As coronavirus outbreak forces firms to cancel events, these tips can help you negotiate with the venues

contract

Spend Matters welcomes this guest post from Talia Mashiach, the Founder and CEO of Eved, a spend management and payments platform built for meetings and events.

Knowledge is key to any negotiation, and this is no different in situations when you cancel or postpone a meeting or event. Cancellations are happening worldwide as a precaution against the coronavirus outbreak, but many reasons can lead to calling off or delaying an event. So understanding how to handle this situation is important.

Knowing your position contractually is a basic requirement. However, knowing the likely actual damage your cancellation will cause the facility and how you can mitigate it is just as important. Additionally, you need to have knowledge of your market influence and which resources you can use as leverage in your discussions. If you reach a decision to cancel or postpone an event, while you should not delay notifying your venue, you should first have the answers to the following key inputs, which will help you in the discussions:

  • How was the contract sourced? If a third party helped you source the event location, immediately involve them. Additionally, if you have a travel department or agency, get their involvement or at least their advice on possible relationships you can leverage, including any mitigating business volume you may be able to redirect from your transient business travel.
  • Review the contractual terms, generally if there are any governmental restrictions on travel or the location of the event, or on most of your participants, you may be able to use the “impossibility clause” or “force majeure.” Remember to ask the venue the questions about their ability to deliver services at contracted levels as well, for example, if they are proposing to deliver services but with half of the staff and likely outages on supplies, etc. — then they could be in contractual breach. In today’s environment, restrictions on food service delivery mechanisms, such as elimination of buffet services, could cause significant breaches in delivery.
  • Working with the event sponsors, realistically determine if the event can be postponed rather than completely canceled. Many venues, even though they will suffer real damages (because it would be unlikely that they will refill business displaced) will be more generous on terms with postponements. Have dates in mind, as this will be important. (Note: Sometimes organizations will cancel for a specific reason but then not rebook for other business reasons. Outright cancellations result in losses for the venue just as they would for your business. Paying cancellation fees, rather than finding a way to offset them with a way to rebook one or many events up to the value of the original event, is an inefficient use of organizational funds, especially for organizations that will still have events in the future.)
  • If you have brand champions (national sales representatives) for the venue, bring them immediately into the conversation. If possible, know how much business your organization provides the venue annually, and if attached to a brand (Marriott, Hilton, etc.), know the brand volume annually.
  • Understand your need for the venue. If this is an important venue to your organization, either for individual travel or events, generally the venue will be working in partnership with you to mitigate cancellation costs. But remember, the venue is often unlikely to be able to refill space, so they will likely absolutely experience a loss. If a fair settlement can be attained, you can always write in a clause that says funds are to be returned to you should hotel refill the space with same or greater value business. If a settlement is punitive to the supplier, the venue may be less likely to bend in the future and your short-term gain in savings on a single cancellation may turn into a longer-term era of increased costs and decreased flexibility. Know the value of this supplier within the structure of your organization.
  • In some cases, if both parties know and understand cancellation fees will be required, faster payment of said funds can bring about a further discount.
  • If your organization has a future event that may be larger in spend, contracting for that at the same venue in question at time of cancellation may significantly mitigate or eliminate cancellation costs.

As you have read, the more you know about your event and transient travel usage of the venue (and its affiliated brand), the greater your leverage. Any party to your sourcing of that venue and travel in general should be involved and leveraged as much as possible, as they can add their incremental volume leverage.

However, your greatest leverage is your ability to replace the displaced business generally within the calendar year. This requires your business sponsors support and alignment but will generally result in the absolute best outcome.

You can email Eved at sales@eved.com.

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Voices (2)

  1. Audrey Maria:

    Yup! It is our duty to spread helpful knowledge regarding safety measure during COVID pandemic. As others, event planning industry is also disturbed, thanks to you for explaining whole lot in detail. Cancellations are happening worldwide as a precaution against the corona virus outbreak, but many reasons can lead to calling off or delaying an event.

  2. Jason Busch:

    Talia, thanks so much for making this contribution. Very timely. This, like so many others, is such an expert supply market and category. You guys are truly category experts besides having the tech! Thank you again for taking the time to contribute.

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