As oil continues to wash up on beaches around the Gulf of Mexico as a result of the Deepwater Horizon disaster, companies with upcoming meetings in the Gulf region face tough decisions about whether to pull the plug—and concerns about the penalties if they do.
We asked three industry lawyers—Stephen Barth, founder of HospitalityLawyer.com and a professor at the Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston; Jim Goldberg of Goldberg & Associates, Washington, D.C., and a Corporate Meetings & Incentives columnist; and Tyra Hilliard, Esq., CMP, an associate professor at the University of Alabama and industry consultant and educator—what companies should know if they’re considering canceling.
“The bottom line is that unless the oil spill makes it ‘impossible, illegal, or commercially impracticable’ to hold the meeting (or however the specific force majeure clause in the contract is worded), it is not necessarily an automatic cause for termination without liability,” says Hilliard.
“Start by seeing if the oil spill is even affecting the area. As with most crises, disasters, and emergencies, misperception is often as big a challenge as the incident itself. If the oil spill is affecting the area, then you must decide if it is ‘materially affecting’ the facilities, services, or amenities that the group was counting on when they chose the destination and facility. If so, that is the time to take action.”
Barth says that whether or not the spill has made it “impracticable” to use the facility as originally planned will have to be decided on a case-by-case basis. “It will require a review of the impact of the spill on each facility and the specific language in the force majeure clause of each agreement.”
According to Goldberg, incentive trips might have more of an edge under force majeure. “You have to consider the reason the group is canceling. If you’re having a meeting in Pensacola and the beach has tar balls, does it affect your ability to have a meeting in a meeting room from 1 to 5 p.m.? Not really.
“If it’s an incentive trip, it’s a stretch to say it makes it impossible, but you might have more of a leg to stand on—but it’s still a tough fight.
“I try to use contract terms like ‘inadvisable,’ or ‘commercially impracticable,’” continues Goldberg, “which essentially means ‘not impossible but very difficult.’ That phrase better describes the circumstances for an incentive group” because of the nature of the event."
However, he adds, “If you have a meeting on Florida’s East Coast, say Fort Lauderdale or Miami, and you say it’s conceivable that the spill could come there, then you have a problem.”
Goldberg says that in similar situations he’s found that hotels are willing to work with planners who commit to coming back. Another option is to move the meeting to a sister property elsewhere.
Barth advises planners to consider meeting insurance. “Insurance helps us mitigate risks,” he says, “and circumstances beyond our control that interrupt our events are significant risks.”
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