Skift Take
The extremely trying first half of 2020 has tested the relationships between event organizers and their venue partners. Here's a look at how they've been handling the flood of cancellations and what changes may result from the pandemic.
The coronavirus pandemic has forced countless event postponements and cancellations across the entire events industry. Although some planners are successfully pivoting to virtual, venues that by definition rely on in-person gatherings have been closed or empty for weeks, and are only now starting to reopen with limited capacities and social distancing measures in place.
While venues and planners are natural symbiotic partners, certain properties have a history of straining these relationships, and things did not improve in the early days of the coronavirus. Many planners voiced their frustration about not being able to get out of contracts with major properties despite the clear public health sanctions against all large physical gatherings.
Both sides are experiencing massive losses, and neither knows how the rest of the year will turn out, so it’s more important than ever for planners and venues to work together as partners to slowly start to recover from the global shutdown.
We spoke with both the planners and venues to find out where things stand, and what will need to change moving forward.
Coronavirus Cancellations
When the coronavirus first started to affect gatherings outside China in March, there was widespread outrage and disappointment from planners who were cancelling live events but didn’t receive the support they needed from their venues — and Marriott properties in particular.
Everyone is waiving change fees for COVID 19 but @Marriott. The @SeattleMarriott is charging our non profit $30k to reschedule our event so we can be in line with the state’s guidance to reduce the spread of THD virus!! Shameful!!! https://t.co/qA8bFczcZ5
— Yvette Smith (@yvettehsmith) March 10, 2020
Dear @CityofSanJose:
The San Jose hotels have asked us for an additional $1,000,000+ this week for an event the County said should not happen
Can you help?
— Jason ✨BeKind✨ Lemkin (@jasonlk) March 10, 2020
Marriott finally updated their cancellation policies mid-April, which was very late given that concerns over the coronavirus were mounting well over two months before. Other big players, however, were setting a good example from the start:
Huge thank you to @HiltonHotels for recognizing the ban by Santa Clara County
According to them, all SaaStr attendees should get a refund shortly
Thank you @HiltonHotels!!
And for reducing all of our stress in these challenging times
— Jason ✨BeKind✨ Lemkin (@jasonlk) March 10, 2020
It’s important to recognize that the issue of cancellation is a complex one, with both sides attempting to mitigate losses and adapt to a situation that changes almost daily.
“I don’t blame the venues for trying to protect themselves from loss,” acknowledges Amy Street, Events Specialist for the Petroleum Equipment & Services Association (PESA). “I think that’s what everybody is trying to do here.”
While some venues may have been leveraging their cancellation clauses at the expense of planners, others are simply trying to do right by their clients while still staying afloat.
Leah McCarthy, co-owner of Downtown Catering Company and Venue 1223 in South Carolina, has been in the events business for 17 years and sheds some light on how this fragile balance factored into her decisions regarding cancellations.
Co-Owner, Downtown Catering Company and Venue 1223
One of the trickiest aspects of working through cancellations for both planners and venues was determining if and when their Force Majeure clauses applied. Street shares that she was able to successfully invoke Force Majeure when cancelling PESA’s annual meeting, thereby avoiding hefty cancellation fees.
Meanwhile, McCarthy says that she made the decision to refund events that could not reschedule — regardless of the fees that she may legally have been within her rights to enforce. “I’m human,” she says. “I understand that nobody saw this coming and that everybody has money on the line.”
Pushing for Postponements
Most of the industry has been favoring postponements over outright cancellations in an attempt to maintain some future revenue, and venues have been trying to facilitate the process.
Amy Birnbaum, Director of Sales at The Hoxton in Brooklyn, says that they’ve been encouraging rebookings, and that most people seem to be onboard. The hotel is doing its best to make this as easy as possible.
Director of Sales, The Hoxton
Similarly, McCarthy notes that Venue 1223 has been in regular contact with clients regarding postponements and is moving any money on deposit to a new date of their choosing — provided that it’s available, since 2021 is starting to get booked up.
In countries like France, the government has stepped in to encourage postponements and attempt to staunch the bleeding of the travel and events industries. According to a law passed there in March, venues are able to offer credits valid for 18 months instead of providing a full reimbursement for cancelled services. If such a credit is offered, the client cannot request a reimbursement until the 18 months have passed and they haven’t been able to reschedule.
The Industry Is in This Together
The overall sentiment in the industry surrounding cancellations seems to have changed over time as it’s become clear that the implications of the pandemic are neither isolated nor fleeting.
Melissa Anelli was one of the many planners who have had to consider postponements. As the founder and CEO of event management company Mischief Management, she didn’t expect much help from venues at first.
Founder and CEO, Mischief Management
Street echoes this feeling, noting that PESA has had a generally positive experience, and that most venues have been flexible and understanding of their need to postpone events. Elisabeth Clares, Director of National Accounts at Global Cynergies in France, similarly remarks that she has “negotiated with individual properties and some brands, but they’ve been very supportive and wanted to help.”
On the venue side, Birnbaum explains how The Hoxton’s approach evolved with the crisis. “At first, we tried to stick to guidelines,” she says, “but quickly realized that every event has its own situation.” Recognizing that the situation is “anything but by-the-book,” Birnbaum and The Hoxton are “doing our best to work through it together and do what’s best for both parties.”
Building Relationships for the Future
It seems clear that many venues — at least now — are more interested in fostering potential long-term business than making a quick buck through cancellation fees and likely ruining professional relationships in the process.
Street remarks that her organization has been collaborating well with venues, and that this is an opportunity “for venues to build a relationship of trust and support.” Those that are able to do so will be more likely to win business from planners in the future.
The industry will remember how different suppliers and businesses acted during this crisis, and it’s in everyone’s best interests to support each other and help the industry out of its current predicament. Those who do so will be rewarded with loyal clients and positive feedback.
This is a great decision by Hilton, which will be noted by conference organisers everywhere.
Jason, at least you know now who your future hotel partners will – and won’t – be.
— Brian Corcoran (@brianc13) March 10, 2020
The tourist and conference industry is hit hard, but it’s time to rethink who do we partner with. Obviously, @Marriott cannot be trusted as a partner that will share the risk of cancelations due to #covid19 https://t.co/ScQxh5XtSC
— Chris Georgiev (@chrisgeorgiev) March 18, 2020
Anelli notes that even though US states are starting to open up, venues are staying flexible for the time being and not rushing to enforce any strict policies.
“They likely recognize that you can force a payment, hollow out a company, and burn a bridge — or you can work with them, create a good experience, get your next year on the books, and allow them to have a wider sales window to put on an event safely. Then you create so much goodwill that you were helpful to them in a time of such utter uncertainty.”
– Melissa Anelli, Founder/CEO, Mischief Management
McCarthy also explains that this logic weighed heavily in her decision to refund cancelled events — inflexibility would inevitably lead to negative word of mouth, but doing the right thing means there’s potential for future business if the event ever comes up again.
This certainly holds true when it comes to companies like Clares’ that are paying attention to which venues are being particularly helpful — and which aren’t — by internally highlighting the properties that are working to “find solutions that both parties can agree on” so that everyone knows which venues can be considered trusted partners.
The Path Forward
A lot has changed since the beginning of the year, and the pandemic has forced both planners and venues to rethink how they will work together to plan events moving forward — especially in the short term as restrictions remain in place.
One of the major changes concerns contracts and cancellation clauses, which both sides are actively reviewing. McMarthy shares that one of the first things she did at the start of the pandemic was to have her venue’s contract reviewed by attorneys to make sure they were properly handling cancellations, as well as to add a new pandemic clause. This clause enables the venue to move any money from an event to another date within 365 days, and also includes an inflation clause that allows for changes in pricing given that the pandemic has caused certain food shortages.
Birnbaum explains that The Hoxton has also added a rebook clause to its contracts stipulating a contingency plan if something were to interfere with the rescheduled date, and Clares notes that clients and hotels will start including additional clauses in future contracts like they did after the previous crises of 9/11 and the 2008 financial crash.
“I’m really hoping that this creates a more equitable process for this kind of contracting in the future,” says Anelli. “We’re certainly going to try for better cancellation policies.”
Another consideration for upcoming live events is the implication of social distancing measures, and how that will affect both the planners’ and the venues’ bottom lines. Food and beverage minimums will need to be rethought, and the overall organization will be more involved, which will require both sides to work closely together.
Events Specialist, Petroleum Equipment & Services Association (PESA)
The circumstances over the last few months have also encouraged a lot of collaboration and best practice sharing, which is one of the main things that venues and planners both hope continues well into the future.
According to Birnbaum, The Hoxton has been participating in venue calls with other hotels in the area — many of which are generally competitors — to talk about what they’ve been dealing with and offer each other advice. Gathering insight on other venues’ timelines has been particularly helpful since they’re “not given too much from the government on events quite yet.”
Similarly, Clares’ organization has been providing guidance and information to some of its partners when managing cancellations and postponements, working with individual properties to inform them about what other global brands are doing and what they can do to help.”
IN CONCLUSION
The events industry will be fundamentally changed following this pandemic, and for now, venues and planners seem to be coming together in this difficult time and working to find solutions that everyone can agree on.
Time will tell whether the goodwill engendered by the current situation will endure once the crisis has passed.
