By Beth Buehler
Destination Colorado connected with two meeting and event professionals, a planner and a supplier based in Colorado, to discuss what they have learned about force majeure clauses during the coronavirus (COVID-19) pandemic and to gather their insights on the topic.
Especially encouraging is how both sides of the meetings and events equation are partnering so the best possible outcome can be found for all entities involved. “The great work done between planners and suppliers during this difficult time has been truly inspiring. My experience has been overwhelmingly positive from the perspective of putting the well-being of the attendees first, both by planners and properties,” says Thad Carlson, Senior Director of Sales for Devil’s Thumb Ranch Resort & Spa in Grandby, near Winter Park. “I am proud to work for a property that has shown great flexibility with our group clients and grateful for planners who recognize the impact the pandemic is having on properties and their most important assets, the employees.”
He adds, “We have been fortunate to work with planners who are open to creative solutions including, but not limited to, rescheduling event dates, changing stay pattern to find new availability, and at times showing great patience to see how the pandemic unfolds.”
Third party planner Nicole Steed, Associate Regional Vice President for Lamont Associates, works out of a Fort Collins office and has been impressed with the flexibility and honest dialogue. “First and foremost, having productive and understanding conversations has been so helpful. Our clients have had the ability to reschedule their events with little or no penalty to later in the year or next year—whether or not their situation falls within the scope of force majeure—knowing their attendance will be severely impacted this spring and early summer,” she says.
“We have also had hotels offering additional allowable attrition with room blocks and food and beverage. Our global sales representatives with various brands and destination marketing organizations also have played a key role in finding a mutually beneficial solution,” Steed notes.
Here’s what else Carlson and Steed had to say in response to questions about force majeure clauses.
What have you learned about force majeure clauses during the COVID-19 pandemic?
Nicole Steed: Force majeure clauses are crucial and interpreted specific to the language in each individual contract. Third parties and planners will want to pay special attention to the language in the clause, examples of force majeure events, performance requirements, and requirements to notify the hotels and other vendors. In general, this raises our awareness of this clause in our contracts, and I see more care going into crafting this clause in the future. Organizations would be well advised to have their legal team come up with a standard acceptable clause.
Thad Carlson: Force majeure was one of those standard contract clauses that wasn’t given much attention, other than ensuring each contract had one. With the onset of COVID-19, it has become the most discussed language in event contracts. This experience has reiterated to me the importance of standard clauses in the agreement for the protection of all parties and why you should never take them for granted.
From planner and supplier perspectives, what are the top things to think about regarding force majeure clauses?
NS: If you or the hotel have examples listed, the interpretation of a force majeure event may be narrower. You could consider adding pandemic or public health crisis to the clause, but there will still be other criteria to prove force majeure. If you have a clause that does not have specific examples of force majeure but refers to “events outside the performing party’s control,” it may cover something like the current pandemic.
Also, pay attention to force majeure clauses that specifically reference a length of time that the force majeure event has to occur in reference to your on-site conference or event. Adding “commercially impracticable or inadvisable” into a force majeure clause besides the impossibility clause may help planners cover unforeseen events like COVID-19. It’s also important to hire and consult legal counsel before signing off on contracts if you don’t already have someone in place.
TC: From a supplier perspective, COVID-19 has taught me that force majeure, depending how written, does not take effect until the time of the event and may include language like “making performance impossible.” It’s true that government-issued, shelter-in-place ordinances could invoke force majeure clauses, however, the clauses are not necessarily applicable to events after any such ordinances expire. Also, when a company enacts a policy to not travel, it does not constitute force majeure.
How has COVID-19’s quick impact on meetings and events changed your organization’s approach to force majeure clauses?
NS: We will evaluate each force majeure on a case-by-case basis. Our practice is to evaluate each contract individually, specific to each client.
TC: COVID-19 has raised the question as to whether events in which force majeure apply should be released from agreement or rescheduled. Force majeure clauses vary as to what will happen when evoked and this experience begs the questions, “What if? Then what?”
Watching the meetings and events industry deal with cancelled and postponed gatherings in 2020, how has it changed your thoughts on the topic?
NS: It would be useful to find a mutually agreeable and beneficial clause for all parties involved that creates an industry standard. Obviously, this health crisis has profound financial impacts on all parties involved.
TC: The safety of our group attendees is priority number one. The force majeure clause plays a critical role ensuring that the health and safety of attendees are not compromised for financial reasons. The force majeure clause is now more important than ever as new business happens in a time without total certainty.
What other incidents in recent history or in the past decade have caused a shift in how planners and suppliers look at force majeure clauses?
NS: Both 9/11 and the recession [2008-2009] influenced our force majeure and cancellation policies, safety considerations and risk management, in addition to rate parity and integrity clauses and safety considerations. We added language after 9/11 about terrorism, added economic clauses after the recession, and more recently have paid careful attention to language around a mass shooting or similar event.
TC: For me, COVID-19 is “the” incident in the past 10 years to shift how we as an industry look at force majeure. Previous to COVID-19, 9/11 comes to mind although not in the past 10 years and before my time in the industry.
Watch for more Destination Colorado blogs covering topics that have sprung out of this season of COVID-19 and how the meetings and events industry is responding with solutions. Destination Colorado stands ready to assist groups that are moving ahead with planned gatherings, rescheduling meetings and events, and booking new business. Take a look at the website to find out about all sorts of great destinations, lodging properties, venues, suppliers and more!
Beth Buehler has been editor of Colorado Meetings + Events magazine for 15 years and helped launch Mountain Meetings magazine in 2013. She has planned numerous meetings and events and enjoys exploring Colorado.