Event planners in the US are calling on hotels to rethink outdated contract models as cancellations rise sharply across the industry, according to Skift Meetings. According to site selection firm Hotel Lobbyists (as reported by Skift), 59 events have been cancelled so far this year by its mostly government clients – resulting in over $2.5m in lost hotel revenue and virtually no commission for the planner.
“When a hotel collects cancellation revenue from a client, it might seem fair that I get paid for the work that led to the booking,” said Brett Sterenson, president of Hotel Lobbyists. “In most cases, I don’t.”
Sterenson is now urging hotels to pay compensation. He argues that planners should be reimbursed for the work leading up to the original deal. Typically, Skift reports that Sterenson earns 7-10% on actualised room revenue. In the case of a cancellation, that drops to zero. Sterenson wants to close this gap by proposing a 50% commission compromise.
Legal experts say it’s time contracts evolved. Joshua Grimes of Grimes Law Offices says there needs to be more give and take. “Adapting to federal policy changes should be a two-way street,” he said. “Unfortunately, that’s not happening yet to a significant degree.” Grimes added that hotels have been reluctant to relax room block minimums or renegotiate terms.
The uncertainty is being driven by a mix of geopolitical risk, changing federal policies and funding volatility – especially for government-funded events. Some planners are now pushing to include clauses that allow cancellation without penalty if government support is withdrawn.
Force majeure clauses could potentially cover these drops in attendance, but whether or not they do is a “grey area”, according Tyra Warner, professor at the College of Coastal Georgia.
Planners say that this lack of flexibility is unsustainable. With attendance still falling short of pre-pandemic projections and cancellations stacking up, they want hotels to absorb more of the risk – or risk losing future business altogether.
