NOTE: This article is not legal advice. We highly suggest you consult with your legal representation on how force majeure in COVID19 affects YOUR particular hotel contract. The opinions in this piece are based solely on the experiences of Leanne Calderwood and Stephen Ing, ConferenceDirect Site Selection Associates.
Since COVID19 hit mid-March, there has been an onslaught of industry insights about current hotel contracts for meetings and conferences, as well as what contract clauses will look like for future events.
For meeting planners who wonder how this current circumstance will impact their meeting, it’s very important to remember that each event is different, and a number of factors go into the hotel negotiation surrounding a cancellation or postponement of your event. Your event’s size, rooms to space ratio, dates, pattern, location all go into what the next steps may be for your threatened event.
At ConferenceDirect, we have been conferring with legal teams, clients, and hotel representatives continually to bring you the latest to assist planners with their event.
In late March, ConferenceDirect hosted an associate and client webinar about questions to ask about Force Majeure, you can listen to that webinar here.
Another law firm also produced a resource that you can find here.
The big question out there is around Force Majeure in a COVID19 environment– what it was and how it’s changing. There is no magical date nor magical formula about how far out the industry will evaluate your events as force majeure or suffer commercial impracticability.
IF you have canceled prior to a mutually-recognized force majeure event, you may still be obligated to pay cancellation penalties. There is no precedence that we are aware of where a party retroactively claimed a force majeure event made it impossible to perform, to avoid paying the cancellation invoice, now that it is force majeure. If you have already paid damages and changing your program, you may have a difficult time getting your cancellation penalty monies back. Again, everything in this time is a case-by-case basis and we recommend seeking legal advice if you are in this situation.
IF you communicate to your delegates that you are postponing meetings, but NOT communicating to the hotel. Technically you do not have to communicate anything to the hotel ahead of your delegates, however, you are no longer acting in good faith and being forthright with the hotel. If you can, please connect with your host hotel prior to communicating out to your stakeholders. It’s just good business.
IF it is difficult to get ahold of the hotel due to short-staff at the hotel, try to connect with someone else at the hotel/brand for guidance (our ConferenceDirect associates will do this on your behalf to ensure you receive answers). Patience is appreciated during this unprecedented time. Give your partners time to get back to you accordingly.
IF your hotel has services and amenities that will be shut down during your meeting (and this will impact your ability to deliver a successful meeting), contractually the amenities may not be tied to the contract and the contract has not been broken or breached. Have a conversation with your hotel about its ability to deliver on some of your objectives as early as possible. Again, patience is appreciated as the status of amenities and outlets will change over time.
CAN the hotel hold your deposits under force majeure if you have to cancel? This is a case-by-case situation; a terminated contract could mean that deposits are returned, however, some of your contract verbiages may require some of your deposit to be retained.
IF you would like to postpone your event but are concerned about the size of your rescheduled event, have a conversation with your hotel about attrition and a smaller program. A re-negotiation of your contract can happen, but be willing to meet the hotel in the middle with some give and take on both sides.
IF your meeting’s delegates are involved in the fight against COVID19, it may not be enough that they are on the front lines and cannot attend your event. Many hospitals are not quarantining staff and they are still able to travel. You may need factual basis to back it up to excuse you with a force majeure argument. Document everything so that you can utilize it in the defense of your future actions, if necessary.
IF your event is in the summer months (as of this writing in April 2020) you are not in a force majeure situation, even with flights from international destinations. You’ll need more factual data to back up your claim that attendees cannot make the trip to official qualify under force majeure. Document everything.
IF your speaker cannot make your event, this could be difficult to argue with the hotel if your contract was not contingent on a speaker’s attendance. Advice for future contracts – have your contract be contingent on those non-negotiable elements (ie event is contingent on XYZ speaker being able to make the event). As a side note, can your speaker deliver the content virtually? Be clear on how this affects your future contracts.
Regardless of your particular circumstance, being understanding of hotel partners will be critical during this unprecedented time. At ConferenceDirect, we’re staying on top of these trends and dates as it pertains to force majeure in COVID19 as well as cancellations and postponements, please reach out to us; we’re happy to advise. Our goal is to ensure your event is successful, at the same time treating partners with respect and patience.
Stay safe everyone.
First step – is the hotel open – https://www.eprodirect.com/covid-19-hotel-status-directory
Is there a ban on meetings – https://www.multistate.us/pages/covid-19-policy-tracker
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