Among the many things the pandemic has taught associations is the importance of contract negotiation. In the midst of 2020’s in-person event cancellations—and the often steep penalties that came along with them—associations have been forced to be savvier about what’s in their contracts with hotels and venues and to more thoughtfully revisit agreements that they may have made before COVID-19.
Jeffrey S. Tenenbaum, managing partner of Tenenbaum Law Group, said an association’s leverage will depend on its size and potential to deliver event audiences in the future. But no association should accept a cancellation charge without a discussion, said Eileen Morgan Johnson, CAE, partner at Whiteford, Taylor & Preston.
“We’ve had a few clients that say, ‘We’ll just pay the penalties and be done with it,’ but we don’t advise that,” she said. “You can say, ‘We would much rather book with you for another year out, whenever the next availability is.’ Some venues are willing to do that.”
Milestone Provisions
Because the state of the pandemic is constantly shifting—cases ebbing one moment, spiking the next, and moving around the United States and globally—associations and venues are building more check-in milestones into their contracts. That gives associations a wider window to make decisions about cancellations or changes without a substantial fee. Venues, in turn, have an opportunity to book rooms that might otherwise be left vacant, as well as a chance to preserve client relationships.
“We’ve been telling our [association] clients to build in room-block review provisions,” said Nisha Thakker, counsel at Tenenbaum Law Group. “If your event is four years out, give yourself at least three times to go back to the hotel to either reduce or increase the room block by an aggregate percentage—15 to 20 percent seems to be pretty common. When you do that from the time you sign the contract to 60 days before the event, you’ll have a realistic number of what to expect.”
Johnson noted that including agreements to have smaller meetings at a venue—say, a board retreat or a committee meeting—can make negotiations more flexible.
