Most corporate meeting planners are contending with a strong seller's market, short lead times, and tightening budgets — but only medical planners also cope with the uncertainty of Food and Drug Administration approvals, which can wreak havoc with meeting dates. “No other industry is dependent on drug and device approvals,” said Judy Benaroche Johnson, CMP, president and CEO, Rx Worldwide Meetings, Plano, Texas, who moderated a panel on effective hotel contracting at the West Coast Medical Device and Bio/Pharmaceutical Meeting Planners Forum in Costa Mesa, Calif., last December.

The session brought planners and hoteliers together to discuss the most pressing contract negotiation issues, from rebooking and non-compete clauses to multi-meeting contracts and exorbitant resort fees. The conference was organized by Medical Meetings magazine and the Center for Business Intelligence.

Divorce, Pharma-Style

Given the volatility of the pharmaceutical and medical device markets, cancellation clauses — and in particular, rebooking clauses — are a key issue for planners, said Benaroche Johnson. (A rebooking clause allows the company to use a cancellation fee toward a future meeting booked at the same hotel.)

“It is critical to have a cancellation clause in your contract,” said panelist Marybeth Roberts, CMP, senior manager, meetings and trade shows at Amgen, Thousand Oaks, Calif. “Sure, it may seem counterintuitive — like talking about divorce on the day you are getting married — but even though you don't really think you are going to cancel, you still need to prepare for it. You need to protect your company as much as possible. We try to incorporate rebooking clauses in all of our contracts.”

Added panelist Brian Henry, senior meeting planner, Allergan, Irvine, Calif. “We try to avoid spending money on cancellations by filling those holes we may have created by canceling an event, [and replacing them] with other meetings of comparable size. We ask in our contracts [for the venue] to give us a year to rebook.”

In the eyes of the hotelier, the bigger the client, the more flexible the venue can be when it comes to rebooking. “If you're a major player, [the rebooking clause] may be standard in your contract. For a smaller player, we will negotiate the contract on a case-by-case basis,” said Julie Hills, senior director of pharmaceutical sales, Hilton Sales Worldwide, Crest Hill, Ill. If a hotel won't agree to a standard rebooking clause, planners might suggest that the hotel credit them for 50 percent of the cancellation fee, or they might offer to bring in twice the amount of business that was canceled, Hills said.

Communicate about Non-Competes

Another “must have” for many pharma planners is a non-compete clause, which ensures that competing companies won't be meeting at the same time at the same property.

Hills noted that these can be a point of contention between the planner and hotelier if they are not communicated properly: “We understand that non-compete clauses are very important to you,” said Hills, addressing planners. “But keep in mind, a sales and catering staff of between five and 50 people may be booking business over the same period as your program. Sales technology has not caught up to your non-compete needs, so it is up to your hotel sales person to be your watchdog.”

Her advice: Be as clear as possible about your needs. “If there are critical companies or key competitors you are concerned about, mention them by name in the addendum. Sometimes two [seemingly competitive] companies can coexist [at the hotel over the same dates].”

Nickeled and Dimed

Shifting the discussion to pricing trends, Benaroche Johnson addressed the hoteliers on the panel: “I am seeing fees popping up on contracts lately, such as housekeeping line item charges and resort fees. When did these fees become the norm?”

Explained Hills: “The resort fee is a catch-all fee. Each hotel includes different items, such as newspapers, beach towels, high speed Internet, or other services.”

To counter that trend, one participant observed that some major pharmaceutical companies have a “no resort fee” clause in their addendums.

“Another trend we are seeing is the hotel requiring the use of its in-house audio visual services or its destination management services,” said Tom Tolvé, CMP, manager, meeting operations at Novo Nordisk, Princeton, N.J. . “The hotel will charge a fee for not using the in-house company. We have seen this a lot within the past two years. What we do is redline through these items in the contract and start the negotiations from there.”

“We sometimes bring in our own AV company, so the [requirement to use inhouse AV] is a deal killer for us,” echoed Allergan's Henry. “It is similar to paying corkage fees. I don't like being nickeled and dimed. I am finding a lot of hidden fees [at luxury properties], while [budget hotels] are dying to give me everything for free.”