The state of the world has impacted meetings, travel and hospitality. From politics, terrorism, unprecedented weather volatility and catastrophic natural disasters to wildly fluctuating global economies, planners work in an increasingly unpredictable environment, forced to consider a multiple of “what ifs?” as they organize events and programs.
And given the litigious environment these days, they must understand how legal issues come into play, in contracts and elsewhere.
Wayne Robinson, CMP, CMM, assistant vice president with Rhode Island-based FM Global, sums it up this way.
“We are in the midst of a prolonged seller’s market favoring the supplier side with high demand in popular destinations and markets typically used by insurance and financial firms. Flexibility in contract negotiations is not as easy as it used to be. There was more wiggle room in big-ticket items such as slippage and cancellation. Now we have to be prepared to negotiate knowing we may not get the attrition percentages, lower deposits further out, concessions or favorable cancellation clauses once offered in a negotiation.”
He says planners have to deal with these things on a case-by-case basis and attorney review is always the best practice. “Most planners use specific clauses to protect their companies, but the biggest challenge is navigating the changing landscape affecting negotiations right now. For example, more emphasis is placed on how world events can affect meetings such as security, medical risk, change of flag, destination infrastructure and political climate.”
“Many of the challenges that were not key determining factors a short while ago are front and center now. We have a lot more questions to answer before we can green-light a meeting.”
— Wayne Robinson
For Kip Lambert, chief culture officer at Utah-based Destinations Inc., vague language in contracts is an issue. “What’s come up lately have been questions of cancellation surrounding severe weather, such as the recent hurricanes, as well as terror acts, like the mass shooting in Vegas. Many contracts have vague language about the ability to cancel in these types of situations.”
Ellie MacPherson, senior vice president with Toronto-based Strategic Meetings + Incentives, speaks to the importance of “due diligence in selecting meeting sites as well as comprehensive review of vendor contracts,” and offers an interesting Canadian perspective.
She believes planners should require certificates of insurance from all vendor partners and in certain cases should request to be co-named. “From a legal viewpoint,” she adds, “we must be certain that we conduct a risk assessment in conjunction with our clients regarding any destination under consideration. This is immensely important if something untoward occurs during the program.”
As a Canadian, MacPherson also brings up an interesting legal issue that has come to the forefront today as a result of the immigration debate in the United States, which could potentially have a gravely negative affect on future U.S. meetings — and their considerable contribution to the U.S. economy — even if companies have little recourse to make changes today.
“Canada is culturally diverse and our groups can include attendees with a myriad of birth origins,” she says. “Currently, our clients have not cancelled meetings or incentives into the United States as a result of the immigration bans, and they continue to book into the future as well. There are a few reasons for this. Our clients have many programs that will be actualizing in the near term, thus cancelling these now would incur significant cancellation charges. At the other end of the spectrum, clients are booking far into the future, as far as 2023, and are utilizing U.S. destinations in the hope that some of the immigration bans and travel restrictions will be resolved.“
That said, she adds, “Certainly, some U.S. cities have lost programs and high-profile events due to laws or attitudes toward the LGBT community.”
Robinson and MacPherson are lucky to be in companies with expert staff available. “We have in-house counsel conversant with aspects of law affecting meetings and incentives,” MacPherson notes.
Robinson says he’s lucky to have the right help but there’s a downside. “We have a legal department that’s very adept at hotel and venue contracting. The challenge is that our attorneys are so risk adverse because of the nature of our industry that we have to negotiate quite a bit.”
Which brings us to what attorneys have to say.
Good attorneys are risk averse. That, after all, is the nature of their work. And when you’re talking meetings, there are many risks to consider, which is why you want an attorney with expertise in the issues, laws and rulings that impact the meetings industry.
Lisa Sommer Devlin, of Phoenix-based Devlin Law Firm, specializes in hospitality law and is a member of the Academy of Hospitality Industry Attorneys (AHIA). She puts it this way: “Having a relationship with a lawyer that focuses on representing groups in the meeting industry is important. Lawyers practice in many different areas, and just like you wouldn’t ask your dermatologist to deliver your baby, you should not assume that any lawyer can evaluate event contracts. No planner likes to incur the cost of having a lawyer involved, but in the legal arena, the adage that ‘an ounce of prevention is worth a pound of cure’ is very accurate.”
Tyra Hilliard, Esq., Ph.D., CMP, attorney and professor at College of Coastal Georgia, another AHIA member, advises planners to use AHIA as a resource to find attorneys who specialize in the legal needs of those in the meetings and hospitality industries.
Devlin addresses a variety of issues that planners should consider as they go about the business of creating successful meetings and incentive programs, however likely or unlikely they are to happen.
Having alcohol at an event, for example, should not create liability exposure for planners as long as it’s served by employees at a venue with the necessary permits and insurance. Where a planner could get into trouble, Devlin notes, “is if the planner engages in conduct encouraging drinking by attendees that leads to an injury, or arranges an event at which attendees serve themselves and there’s no bartender or other server monitoring consumption.”
Personal injury or illness could arise related to alcohol, as well as in other areas. “Any issues relating to personal injury or illness should be high on a planner’s list of things to keep front of mind,” says Hilliard. “As my friend Jim Goldberg, Esq. (a DC meetings-industry attorney) likes to say, ‘If someone gets hurt, someone’s got to pay.’ This includes anything from alcohol-related injuries (or worse) to someone getting mugged in the area of the hotel to a sudden cardiac arrest or allergic reaction to food…and more. That planners are choosing hotels that don’t have automated external defibrillators, for example, boggles my mind.”
Planner negligence could be an issue though it’s not a common one. “I have not seen many claims of planner negligence,” Devlin says. “A simple explanation of negligence is that a party responsible for taking an action either did not act reasonably or failed to act, which causes an injury. For a planner, a claim could arise out of the planner not taking reasonable steps to make sure the venue booked was safe or that it met the requirements of the meeting. Or if a planner was responsible for negotiating a contract and failed to include protections for the end-user that lead to a loss.”
Hilliard reminds planners to think beyond contracts. “I think planners often hear ‘legal’ and think only contracts. But it’s not just that, especially when talking about negligence. Negligence can be present in any part of the planning process.” Hilliard offers a non-exclusive list of possibilities:
“In reality, it’s about all actions (or omissions) the planner undertakes,” HIlliard says. “Negligence stems from a breach of duty of care, and a planner’s duty of care doesn’t end with contract negotiation. The duty carries through every step of planning and management.”
Planners also must be aware of less obvious issues, including copyrights and trademarks. “Any time you’re considering using anything created by another party, whether photos, music, logos, artwork, written material or anything else, you need to make sure that you have the proper licenses and permissions to use it,” Devlin says. “If in doubt, consult an attorney who practices in the area of intellectual property.”
How many of us are well-versed in antitrust laws, and how exactly do they impact the meetings industry? “Antitrust laws are complex,” Devlin says, “but are generally designed to protect customers from sellers that collude to fix contract prices or terms. For example, laws prevent hotels bidding on a citywide event from sharing with each other the room rates they intend to offer in order to reach agreement on a minimum bid, as that’s anti-competitive. On the other hand, the planner can share information in an effort to get the best deal, such as saying, ‘Hotel A offered rooms at $200; your offer is $250. Can you match $200?’ It’s unlikely the planner would run into antitrust problems, as the law would focus on the conduct of the hotels and whether it was anti-competitive.”
One of the most challenging areas for planners these days is safety and security and how to handle them contractually. The organizers of the concert in Las Vegas where the horrific mass shooting took place this year are currently being sued. Are planners at risk if something goes horribly wrong at their event?
“You can never prevent someone from filing a lawsuit,” Devlin reasons. “Whether the party filing the suit will win is a different issue. The party making the claim has to show that the planner did not act as a reasonable planner would in choosing the venue and making arrangements for security and safety of attendees. Since every event is different, there’s no easy checklist to use to ensure that you’ll minimize claims.“
Some “minimizing” is fairly mundane. “For example, if you’re providing transportation for attendees, you should make sure the transportation company has all required licenses, can provide information about the condition and maintenance of its vehicles and know whether it checks the driving records of its drivers. When you’re choosing a hotel, you might want to verify its star or diamond rating or ask for the results of its most recent safety inspections. The important thing for planners to do is think about what potential safety risks might be involved in an event or activity, take steps to address the risks or ensure that other responsible parties are handling them, and then document what was done so if a claim is made a planner can show that he or she did act reasonably.
Hilliard points out that safety isn’t just about the attendee. In addition to considering risks to attendees, she says, “planners also have to ensure that their businesses can survive the bad press that might surround a crisis or disaster.”
Contracts are just one piece of the legal puzzle, Hilliard says. ”Of course, I’m a proponent of strong contract language: indemnification, service and staffing standards, cancellation and force majeure clauses. However, contracts alone aren’t sufficient. Planners need to consider the types and limits of insurance they might need to cover their business ‘temporarily off premises,’ such as at a meeting. They need to explore event cancellation insurance and be clear on what it does and does not cover. They need to consider additional measures, such as hiring outside security and assigning staff to monitor potential threats. They need to have the conversations with hotels and other venues about safety and security and what the plan is — short term and long term — if the worst happens.”
Contracts aren’t the only worry but they are a substantial worry. Jonathan Howe, president, Howe & Hutton Ltd., in Chicago, puts contract issues among the top legal worries planners face.
One major issue: The failure on both sides of negotiations to fully understand what’s being put down on paper. “Make sure you understand the terms of the contract,” Howe says. “Make sure to get a mutual agreement on what the terms mean, even if you think you know how the other side is reading it. Don’t use form contracts. Every meeting and event is different. You can have a checklist and model language, of course. But create contracts specific to each meeting and then come to an agreement on what exactly the terms mean.”
Perhaps no clause is more misunderstood than force majeure. “Force majeure has a very specific legal meaning: something that makes performance impossible and is beyond the control of the parties — acts of God, for example,” Howe says. “But other things are often put under this in order to avoid liability to pay for something or do something (that one party) doesn’t want to do although the meeting is not actually ‘impossible.’ ”
Howe advises going with a strict force majeure clause, then adding other clauses. “For example, if management changes, it doesn’t make the meeting impossible but a planner may want to escape liability in cancelling by adding, ‘If there’s a change in flag or management we reserve the right to cancel or change without liability.’ ”
Weather is another issue. Not all storms fall under force majeure. “If 40 of the 160 people registered can’t get to the meeting because their plane is cancelled or they’re snowed in, that’s not force majeure,” Howe says. “It may prevent those people from attending but it doesn’t prevent the other 120 people from attending. Negotiate attrition in a different clause.”
The same holds true for terrorism. “An act of terrorism in a destination does not preclude your meeting there from going forward. Because an incident happened two weeks ago doesn’t mean it will happen again. Hotels might work with planners to reduce the numbers,” Howe says, “but they won’t give a pass and why should they? It doesn’t matter if attendees are now frightened to go to that destination. It’s not force majeure.”
Riders are another tricky element — and Howe says planners can end up paying a hefty price for misunderstanding them, literally. “One planner was able to reduce the attrition block by 50 percent in a rider. But she didn’t take into consideration what would happen if she canceled the meeting. The rider only related to attrition, not to the entire contract. When she cancelled the meeting, the hotel came back and rightly said we expect to be paid for 100 percent of the room block, not 50 percent. That was just a rider and didn’t impact the entire contract.”
Additionally, Howe says planners should consider what appropriate damages are if a hotel cancels or relocates a group. “Planners should have a liquidated damages clause. The parties may not know what the exact damages will be but they can agree on a specific amount. The clause should state exactly what happens in the event of relocation. There’s a whole litany of things planners can put into the contract to cover themselves.”
“The goal is to make it economically unattractive for a hotel to breach the contract, relocate a conference or walk attendees to another property if they happen to get a better piece of business. It happens more often than you’d think. It happens all the time.”
— Jonathan Howe
Attorneys can put all the right protections into a contract, but if planners don’t manage the contract properly, someone will pay the price. “In one case, a group could cancel 365 days out without penalty. At 400 days out, the planner cancelled by phone. However, the contract required cancellation in the form of a written notice, sent by certified mail, return receipt requested. The hotel was in its rights to demand compensation. A settlement was reached, but the planner made an unexpected ‘career adjustment.’ ”
Howe says contracts are continually evolving and planners should not rely on form contracts or traditional boilerplate language, which has changed. “For example, contracts typically allow for the addition of rooms,” he says. “While contracts used to state that groups could add rooms if available, most now state that both the room and the rate have to be available, which almost never happens.”
Privacy issues are another area planners must watch, especially when contracts state that hotels have the right to use attendee information in other ways, say to give to other properties within the same company.
“No one can give away someone else’s rights and privacy,” Howe says. “Planners have to watch for that clause giving hotels permission to use attendee information and it’s often tricky. Bottom line: If hotels want the attendee information to use, they have to get it themselves.”
In the end, attorneys agree that a meetings-savvy lawyer is one step; however, planners must take responsibility, too. Be knowledgeable. Do your homework. Do your due diligence. Do your research, they say.
Planners would be wise to listen. I&FMM