Argue over global warming all you want, but fail to plan for extreme weather at your group’s peril. That’s the message from meeting professionals after two hurricanes assaulted the East Coast this convention season.
“Any meeting planner or corporate travel manager who is not sensitive to weather-related risks is not fully performing his or her responsibilities,” says Bjorn Hanson, divisional dean at New York University’s Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, and former hospitality practice leader at PricewaterhouseCoopers.
The massive Hurricane Sandy, which made landfall just south of Atlantic City, N.J., Oct. 29, forced meetings cancellations from Boston to Baltimore as high winds, flooding and power outages devastated the region, killing more than 100 people. The Global Business Travel Association estimates that Sandy caused more than $600 million in lost travel and meetings business.
And just two months before, Hurricane Isaac swept out of the Gulf of Mexico to put a crimp in the high-profile Republican National Convention, forcing the GOP to cancel the first full day of events. Isaac then proceeded to New Orleans, a reminder of the wholesale destruction that Hurricane Katrina visited upon the Gulf Coast in 2005. PageBreak
Planner Preppers
Hanson says that meeting planners have become more sophisticated about negotiating provisions in contracts covering extraneous circumstances ever since the 9/11 terrorist attacks in the U.S.
“Meeting planners have been through some difficult periods,” Hanson says, “so more than ever they are looking for other kinds of protections.”
Those provisions sometimes are referred to as force majeure, or acts of God, although meetings and hospitality attorney Lisa Sommer Devlin points out that “if it is a true force majeure, the contract is ‘terminated,’ which means that it is as if there never was a contract--all deposits must be returned and no damages are owed--though contracting parties often agree to terms related to partial inability to perform.”
Among such provisions, according to Hanson, are those covering social unrest, transportation disruptions and area power outages, along with provisions specific to venues such as the failure to disclose even allegations of violent crimes at the property.
Associations have also negotiated for reduced attendance without paying attrition damages when cases of food poisoning at a venue occur after a contract is signed but before the meeting takes place, according to Hanson. The rationale, he says, is that attendees at association conventions usually choose to attend the event rather than being required by their employers, which is typically the case with corporate meetings.
In addition, groups have negotiated variations on paying damages to the point of virtually not paying them at all, according to Hanson. For example, a group could cancel a meeting without paying damages if it re-books the meeting within a specified time and with a comparable budget—in effect, postponing the meeting for free. A group might also negotiate to pay damages for a canceled meeting based on a sliding scale determined by how many days in advance the group canceled the meeting. On rare occasions, a group can cancel without paying damages, he says.
“Over the past decade, larger and more-valuable groups, having leverage, are able to negotiate better terms,” Hanson says. “But they’ve made it easier for smaller, less-valuable groups to follow.
“There is pushback from hotels, but it’s been slow in coming,” Hanson adds.
He attributes venues’ relatively benign position on the matter to lower occupancies during the economic difficulties of the past few years along with both sides simply considering such requests reasonable.
“That these provisions are finding their way into contracts show that they are important,” Hanson contends. PageBreak
The Tech Angle
Continuing improvements in weather-predicting technology can intensify the force majeure issue, particularly regarding storms and hurricanes, according to Devlin.
“The law surrounding force majeure was developed at a time when we didn’t have satellite radar and storm-projection mapping,” Devlin says. “People were not aware when a hurricane was coming. Now that we know hurricanes are coming many days in advance it puts all parties in a difficult situation: At what point is the threat serious enough that a party can claim force majeure?”
But it appears ongoing relationships still count for something in the hospitality industry, according to Devlin.
“When there is a true disaster such as Katrina or Sandy, the hotels and groups partner together to work things out; there have been very few disputes over groups canceling in those cases,” says Devlin, who nonetheless recommends that groups buy event-cancelation insurance.
While advance warning can complicate talks between groups and venues, more time to plan can only benefit meeting planners.
“The good thing about hurricanes—if you can call anything about them good—is that you have ample time to plan because you get to see projections over days,” says Tyra Hilliard, associate professor at the University of Alabama’s Restaurant, Hotel & Meeting Management Program and a longtime meetings industry lawyer. “So contingency planning for a hurricane is somewhat different than planning for an earthquake, a bombing or another type of crisis.
“Some of the most important elements of contingency planning are those related to business continuity, making sure that the business can go on despite the crisis,” Hilliard says. “So off-site, data back-up, communication plans and succession planning are crucial.”
