Was it just last November that you crossed New York City off your site selection list for a pharmaceutical company meeting in 2001? You knew the dates you wanted would be impossible to get, or you'd pay through the nose to get them.
Well, think again. While hoteliers in nearby New Jersey, home to many pharma company headquarters, are still reaping the benefits of strong demand for meeting space by pharmaceutical companies, according to Marriott International Inc. Executive Vice President and CFO Arne M. Sorenson, other areas aren't so lucky. New York — along with San Francisco and Orlando — is being particularly hard hit by the slowdown in individual business travel, small internal corporate and training meetings, and out-and-out meeting cancellations.
David Scypinski, senior vice president, industry relations, Starwood Hotels and Resorts, portrays a cautious optimism with regard to business travelers: “We are seeing slowdowns in selective locales,” he says. “Not necessarily cancellations, but individual business travel is being affected, particularly in first-tier, expensive cities. People who usually travel on business are being cautious, and many companies will take a wait-and-see approach, probably through the summer.”
Marriott's Sorenson says, “Domestically, full-service hotels were hardest hit, and saw a smaller-than-anticipated increase in revPAR [revenue per available room]: 1.6 percent.”
Most of the travel and meeting cutbacks to date fall into the technology and financial services sectors, but all kinds of organizations are feeling the effects. As independent planner Edina Lessack, CMP, Meetings & Events USA, Chicago, says, “Many clients who were planning events like road shows and product/services launches are putting them on hold.”
So which side is health care on these days? “I haven't seen any changes in the number of meetings for the health industry,” says Bob Talley, president, Talley Management Group, Mount Royal, N.J., which provides planning services to a wide spectrum of corporate and association meetings. “It's the commercial e-business that's had the biggest turndown in meetings at this point.”
“I haven't seen any changes in the number of meetings for the health industry.”
— Bob Talley
The upside for medical meeting planners? For Lynne Tiras, CMP, president of Houston-based International Meeting Managers Inc., whose clientele includes medical and pharmaceutical companies, it can be summed up in four words: hot dates/hot rates. “We just booked Four Seasons that had a group cancel. We fit in perfectly for the hotel, and we were able to get good rates.”
Still, many medical planners don't tend to take advantage of hot dates/hot rates promotions. As Chris Pentz, CMP, Pentz Group Communications, Levittown, Pa., says, “In my experience in the pharmaceutical/medical industry, we have heard, ‘These are the dates, find the space. Anywhere in Europe would be fine,’ much more frequently than ‘We are flexible with our dates.’”
There's another reason hot dates/hot rates haven't been so hot in the seller's market. According to Jim Stanton, vice president of marketing for HDHR.com, a Web site affiliated with Scottsdale, Ariz.-based site selection company HelmsBriscoe, “Those dates really have not been much of a bargain for the past couple of years. Now that the market's shifting, we're getting flooded by calls from planners saying, ‘We know there are bargains out there,’ and from hotels saying, ‘Do you take credit cards? Sign me up today!’” (Hotels pay a fee to be listed on HDHR, they manage their own inventory, and planners can access the site for free.)
In fact, the environment is looking so hospitable that another hot dates/hot rates Web site launched in May. Charlie Robinson, a Starwood/Sheraton veteran of 28 years who started HotMeetingDates.com, says that up to 65 percent of the bookings his office handled were less than $50,000 in rooms revenue, and the majority of them were looking to book within a 12-month window. One planner told him that, of the 400 meetings he planned last year, 80 percent were booked for the year in the year. Placing all those pop-up meetings also takes time and energy away from working on the larger meetings, planners told him.
“Hotels are looking to fill short-term holes, and planners have a tremendous demand for space for short-term meetings. It's a natural,” Robinson says of his site, which also is supported financially by hotel fees and is free to planners. Because it's noncommissionable, it also is open to third-party planners. “Now that business isn't growing at the same rate of speed, there are more hot dates out there. It's a great time to come into the marketplace.”
While hopes are high at HotMeetingDates.com and business is booming at HDHR.com, most planners MM contacted for this article who use these promotions still tend to go to a national sales rep to do the initial hot dates legwork, or rely on mailers and newsletters, both hard copy and electronic.
“Meetings are definitely being cancelled,” Stanton says. “Companies that use events as part of their business strategies, especially public companies, are not putting on lavish programs that would look extravagant to stockholders and impact negatively on their bottom lines.” The hot dates are out there, and through Web sites and e-mail promotions, they're easier to find than ever before. Whether they'll catch on in the medical meeting planning community, however, remains to be seen.
Medical Meetings asked John S. Foster, CHME, Esq., attorney and counselor at law, Foster, Jensen & Gulley, LLC, Atlanta, for legal advice on attrition and cancellation issues in today's tumultuous economy.
MM: Does a hotel legally have to show that it tried to resell guest rooms if a cancellation goes into litigation? Does publishing hot dates/hot rates on Web sites constitute proof that the hotel did try to resell the rooms?
JF: The injured party in a contract dispute must show that it took affirmative steps to mitigate its damages when a suit is filed. The other party is entitled to make them substantiate their efforts. Publishing open dates on a hot dates/hot rates Web site certainly would qualify as mitigation, but it may not be all that's required.
Also, canceling a year out would require a different level of mitigation than canceling a day out. But even if the meeting is cancelled on arrival day, the hotel should notify its 800 number that the dates are available for special rates.
MM: You have said that the exception to this is if both parties agree to a reasonable liquidated damages provision. How does the inclusion of this clause impact mitigation efforts?
JF: Liquidated damages can be stated as a flat fee, a sliding scale, or a formula. To be “reasonable,” the provision must be a close approximation of actual damages, and it can't be a penalty. If a liquidated damage provision is held by the court to be “reasonable,” it is presumed that the parties already factored in mitigation when they negotiated the terms. My clients decide if they should use a sliding scale, a formula, or a flat fee, but they all include the clause in some form.
MM: Does a meeting sponsor have the right to look at the hotel's records?
JF: Yes, meeting sponsors have a right to independently ascertain the accuracy of the hotel's numbers regarding out-of-order rooms; rooms sold to in-house guests; and rooms billed to others for no-shows, attrition, and cancellation. If the parties go to court, the hotel's records are open by law to “discovery” by meeting sponsors. Hotels routinely require the meeting sponsor to sign a confidentiality agreement. Because large amounts of money are at risk, smart planners should include an audit provision in the hotel contract so that the meeting sponsor's right to see the records is clearly understood.
MM: Will hotels ease up on attrition and cancellation clauses because of today's unsettled economy?
JF: Attrition clauses will not go away in first-tier cities. But they may well go away in second-tier cities. Even in first-tier cities, smart hoteliers will consider and accept contract terms proposed by meeting sponsors as long as they are fair and written to compensate the hotel if damages occur.
Contact Foster at jsfoster@mindspring.com or (404) 873-5200.
While it can take a bit of research to find the hot dates and hot rates you want, sometimes you just get lucky. That's what happened to Chris Pentz, CMP, Pentz Group Communications, Levittown, Pa., this spring.
“We had a one-day meeting in Philadelphia this April at one of the major hotels in town. The meeting had been scheduled for mid-March. It was to have taken place during the ‘snow that never came’ week. In anticipation of the blizzard, the meeting was called off. The hotel agreed to let us rebook at a later date without cancellation penalties. This was a small but very upscale meeting that involved participants — many from overseas — arriving in the evening, followed by a full day of meetings.
“Much to our surprise, we were asked by the client to rebook the meeting starting with dinner on Easter Sunday and meeting all day Monday. Of course, the hotel was delighted with the timing, since there were no functions planned for that day. And we were able to obtain some major concessions, such as free meeting space. A lucky win-win situation!”