Hotel Leaves Meeting Group Out in Cold

The abrupt cancellation of an adult entertainment industry networking event last month in Reykjavik, Iceland, raises a red flag for meeting groups booking international meetings: are contracts with suppliers in foreign countries enforced as vigorously as in the U.S.?

Here is what transpired: the Radisson SAS Saga Hotel canceled the room block of Funix BV, of Driebergen, the Netherlands, on Feb. 22, less than two weeks before the opening of Funix's SnowGathering 2007, a five-day event for producers of Internet-based adult content.

The hotel, owned by the Iceland Farmers Association and managed by the Rezidor Hotel Group (which operates the upscale Radisson SAS brand), apparently bowed to pressure from women's groups and Iceland government officials following a media storm.

Amid protests, police and immigration officials looked into ways to block SnowGathering's attendees from entering Iceland based on the country's anti-pornography laws and the government's right to refuse entry to those who pose a threat to security. In 2002, the government denied entry to members of the Hell's Angels motorcycle club, which has been linked to criminal activity, and to Falun Gong activists, who planned to protest a visit by former President of China Jiang Zemin.

Faced with the loss of sleeping rooms and possible government action, Funix, which owns the adult Internet site, canceled SnowGathering. About 70 people had registered for the second annual event when it was canceled, according to Funix event manager Cristina Ponga Vega.

Conflicting Sides
Funix signed a contract last Oct. 12 for a block of 125 rooms at the Radisson SAS Saga Hotel but had not paid a deposit when the hotel canceled its booking, according to Ponga Vega. Funix had planned a dinner and a few cocktail receptions at the hotel but no meetings, as attendees were expected to network on their own, according to Ponga Vega.

She denied that the group had planned to produce or distribute adult materials at the hotel as part of the event. "We had no intention to produce porn in Iceland," said Ponga Vega in an e-mail response to questions posed by MeetingNews. "Our intentions were to have some fun and create some business opportunities, not to break any laws." The first SnowGathering was held last year in Kaprun, Austria. Ponga Vega said that event proceeded "without any commotion or media attention."

The Saga's general manager, Hrönn Greipsdóttir, claimed that the hotel was unaware of the event's specific purpose prior to the booking. "The general policy of our hotel is not to ask our guests in detail about their business and the contents of their meeting," he said in an e-mail to MN. "These rules were applied to SnowGathering when they did their booking."

However, Ponga Vega said she informed Saga's representatives about SnowGathering's focus during a meeting at the hotel in November. "We were asked what kind of business we were, and we told them," she said. "They did not mind that we were linked to the adult entertainment business until the protests.

"After the first media commotion," Ponga Vega said, "we received an e-mail from the hotel stating that although it received complaints and pressure from the community, it was not going to break our contract."

In his e-mail to MN, Greipsdóttir appeared to acknowledge that public opposition to the event and the resultant publicity played a role in the cancellation. "When the news spread, the reaction from both the local and international communities was very strong," he said. "Even city authorities and political parties protested heavily."

The Business Damage
Funix lost thousands of dollars in revenue as a result of the cancellation, according to Ponga Vega. At press time, the company is seeking counsel in Iceland about its legal options, she said.

For all practical purposes, Funix and other groups that book events or meetings in foreign countries may have little recourse against suppliers that break contracts, according to James Goldberg, a Washington, DC-based attorney who specializes in event contracting.

"The question, even in our own country, is always what are the damages, and what does it cost to pursue those damages?" said Goldberg. "As a practical matter, it's more difficult to pursue recovery of damages when you're in one country and the hotel is in another country."

The matter is further complicated, he said, because contracts in other countries are not necessarily as comprehensive as those in the U.S., which means greater ambiguity in terms and conditions. "Contracts in Europe tend to be shorter and less complete than we are used to," he said. "Even with some U.S.-based hotel chains, the foreign property may use contracts typical for its country." Groups could try inserting provisions that their countries of origin have jurisdiction over legal disputes, but it's highly unlikely that hotels will agree to them, he added.

Goldberg pointed out that hotels, too, take a greater risk when contracting with foreign meeting groups. "It cuts both ways," he said. "The meeting group can cancel, and the hotel may have no recourse." Also, attrition clauses and their enforcement tend to be more lenient in Europe than in the U.S.

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