Weigh pros and cons of postponing or holding virtual events instead of canceling, establish a go-no-go date and policy on refunds
March 13, 2020
By Kathryn Walson
Whether to move forward with a big meeting—or choosing to cancel or postpone the event—is a major business decision, and association executives should prepare now rather than hoping the coronavirus outbreak will quickly pass.
Several experts in two recent webinars focused on assessing key documents and having important conversations with sponsors, exhibitors and trusted advisers.
“Take the time right now to establish the deep relationship that it’s going to take to pull you through the process,” said Shawn Pierce, president of strategic events, meetings and incentives at association management firm MCI Group.
“It’s important to be working the phones right now. Don’t sit behind your desk and hope that things are going well. Get in front of it.”
Pierce recommends creating a spreadsheet and weighing the pros and cons of canceling, postponing, having a hybrid online/in-person event, or going completely virtual. (Click here for a spreadsheet template and checklist.)
“You need to make sure that your member is being served properly,” he said. “Have you read your clauses? What are my cost effects? What is this effect going to be on our reputation?”
Check to see if you have event cancellation insurance with an add-on for communicable disease coverage that was purchased by mid-January. This insurance typically covers an association’s lost revenue from a canceled event. It can also reimburse a group for reduced attendance if the group decides to hold a meeting with fewer attendees, said Jack Buttine, president of Buttine Exhibition & Event Insurance.
If you don’t have communicable disease coverage, you can still buy it for future outbreaks, but it won’t cover cancellation due to the coronavirus. Also, some policies do not cover communicable disease if the cancellation happens because of fear; the organizer must show that people’s inability to attend is because of government or company travel restrictions, he said.
Consider the alternatives
Hotels are more amenable to rescheduling shows than canceling, now that business and leisure travel are on the decline, Pierce said.
If postponing the event isn’t practical, holding a hybrid in-person and virtual event could work well if, for example, 20% or 30% of attendees can’t attend, he said. If you’re seeing a larger percentage of cancellations, consider making the meeting entirely virtual.
“You’ve already done all the marketing. You’ve got the buzz going on. You’ve got your speakers pulled together. You have content,” Pierce said. “Let’s get that content out there and provide value back to your members.”
Train staff, manage the message
The coronavirus outbreak highlights the need for organizations to have crisis management plans in place to handle emergencies and disasters that occur not only during a meeting, but also before and after, said Barbara Dunn, a partner with law firm Barnes & Thornburg.
And make sure your staff is trained, she said.
“What if someone comes up to the registration desk at your trade show and says, ‘I just found out this person in the room has the coronavirus and I’ve been sitting by them for a week?’ Hysteria is starting,” she said. “What should staff say?”
Dunn recommends putting a go or no-go deadline on your calendar. Even if a show is six months away, it’s not too soon to start posting notices on your website that the situation is being watched, Dunn said. Also, make a decision about whether to provide refunds or credits for a future event sooner rather than later.
In all communications, stick to the facts, Pierce said. Provide links to the World Health Organization, Centers for Disease Control and Prevention and other resources.
“You should have a message from your leadership, from your trusted executive in charge,” Pierce said. “That messaging should be carried out throughout your campaigns in other areas,” such as social media.
REVIEW CONTRACTS CAREFULLY BEFORE NEGOTIATING
Meetings and shows come with contracts for the convention center, hotel, food and special events. Associations also have contracts with exhibitors and sponsors. Because no two are alike, it’s important to look at each document carefully, said Barbara Dunn, partner with business law firm Barnes & Thornburg in Chicago.
First, look for a “force majeure” clause, which means “a force beyond the party’s control.” This clause can allow groups to cancel without penalty. It usually contains a list of events such as terrorism, hurricane, disease and flood and ends with “or any other cause beyond the party’s control,” Dunn said.
“When I’m looking at contracts, it’s probably fairly easy to say that the virus itself checks a box on that list, even if it’s just in the catch-all statement,” she said.
Next, look for the “standard of impact.” The association must establish that the coronavirus has a certain level of impact on the group’s ability to hold the meeting. Depending on the contract, the standard of impact will be “impossible,” “illegal” or “commercially impracticable.”
However, be prepared for hotels and convention centers to push back.
“You could make an argument that … if (attendees) decide not to come, it makes it commercially impractical or ‘inadvisable’ for us to hold the conference,” said Jeffrey Tenenbaum, managing partner with Tenenbaum Law Group. The hotel or convention center is likely going to make the case that it’s driven by fear, however, and won’t let the association out of the contract, he said.
“These are arguments that both sides will make, and that’s where the negotiating starts,” Tenenbaum said.
Hotels and conference centers are waiving penalties for attendees who are barred from entering the country, but they have been taking a hard line on groups trying to cancel meetings in the U.S. with primarily U.S. attendees, Tenenbaum said.
“In terms of allowing associations to cancel without penalty, we’ve seen really strong resistance almost across the board,” he said.
A desirable but less-common item to look for in a contract is “partial performance.”
If a force majeure event applies and the contract permits partial performance, the group can hold the meeting with partial attendance, for example 50%. The group will not be liable for “attrition fees” for failing to meet the agreed-upon number of rooms and food and beverage purchases.
“Our hospitality community has been battered by this virus,” Dunn said. “I think that hotels, convention centers and cities would rather have the group come, even with reduced attendance, than not have them come at all.”