I recently had the pleasure of speaking with a group of hoteliers and buyers in the life sciences sector about the challenges they face in meeting each other’s needs. The conversation raised a lot of interesting questions, one of which covers what buyers and hoteliers want and need from each other for a relationship to be mutually beneficial. That question—which touches on issues as diverse as meal caps, intellectual property protection, cyber security, noncompetes, and what hoteliers need from buyers in order to respond to an RFP—is one I will revisit in future columns.

For this column, I’ll focus on meal caps, one of the reasons a hotelier from a major chain said his chain’s properties are becoming increasingly reluctant to accept business from the life sciences sector. At another educational forum I spoke at a few months ago, this person said, “My hotels prefer not to book pharma meetings. It’s just too hard with meal caps and their contract addenda. They’re asking for too much.”

I replied saying pharma companies tend to spend the most per attendee for meetings, and he noted that the technology sector spends almost as much—while being easier to work with. The difference between tech and pharma companies is that the latter are heavily regulated with high penalties for noncompliance (meal caps, for example).

When I mentioned this to the group I recently spoke to, everyone in the audience began nodding their heads. The hoteliers made numerous comments such as, “How can our catering departments offer a decent meal when meal caps have not been raised in five years?” and “We are nervous offering meals that comply with meal caps since we don’t want the low-cost meals to reflect poorly on our property.” Finally, perhaps the most telling of all: “Why haven’t meal caps been raised?”

It was an excellent question. Why haven’t meal caps been raised? After all, meal caps are not defined in either the Physician Payments Sunshine Act or the Pharmaceutical Research and Manufacturers of America Code, but rather need to be “…modest as judged by local standards,” according to the PhRMA Code on Interactions with Healthcare Professionals, July 2008, p. 4. “Modest” is an ambiguous term that leaves the decision of what meal caps should be to life sciences companies.

Furthermore, if meal caps are one of the obstacles to life sciences companies booking properties, or at least causing them to receive less preferential terms as market pressures begin to squeeze them out, why have compliance officers been reluctant to raise caps? After all, meal caps have not kept pace with inflation or food trends that require free-range, organic, gluten-free, and locally grown offerings.

I think the issue can be reduced to a matter of perception. Just as “modest as judged by local standards” is based on perception, compliance officers are concerned with perception. If they are the first to raise caps, it will potentially make them targets to those who enforce the standards. The converse is also true. If one compliance officer raises meal caps and others quickly follow, there could be a perception of collusion. Either scenario is suboptimal from a compliance officer’s perspective.

So tell me—does anyone out there have insight into why meal caps have not risen in years? Let us know, and I’ll see you next time.

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