Industry attorney Joshua Grimes shares his perspectives on today’s hottest legal challenges. View part 1 of this article here.

The COVID-19 pandemic changed a lot of things in the meetings industry, at least temporarily. Now that in-person meetings and events are reaching pre-pandemic levels, what event-related legal issues appear to be here to stay, at least for the near term?

That was one of the burning questions a member of the audience at the ConferenceDirect CDX event held in late summer in Nashville posed to industry attorney and speaker Joshua Grimes, Grimes Law Offices, LLC. One that’s for sure, he said, is that force majeure clauses have to be much more specific that they may have been pre-COVID. “If your force majeure clause doesn’t include the words ‘disease,’ ‘epidemic’ or ‘pandemic,’ a court would conclude that COVID, or whatever the next disease is coming down the pike, is not covered by your force majeure clause.” And even if you mention COVID by name, it still may not be covered because COVID is now a known hazard, so it wouldn’t be considered an unanticipated occurrence, he added.

“Hotels and other vendors have gotten much stricter — basically, they do not want you to be able to cancel your meetings anymore. And they tend to have really good lawyers,” he said. While it used to be standard to see force majeure clauses saying a group can cancel if it becomes illegal, impossible or commercially impracticable to hold the meeting, but if you look at your hotel contracts now, “I can almost guarantee that the words “commercially impracticable” are no longer there. Now you can only cancel if it’s illegal or impossible — unless you negotiate this. That means that in most situations, if COVID were to happen again, there would be no more cancellations without the group having to pay damages.”

The remedy, as always, is to negotiate more favorable force majeure terms. One thing that many venues and suppliers want now is to ensure they will get reimbursed for the money they’ve already spent on the meeting up until the time of termination. Even with the horrible fire in Lahaina on Maui this summer, some hotels say that, if you want to declare a force majeure, you must do it within 10 days of the occurrence. “I don’t think that works,” Grimes said. “I don’t think that ever worked.” He cited a case a few years ago when a hurricane closed the airports and most properties in a popular Mexican destination. “If you have to give them a decision within 10 days of the hurricane happening, you can’t wait to see if the resort will be reopened” by your meeting dates. Why should you have to make a decision within 10 days if your meeting is six months from the occurrence?”

Grimes likened it to what happened in some cases during COVID, where venues wanted to wait before letting groups cancel until a few days out because the government restrictions on the number of people allowed to gather could change. But attendees aren’t waiting until 10 days out to make their plane reservations. “You should have the right to declare a force majeure when it’s right for your group to make that decision, not by some artificial deadline,” he said.

Grimes also told of a client who was told they had to cancel a meeting that had been rescheduled due to COVID and were facing double damages. The reason for cancelation had nothing to do with COVID — the group had just outgrown the hotel, which no longer had the space the group needed.

“When they told me this, it’s like my head was exploding. Why is it in anyone’s interest to pay cancellation damages instead of working with the hotel to find a way to accommodate the group, which would be in everyone’s best interest?” This is where being able to have honest and frank conversations between the group and its hotel partners becomes vital, he said.

So what about the potential for a hotel worker strike, which has been an issue this year? While force majeure clauses often include language about labor disputes and strikes, “It should be clear that strikes of the venue’s own employees should not be a force majeure,” he said. “Why? Because they could just pay them more and they’d come back to work.” He likened it to a group trying to use force majeure for a meeting where its attendees couldn’t make it, say if they were physicians during a medical emergency. “Now the shoe is on the other foot.” It’s also important to have a separate clause if a group’s attendees will not cross a picket line, he added.

A few other recommendations Grimes had for the CDX audience:

• Have a good service quality clause in your contract. “We all understand the staffing situation, but it’s up to the hotels to make it right because the group is paying for a certain level of service.” But how to you quantify what “good service” means in the contract? “Specify based on your experience with your group,” he said. “If you know your attendees don’t want to wait at the bar for more than three minutes to get a drink, specify how many bartenders you need to make sure that happens.” If daily housekeeping in guest rooms is important, put it in the contract. And don’t be shy about documenting what the hotel advertises in terms of service levels. While “white glove” may be hard to quantify, a screen shot of how they envision that on their website can’t hurt.

• Watch out for service charges and fees being added into liquidated damages on cancellation. “In my world, there shouldn’t be a service charge if you cancel before that service is rendered,” he said.

• Peg your hotel rate increase clause to an objective measure. “Look at the increase in the Consumer Price Index, for example. If we agree that the chain’s rate is $350 in that city on the date we sign the contract, and the CPI is up 8% six months out, then the rate can go up 8%.” Some groups tie it to the federal government per diem, even if they’re not a government group, he added. He recommends using a similar objective measure to determine increases for food and beverage. Some groups are OK with agreeing to raise F&B costs by 3% or 5% per year, and “that’s OK if it works for you. Otherwise, tie it to an index.”