Contracts and RFP’s During COVID - What we have learned and where we go from here

Over the last two years, the business events industry has been incredibly impacted by meeting cancellations and “lifting and shifting” of groups.  From a contract perspective, we have had to quickly incorporate addendums and revisions to contracts that allowed for updated Force Majeure, flexible deposits, revised attrition and cancellation schedules. A huge amount of goodwill and relationship capital has been spent working through all these variables. What should not be overlooked is the human toll this has taken. We have “lost” a tremendous number of experienced people that have left the business events world. Replacing those people will be a long-term challenge while we restart the meetings and events industry in Canada. As we enter our third calendar year with COVID the climate continues to be challenging, especially in countries that must still adhere to group gathering and travel restrictions.

However, there are still good reasons to be optimistic!

• We can successfully plan safe meetings. Many organizations resumed face-to-face meetings in the fall of 2021 in Canada without becoming “spreader events”.
• We can recognize nothing replaces the engagement and camaraderie of the face-to-face experience.
• Hotels, venues, airlines, restaurants and other meeting, event and travel related companies are adhering to and making health and safety protocols a priority to provide safe environments for attendees moving forward.

CONTRACT INCLUSIONS

Let’s start with focusing on venue contracts and the language used in clauses as they can be very overwhelming and at times confusing especially when the person negotiating the contract may be unfamiliar or unclear of essential contract components. We will address the big question that our industry has grappled with: Force Majeure and how it has been applied and enforced. An essential contract inclusion, besides dates, concessions and room rates is the Force Majeure clause. All contracts should include some form of it.  Staying silent on Force Majeure and hoping that the implied impact of Force Majeure will be accepted is not advisable.

If you did not include a Force Majeure clause, you will need to rely on your ability to persuade the other side to accept some sort of “frustration of purpose” argument which can be difficult. Canadian law does not have extensive experience in dealing with this and  unfortunately there is not a lot of case law to refer to. You will need to rely on your relationship with the supplier/venue and your ability to “tell the story” of why your organization needs to move or cancel.  

TIP: Have enough specificity in your Force Majeure clause to ensure you mention the major issues and events at hand, such as war, terrorism, disaster, fire, pandemic and travel recommendations or restrictions suggested by WHO, Public Health Agency of Canada and/or a Provincial Health Agency. Avoid being too specific, as too much detail can be argued that if it’s not written in the contract, it should therefore not be a reason for Force Majeure.

Timing is everything when discussing Force Majeure with a venue, various factors will come into play such as when the meeting is taking place. Where are the attendees coming from?  What is the professional demography of the attendees? A group of medical professionals or teachers travelling from a COVID hot spot and due to meet 3 months from now, may have a much more difficult time travelling and meeting than potentially other groups. 

Force Majeure should not be used as a reason to get out of your financial obligations because it is simply inconvenient. Even if both parties agree that Force Majeure is in play, there should be an ethical obligation for the group to return to the venue as soon as practical.

TIP: Partnerships are key! If you are unsure if Force Majeure is applicable, discuss it with your supplier sooner than later. Often you can come to an agreement together on a course of action that will benefit both parties. Sometimes, what is best is delaying the decision and holding deposits and cancellation fees so that they do not increase to give both parties some time to work through all the operational issues of planning and executing the meeting.

CHANGING LANDSCAPE OF RFPs

Another key learning during COVID-19 was how we create Request for Proposals (RFPs) and how venues are respond to them. Meeting and Event demand will continue to increase as we progress further into 2022. As we saw in late 2021, the hospitality industry was hit with a perfect storm of labour shortages, supply chain issues, ever changing government regulations and a huge increase in RFPs as groups started to return to business. These resulted in a delay in response times as venues dealt with labour shortages, venue challenges as organizations competed for a finite amount of meeting space and inevitable price increases due to supply and demand and inflation in the major markets in Canada. Expect 2022 to be much the same and so our work on the RFP process should continue to focus on:

• Educating our clients on pricing, value, and not to expect deep discounting
• Being prepared for properties to push back on placing courtesy space holds and deciding to go with “whoever signs first” philosophy.If the venue holds space, groups should be prepared to make quick decisions or risk losing space to another group.
• Understanding the challenges that hotels, meeting venues, and other vendors are facing with regards to staffing, training and support for their convention sales and service teams
• Having clear and concise requirements on your RFP that can be responded to quickly.If your RFP is complicated, too wordy, or does not have enough detail, then it’s going to the bottom of the response pile.

What’s next?

Open communication, contract language comprehension and “packing your patience” will be key. Enlisting the support of great partners with excellent industry relationships is more important now than ever. Having someone in your corner who is up to speed with the latest in industry issues and who specializes in working through difficult contractual situations is a strategic advantage and will save you time and money.

Shannon Byck and Joe Nishi are with Meeting Encore Ltd., which recently celebrated its 32nd year of assisting clients with their strategic sourcing needs.  Meeting Encore’s team of industry professionals can be reached at 905-403-9646 or via their website at www.meetingencore.com.

About the Authors:

Shannon Byck, CMP, VEMM, DES
Regional Director
Meeting Encore

Joe Nishi
Managing Partner
Meeting Encore