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New Meetings Contracts for a New Era

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After associations experienced costly event-cancellation penalties due to the pandemic, many are looking at their meeting contracts differently and incorporating new provisions when possible.

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.

No association should accept a cancellation charge without a discussion.

Safety Issues

Just as attendance figures are increasingly shifting, so too are vaccination requirements—and resistance to them in some states and municipalities. As of early October, five states had prohibited businesses from requiring proof of vaccination to enter. But Tenenbaum said associations still have substantial control over what they can require in the name of attendee safety.

“Venues will still allow the association to impose its own rules regarding masking and vaccination,” he said. “It’s anecdotal, but venues have said that while they cannot require proof of vaccination for people to come into a hotel or convention center in those states, as the lessor of space in the facility, you can impose a vaccination mandate—to date, they’re not going to stop you from doing that.”

An association can offset concerns that it will be held liable for onsite COVID-19 diagnoses by taking measures to avoid negligence claims.

“Associations should follow the then-current [public health] guidance to the greatest extent possible,” he said. “You can’t necessarily do everything, but the more you can show you were not negligent, the better—that can be a mandatory vaccine requirement or proof of a negative COVID test within the last 72 or 48 hours.” (But “I’m Vaccinated” buttons or badges, Johnson said, are “not a good idea,” because they can be interpreted—and litigated—as discriminatory.)

Technology Contracts

For associations that are still forgoing an in-person meeting in favor of a virtual conference, or are hosting hybrid events, contracts with technology vendors have become increasingly important. Thakker said such contracts should clarify the penalties that the contractor will absorb in case of technical difficulties.

“Every technology contract should have some service-level estimation, where [vendors] guarantee you’re going to be functioning at least 99 percent of the time, and if you fall below that threshold, the association can start taking money back or figure out a solution for the loss of time,” she said. “If it’s a live event, we typically say that if 50 percent or more of the attendees cannot access the platform, that’s a complete outage, and then there’s an immediate and automatic full refund of the amounts under the contract. If it’s above 50 percent, then it might be graduated—a proportional refund, or an agreement to do a second event to cover the loss or rescheduling.”

Mark Athitakis

Mark Athitakis, a contributing editor for Associations Now, has written on nonprofits, the arts, and leadership for a variety of publications. He is a coauthor of The Dumbest Moments in Business History and hopes you never qualify for the sequel.

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