Brush up on your legalese and your economics: The turn of the century will bring no turnabout in the complexity of legal issues related to meetings--especially those issues that affect the bottom line.
We asked three legal experts --John S. Foster, a principal in Foster, Jensen & Gulley, Atlanta; Jonathan T. Howe, senior partner/president of Howe & Hutton, Chicago; and Jed R. Mandel, a partner in Neal, Gerber & Eisenberg, Chicago--to name the trends they believe are shaping the meeting industry, from a legal standpoint, in 2000 and beyond. Here are their top 21.
The Big Picture 1 meeting planners and hoteliers will become more sophisticated in negotiating. "Both sides will become familiar with legal nuances and more sensitive to them," says Jed Mandel. And those who don't? "The planner or supplier who does not have a total understanding of all the dynamics of a hotel or a meeting will be left by the wayside," according to Jonathan Howe.
2 contracts will be longer and more detailed. "Both sides are now realizing that the full intent and expectations of the parties need to be put into contracts," says John Foster. "Even now it's not unusual for a major meetingto be 25 pages long." Some clauses, for example, now run a page and a half, spelling out exactly what performance is expected, how it is measured, and how any damages will be calculated.
3 more clauses will be covered in contracts. Planners and suppliers are increasingly putting their precise expectations in writing. One clause popping up in contracts, for example, states that payment of the hotel master account is contingent on the planner's receipt from the hotel of a post-convention report, detailing the room pickup and the food and beverage pickup.
Mission Impossible 4 there will be more work toward standardizing contracts--but no success. Efforts like those by the Convention Liaison Council (CLC) to establish "standards" or "accepted practices" in several areas, including contracts, will continue as contracts become more critical than ever. But the move won't work. There will be a realization that one size does not fit all; each contract must be negotiated on its own.
The Nitty-Gritty 5 look for strict performance requirements for hotels. "More planners will start to push for contractual, performance-based requirements," says Mandel, including "an examination of quality of service"--for example, quality of food service, the number staff at check-in, the time of day rooms are made up, and other issues.
Fair--or Far Out? 6 reverse attrition is here. Organizations have begun to write "reverse attrition" clauses that come into play if a hotel sells some of the group's rooms to another meeting. "If hotels expect associations to pick up and pay for a certain number of room nights, the contract should state that if the hotel doesn't deliver a certain number of room nights to the association, the hotel should pay damages," according to Foster.
Wired World 7 cyber-correspondence creates potential pitfalls for planners and hotels.
The issues are: electronic communication may be construed as forming a contract with another party; what you e-mail may be used against you, such as defamatory statements (defamatory statements contain untrue or malicious information or information that injures another's reputation); and potential antitrust violations could be documented through electronic communication (messages encouraging others to boycott a vendor, for example).
8 authenticating e-mail may be a challenge. The sender of e-mail can later deny sending the message. Another issue: Where does the e-mail "exist" in terms of the business being conducted: New York, if that's where the sender is based? Or somewhere in the legally undefined realm of "cyberspace"?
9 sign your name online. Technology that provides for "digital signatures" that can be tracked and verified is being used, enabling individuals or companies to encrypt an e-mail message with a private code in lieu of a "real" signature.
10 e-rfps are here to stay. More meeting planners will use electronic requests for proposals (e-RFPs). E-RFPs could raise issues regarding the integrity and accessibility of information. The "integrity" of information (in legalese) means the "protection" of information: In other words, e-RFPs raise the question of who could possibly access confidential and/or proprietary information in that RFP (such as hotel pricing or various meeting requirements).
11 e-commerce sparks new legal issues. The growth of e-commerce carries legal implications for every industry. For the meeting industry these include issues related to online registration and security of credit-card numbers. Another point to consider: how might attendees' personal registration information be used without their consent?
12 the law has to catch up with the internet. "We are still trying to find our way through the age of paper. The law is always about 100 years behind a technological advance," says Howe. "The challenge will be to take current legal approaches and apply them to new technology and new demands on the marketplace." The alternative may be new legislation to address pressing issues.
I Know What You Did Last Summer 13 technology enables hotels to collect more detailed data on meetings. Hotels will take advantage of that capability, creating a database on a group and, perhaps, sharing it with a sister property booked by the same group for another meeting or event, Mandel suggests. The legal corollary could be concerns about privacy, and about hotels passing that detailed information on to marketers.
My Way 14 more planners will try to use their own contracts."Hotels prefer to send out their own contracts; they want contracts on their letterhead," Foster notes. "But companies are looking for ways to make their jobs more cookie-cutter. Everyone is trying to simplify their side of things, and hotels too are coming up with model contracts. The final product will be a combination of what the hotel wants and what the planner wants."
Who's in Charge? 15 more companies will use third-party planners. When companies outsource to independent planners, it is more critical to spell out, in legal terms, the relationship between client and third party. How outside planners are compensated and what happens if clients want to terminate their services are among the issues.
Choices,Charges 16 planners will have more service levels to negotiate. A past emphasis on price will be replaced by a focus on what groups receive for that price, says Mandel. Therefore, hotels will let groups choose a rate that includes a specific level of service, not unlike an individual's choice to stay on a hotel's concierge level. This creates yet another area for.
17 hotels will unbundle more of their charges. Many hotels are already separating out specific charges like fitness center access or business center use. This trend will continue to develop and will result in a kind of menu for hotel services--another negotiable area for savvy meting planners.
Numbers Game 18 hotels remain focused on yield management. The result? Planners will need to be "better bargainers," says Howe. "Planners will need their own computer program to value out what their meeting is worth." From a legal standpoint, the greater knowledge on the part of both parties could mean fewer contract disputes, he adds.
19 the new calculation that matters: return on earnings (roe). "We've seen a move from some of the traditional hotel companies, which prided themselves on service, to companies listed on the New York Stock Exchange, whose obligation is to investors more than customers," says Howe. These companies are skilled in pricing and delivering their product. That means tougher negotiations for you.
See You in Court 20 there will be a greater threat of litigation. Hotel time frames for seeking amicable solutions to disputes are shorter, Foster notes. While there is still relatively little litigation compared to other industries, the nature of the lodging industry has led to a change in attitude. Today most chain-affiliated hotels are not company-owned but have different owners who are more concerned with their individual financial results than with the larger issues of all chain-branded hotels.
Just Wait Until 2001 21 the next market shift will favor the buyer. "Probably in the next 18 months we will see occupancies declining as new hotels come on line," says Foster. Newer hotel salespeople, who have known only the boom times of the past five years, will have to change their short-term approach to the meeting industry to a long-term view. This will put planners in the driver's seat--until the next market shift.