A DEVASTATING $5 MILLION potential loss wasn't the deciding factor in the American Library Association's decision in mid-May to go ahead with its June annual convention in Toronto after the initial April outbreak of SARS in the city. “The health and safety of our members was our primary consideration,” says Keith Michael Fiels, executive director of the Chicago-based association.
That was before the second outbreak of SARS in late May in Toronto, which resulted in the World Health Organization's renewal of travel advisory for Toronto. The ALA was not returning calls at press time as to the status of its June meeting. Talk about nerve-wracking decision-making.
The Harvard Business School, on the other hand, decided in April to postpone its global leadership forum in China until next year. The annual alumni event had been expected to draw 700 to 800 participants to Shanghai in June.
“We chose Shanghai because business was exploding there,” says Christine Fairchild, director of alumni relations at the business school. But when SARS started surfacing throughout Asia in March, a China-based volunteer organizing committee comprised of Harvard alumni was able to negotiate directly with hotels to push the conference back a year. Fairchild says other Asian destinations were considered, but “we felt strongly that it needed to happen in Shanghai.”
Fairchild is getting to be an old hand at contingency plans: Last year she had to cancel a leadership forum in Argentina because of civil unrest. “It's a different ball game — it used to be we could hold these conferences in a blink,” she says. “Now, I'm working on Plans B and C — we need to be ready to make a decision, sooner rather than later. The days of resting on our laurels are gone. We need to be far more flexible.”
Whether one believes SARS has been overblown as a health threat or not, there is no disputing that one outcome of the disease is that it has fundamentally altered the way associations think about and plan their conventions and the contracts behind those events. For starters, it has pushed contingency planning to the top of every organization's agenda — as the ALA case shows.
With its meeting still two months off, ALA has had the luxury of a little time to sit back and watch how the SARS situation unfolded back in April, when several of the city's hospitals closed and the disease seemed to be gripping the city. The American Association for Cancer Research had bailed earlier, just a few days before its annual convention was expected to bring some 16,000 people to Toronto, and several other groups had followed suit. (Within weeks, AACR had rebooked its convention in Washington, D.C. Officials at AACR have declined to comment at all about the cancellation.)
SARS had been on ALA's agenda since March, but once the World Health Organization advised against all nonessential travel to Toronto, ALA spent about 10 days investigating the situation, looking at alternative sites, talking to registered attendees, conferring with Toronto officials, and visiting the city. “We sent representatives to Toronto, and people were not wearing masks there,” says Fiels. “I think there was a great deal of sensationalism over what was happening.”
Aside from the hefty cost to cancel the meeting, none of the alternatives ideally suited the group's needs: Some cities didn't have enough hotels close to the convention center, others couldn't provide enough exhibit space. On such short notice, “a conference with 25,000 people is not something that is particularly portable,” Fiels admits.
The board called an emergency meeting, and at the same time WHO lifted its travel advisory. A few days later, with no new cases of SARS in the city, the board voted to stick with the original plan and e-mailed its 45,000 members to explain the decision.
Prior to the second outbreak of SARS in the last days of May, the ALA had expected a slightly smaller attendance in Toronto — maybe 21,000 instead of the projected 25,000 — but Toronto hotels had graciously waived attrition rules. With the new outbreak, it was unclear as we went to press if those attrition figures would turn out to be much higher, or even if the meeting was still on track for Toronto in June.
With no one able to predict how long SARS will remain a threat, more associations are likely to deal with scenarios like those ALA and AACR faced. Public fear of infection from this potentially deadly virus has eroded any confidence a meeting planner might have in attendance figures, exhibitor counts, and potential revenue from a meeting that was booked in an area perceived to be risky.
In the short run, the best defense is to take whatever steps are necessary to keep attendees safe. And being able to reassure attendees, as ALA has, “calls for more responsible information gathering on the part of the staff in terms of understanding the risks members would incur going to a location where SARS is still an issue,” says Michael Olson, CEO and president of the American Society of Association Executives.
“The first duty a meeting sponsor has is to warn attendees of any known hazards or risks with a destination,” says John Foster, an attorney specializing in meetings and a partner with Foster, Jensen & Gulley, LLC, Atlanta. “You can't assume every attendee reads the same reports or newspapers.”
The Centers for Disease Control recently dispensed guidelines for groups hosting events that include attendees from SARS-infected parts of the world. (See box, page 24.) Clearly, some of those measures would likely panic, rather than reassure, attendees.
“There is a balance between doing one's due diligence to provide a safe environment and not wanting to scare people away,” says Tyra Hilliard, CMP, a meeting industry attorney based in Washington, D.C. “If you are planning a meeting in a previously high-risk area, you would acknowledge that SARS had been an issue but no longer is.”
Another thorny issue is how to deal with registrants or vendors who would be arriving from Asia or other areas hit by SARS. “You have a right to come up with a policy that you're uninviting attendees from these areas,” says Foster. Further, he argues, if a large portion of attendees would have been coming from a SARS-infected area, that portion should not count toward attrition numbers, since the reason they can't attend is out of the meeting planner's control. Similarly, countries infected by SARS may ban overseas travel, or travelers from those countries may have difficulty obtaining a visa to enter the U.S. Those kinds of cases — when it is illegal for an attendee or exhibitor to participate in an event — could present a valid argument for reducing attrition fees, Hilliard says.
For meetings well into the future, now is the time to think about contract provisions that may offer more protection should SARS threaten a meeting. Among considerations: the wording of the force majeure clause, how to handle meetings with large blocks of attendees from SARS-affected parts of the world, the consequences of booking in a hotel that is simultaneously housing groups from those parts of the world.
Force majeure traditionally has followed a strict definition, but Foster, who has been retained by the American Association for Cancer Research as a result of its Toronto cancellation, argues that a looser interpretation should apply in some circumstances. He thinks the concept of “impracticability” applies to situations like this in which a meeting can't take place because of an unforeseeable extreme or unreasonable event.
“When preparing a termination or force majeure clause, you have to think about what you want the standard to be before the legal principle can be invoked,” Foster advises. “The typical clause mentions ‘strict impossibility.’ That's a very strict standard. You might consider whether you want to provide for partial impossibility.”
Regardless of how a termination clause is worded, a legitimate reason for either party to back out of a contract must be something that is out of the party's control and prevents the party from performing as contemplated in the contract, Foster adds.
(At press time, Foster said that the Toronto CVB had sent bills to AACR for about $4.4 million, and that the association had cancellation insurance for the Toronto meeting, but its carrier had notified the association that the policy did not cover the Toronto cancellation.)
Some clauses would be unthinkable in a more competitive environment, but with SARS, the recent war in Iraq, and a sluggish world economy chipping away at occupancy, hotels might be willing to bend a bit to get the business on the books. In Toronto and many parts of Asia, hotels have been relaxing attrition rules in recent months to encourage groups not to bolt. “I always advise planners to trade on their strengths,” Hilliard says. “You can get hotels to agree to things if you have a history.”
And while the standard hotel contract doesn't require the hotel to reveal the identity of other groups in-house at the same time, James Goldberg, a Washington, D.C.-based attorney who represents mainly associations and independent meeting planners, says that's a standard provision in agreements he draws up for clients. He started inserting the clause years ago after a small meeting for a group of conservative business owners wound up adjacent to a Mary Kay Cosmetics sales meeting.
“There were a thousand women in pink screaming at the top of their lungs, ‘Sell, sell sell!’ It was terribly disruptive,” he recalls. More commonly, these kinds of provisions are requested by companies rolling out new products and concerned about snooping by the competition. But Foster says he doesn't think it would be imprudent of an association to request that type of disclosure in a contract.
For many associations, the combination of a weak national economy, fear of travel as a result of the events of September 11 and the war in Iraq, and the SARS epidemic has led to significant revenue losses associated with their annual conventions. Still, in the long run, ASAE's Olson doesn't see the uncertainty surrounding SARS diminishing many associations' economic reliance on conventions. “Associations are reevaluating their conventions based more on economic and travel issues than anything else,” he says. “In terms of SARS being the straw breaking the camel's back, I'm not hearing organizations saying that it's forcing them into a new model of budgeting.”
At least for the time being, that is.
Among the Centers for Disease Control's recommendations to event sponsors: isolate anyone exhibiting SARS symptoms; keep local health authorities in the loop; provide facts about SARS in registration materials; emphasize the importance of hand hygiene; screen participants to identify those at high risk for SARS; establish a health information hotline or Web site; issue self-monitoring tools such as a complimentary thermometer, a temperature log, contact information, and alcohol-based hand cleansers.
12% of professional and trade associations surveyed the third week of April, during the height of the Iraq war and the outbreak of SARS, canceled and/or rescheduled meetings in the second quarter of this year, according to a poll of association meeting planners taken by Association Meetings.
26% of those respondents with second quarter meetings (71 percent of total respondents) expect lower attendance at these meetings. Some 26% weren't sure how attendance would be affected.
62% of all respondents said the state of the national economy was the factor that had the greatest potential to impact meetings for 2003.
22% of respondents said they would plan fewer non-local meetings in the future, 15 percent said they would plan fewer international meetings, and 22 percent said they would use more audio- and videoconferencing.
Editor's Note: The poll had an 11 percent response rate, with a total of 125 respondents.