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By Ed Skapinok, Immediate Past Chair of HSMAI’s Sales Advisory Board
The legal implications of COVID have been astounding, as many hotels are still struggling to understand how many people they can legally host for a meeting or how they can enforce cancellation clauses. HSMAI Sales Advisory Board (SAB) members debated the legal considerations they are working through within their companies during a call on Oct. 15. The two major discussion points focused on enforcing group social distancing and negotiating cancellation clauses. Here are takeaways from the discussion:
GROUP SIZE
Because regulations and laws are changing so rapidly, it has been challenging to keep track of what size groups can or cannot be accommodated. “In Europe specifically, there is a lot of confusion,” one SAB member said. “The properties don’t even know what they are allowed to do.”
Another SAB member said that some municipalities throw another complication into the mix when they allow different numbers if the group gathering is made up of essential workers. “It’s up to the hotel to look at the seven-page document of 92 industries considered essential workers and decide,” the member said. “A lot of our legal team has been helping navigate if they can host the meeting or not. The hotels themselves can’t interpret the language.”
Hotels are liable when hosting meetings to enforce any applicable gathering laws, which SAB members said can be a challenge, especially when the group is drinking and people move closer together. Even if hotels take proper precautions such as moving furniture around and letting clients know how many attendees can be in one room, people still tend to violate those rules. “We’ve had to go to the contact person and hold them accountable,” one SAB member said. “And we let them know that otherwise we will call the authorities and be proactive about that.”
“Our legal department told us to treat it similar to a noise complaint,” another SAB member said. “You give them a warning, give them a second warning if they don’t comply, and then if they still don’t comply, you take them out. We can’t knowingly allow them to break the rules.”
The member continued: “If they’re behind closed doors and we don’t have any staff in that room, if they break the social distancing and add more people at tables or what have you and we’re not aware of it, then that’s one thing. We don’t have to have somebody stationed in the room monitoring them, but we can’t knowingly allow it to happen.”
CANCELLATION CLAUSES
In an already stressful environment, individuals and groups are still looking for a high level of flexibility when booking a stay or a meeting. They want to be able to cancel at the last minute if they don’t feel safe or if someone in their group gets sick. SAB members said that on the hotel side, it’s more feasible when it comes to guest rooms, but when food and beverage come into play, hotels need more advance notice, so they don’t lose money they’ve already spent on provisions.
“We’re trying to get at least seven- or 14-day cancellation clauses, so we aren’t buying food for people that don’t show up,” one SAB member said. “But our clients don’t want to be held liable for any cancellation. Our legal team is having a really hard time with anything less than that seven-day cancellation, so it’s been a struggle for our group teams to navigate that conversation.”
Another member said that their properties are also holding firm to a seven-day cancellation notice. “They always start by saying they want to be able to cancel the day of,” the member said. “But once we get through the negotiation, most of them have been fine settling for seven days.”
Several SAB members mentioned that a banquet event order (BEO) can help protect food-and-beverage costs if they stipulate that the BEO stands apart from the master contract and clearly states that the customer is locked into paying for food costs once the food is ordered. “We let them go on the bigger contracts because we can deal with that,” one SAB member said, “and then lock them in on the BEO contracts they sign, and make sure they know once they sign that, they are committing to paying for that piece.”
Another member pointed out that many customers who won’t sign a contract also won’t sign a BEO. The member said that such cases, they have agreed to do light sandwiches to keep the client happy but mitigate the risk if the client doesn’t show up. “We look at the entire piece of business, including the risks associated,” the member said, “and let the property make a decision based on that, whether or not to take the business.”
For additional information, insights, and tools, visit HSMAI’s Global Coronavirus Recovery Resources page.