Coronavirus cancel culture could be deadly for many third-party planners. When health and government officials started ordering groups to stop meeting in an effort to avoid fatalities in the millions from COVID-19, contractors saw their business pipeline collapse overnight. Income from events they had planned for months disappeared.
While everyone agrees that flattening the curve by physically distancing (many in the industry prefer this variant, as it is essential that we stay socially connected), independent planners began asking for help, so they didn’t bear an outsized share of the burden. Many were still scrambling to adapt to a world where major hotel brands had cut their commissions by 30 percent, from 10 percent of sourcing to 7 percent. The sudden loss of bookings across the board pushed them even closer to the edge of a financial cliff.
In March, David Bruce, founder and executive director of Alliance of Independent Meeting Professionals, called on hotel chains to be reasonable about working with planners on meetings that are postponed or cancelled. “The industry must not play a hardline approach to this series of events. We need a stimulus from the hotel community to prod organizers to book these events for the future, knowing the uncertainties of the market,” he said.
By April it was clear that hundreds of thousands of dollars in business were lost and wouldn’t be coming back, Bruce noted. He called for a relaxing of the 7 percent commission rule at the major hotel properties, along with a more understanding approach to attrition, food and beverage minimums and force majeure clauses during these uncertain times. “The hotel chains who step up to the plate and institute these changes will be the hotel chains who recover the fastest during this process,” he predicted.
When events are rebooked, Bruce suggested offering independent planners half their commission upfront, so they wouldn’t have to wait months or longer to see the revenue. Such a remedy may be the only salvation for some.
Benchmark Resorts & Hotels announced in late April that it would offer “enhanced commissions paid up front.” To assist intermediary partners, commissions on new business will increase from 10 percent to 12 percent with 7 percent distributed upon booking. At the same time, the company introduced a Zero Risk Clause, that would eliminate attrition or cancellation fees on rooms and food and beverage for new meetings scheduled for Jun 1, 2020 through March 31, 2021 until 60 days in advance of arrival.
“We need to remember that the word hospitality is being used here and work together to combat the loss of business by all parties,” Bruce stressed. “This will not happen by osmosis. It will take the event organizer, independent meeting professional, CVB and hotelier to work together to restart a system that is clearly broken at this point.”
Event management company Freeman was active in lobbying for government assistance through its #EventsImpact campaign, which advocated for government help for people in the industry, stabilize businesses and accelerate the recovery for live events. “CARES Act goes a long way toward accomplishing the first two objectives,” was the company’s official conclusion. A celebratory post after the bill was signed pointed to the employee retention credit, unemployment assistance (which for the first time includes self-employed and independent contractors, for up to four months), $377 billion in loans and grants for small businesses, and tax relief.
However, that quickly ran out and U.S. Travel Association stressed the importance of extending that lifeline by adding $600 billion to the Paycheck Protection Program and extending to more classes of businesses.
To Do List During the Pandemic
David Bruce, who is also managing partner at CMP Meeting Services in Dallas, said, “My goal today is feeding my family and paying my mortgage.” This is his strategic plan when no one is meeting.
- Take care of your clients, and they will take care of you (be honest, don’t sugar coat the news).
- Communicate with hotels and sales reps who have been furloughed.
- Keep up with what the industry is discussing.
- Work on future years: 2021-2023
- Request half of future commissions upfront.
- Renegotiate attrition clauses in anticipation of lower numbers.
- Use the time wisely.