhattan meeting for 150 employees of a utility firm.

"Departure day was the day of the storm, and a lot of people did not get out," Sullivan says, recalling that some scheduled meetings had run into the late afternoon, and about half the attendees had to stay for them. The planner decided to add a group dinner but, faced with the expense of another night in the hotel for about 80 attendees, wanted to avoid adding an impromptu banquet room meal to his already swollen budget.

"We decided to go with an off-site restaurant, which would be much more affordable," Sullivan says. "It had to be within walking distance, because there were no vehicles moving on the street." The answer was Carmine's, the famous theater-district Italian restaurant, which had a private dining room capable of accommodating the group easily. "Carmine's is very casual, it's family style. It made it really kind of fun because it was just something they hadn't done before," notes Sullivan.

But even this choice had its challenges. Due to the ban on traffic and public transportation, the remaining attendees had to be escorted on the 20-minute walk through the snow to Carmine's by Sullivan's staff, one carrying a shovel to clear snow off of street corners. Rubber galoshes were purchased for several women without appropriate footwear.

"With emergencies, you have to be on your toes," Sullivan says. "You've got to keep the client informed on a constant basis, whether by text, phone, whatever. We're basically their right hand when they're in our city, so we've got to make it happen."

As a destination experts like Sullivan have proven time and again, the connections that local suppliers bring to the table are invaluable. Indeed, for extreme weather reasons alone they are a resource that meeting groups will be relying on more frequently in the future, according to the Reinsurance Association of America (RAA), a trade association representing reinsurance companies doing business in the United States. "Insurers see climate primarily through the prism of extreme natural events," said RAA President Frank Nutter while testifying before Congress about climate change in 2013, in the wake of huge losses caused by Hurricane Sandy. "In the 1980s, the average number of natural catastrophes globally was 400 events per year," he added. "In recent years, the average is 1,000."

When these events do occur, the best partner a planner has is the team of dedicated suppliers working the event. Here's a look at how hoteliers, Destination Marketing Organizations (DMOs), and Destination Management Companies (DMCs) can save the day in an emergency.


The Hotels
In many ways, there is no partner more important than the hotelier when it comes to handling a crisis that interrupts a meeting. For one thing, between the room rates and the food-and-beverage costs, the hotel almost certainly accounts for the biggest part of the meeting's budget. For another, planners rely on their host properties for everything from ensuring the safety of attendees to helping reschedule events on the fly.

 

There are two basic types of emergency situations under which planners most often work with hotels: the need to cancel or reschedule a meeting shortly before it is due to take place, and having to adjust the event in real time when a crisis occurs. Factors that come into play at such times include the force majeure clause, which nullifies a contract when circumstances such as extreme weather or acts of war make the agreement impossible to fulfill, and the desire of hoteliers to make clients happy in order to win future business.

Most often, hotels will do what they can to work with planners, says Ed Netzhammer, senior vice president of operations for Omni Hotels & Resorts. "We don't want to force anyone to hold their meeting if they can't get their attendees to come for some reason," he says. "It's not going to do either of us any good, so we are going to figure out how to mitigate the damages and the pain of both sides."

This attitude was put to the test when news broke last September that a Dallas hospital was treating an Ebola patient, recalls Chad Enloe, director of sales at the Omni Dallas Hotel. With his phone ringing off the hook, he says, "It felt like meeting planners had the impression we were coming to work in hazmat suits."

The news broke on a Tuesday and by Friday, a major national bank cancelled a big meeting scheduled to begin on Monday at the hotel. "We do quite a bit of business with this bank, and the meeting planner is someone whom I've worked with for years," Netzhammer recalls. "She said, 'My people are too nervous, they're not going to show up.' But just on her word, we knew that the next year she would bring us business that would more than make up for what they pulled at the last minute."

In the end, he let six other clients who asked out of meetings cancel without penalty.

"Every single contract had a clause in it that they owed me cancellation penalties for their doing this," Netzhammer notes. "We would have won every single one of them if we went to court. But that short-term win would have been outweighed by the long-term loss."

That's an attitude that benefits planners as well as hoteliers, says Meg Proskey, Maritz Travel's vice president of experience design. "Our first preference is always to try to rebook at the same property," says Proskey, who until recently was the point-person for emergency planning at Maritz. "We look at where we are from an attrition or cancellation standpoint and then really try to negotiate to say if we rebook this, how can we mitigate the damages? Also, we have a lot of clients, so we also might have other options to fill the hole."




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.   

 

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."



Questions or comments? Email [email protected]



This article appears in the April 2015 issue of Successful Meetings.

Don't Force the Meeting
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
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."



Questions or comments? Email [email protected]



This article appears in the April 2015 issue of Successful Meetings.