Industry attorney Joshua Grimes explains some of the top legal issues facing incentive planners today.
Incentive planning is tricky these days. Between tariffs, border issues, higher U.S. entry fees, increasingly stringent contracting terms, greater security concerns, and having to balance inflation with flat budgets, there’s a lot more to consider when planning an incentive than there used to be. And most of it edges into legal territory.
Industry attorney Joshua L. Grimes, Grimes Law Offices, tackled some of the top legal challenges facing incentive planners today in a recent SITE Global webinar. Here are three top incentive legal issues he shared during the webinar.
- More stringent contract terms. Some new twists Grimes noted include hotels setting food and beverage minimums based on daily F&B, not over the course of the event, as used to be more common. Attrition allowances also are changing. Instead of the 15% or 20% hotels used to require, some are now setting attrition allowances at 5%, while others are not granting daily attrition allowances at all, he said. This means the property is demanding payment for attrition based on your cutoff date, not how many actually show up for the event or the actual occupied room nights the group uses. Another change he’s seeing is venues requiring deposit payments equal to 100% of anticipated revenue, with additional charges after the event based on consumption.
- Increased security risks. It’s especially important for incentives that the destination is perceived to be safe and welcoming for your group, he said. This pertains to everything from air travel to ground transportation to within the hotel to health care for attendees with medical emergencies to protecting against outside disruptions such as riots and political protests. Grimes suggests considering all safety measures up front and include any extra security costs in your budgeting.
- More difficult to declare a force majeure. Most venues have made it much more difficult to declare a force majeure where you can cancel without liability since the pandemic, said Grimes. Venues and suppliers are trying to limit force majeure to only issues that affect the venue itself, not travel issues like employee travel bans or flight cutbacks, or larger issues like the recent government shutdown, which affected some government-dependent meetings. Recent COVID-era court decisions provide some hints on how to handle this challenge, namely that if you want something to be included in your force majeure, you need to specifically include them in your categories of reasons to cancel, which during COVID included government regulations, advisories and recommendations. These still could be valid to include, given how governments, U.S. and elsewhere, have been issuing regulations, rulings and executive orders that may effectively prohibit you from holding your meeting, such as cutting funding for medical groups, placing onerous entry requirements on international attendees, increasing costs for visas, etc. In order for these sorts of things to be covered under force majeure, you need to have language about government actions in the contract that are as comprehensive as possible.Travel bans, unless government-mandated, probably won’t rise to force majeure, but you can try to negotiate it in under “frustration of purpose,” meaning the event can’t be held as planned. “Commercially impracticable” also can be a useful term in force majeure. And factors at the destination shouldn’t be the only ones that matter, he added, especially if it becomes commercially impracticable for international attendees to travel to the meeting due to visa issues or high entry fees that could be overly burdensome for some attendees. “Negotiate it to fit your incentive trip so you have language in there. If you don’t, it’s going to make it harder for you to recover in the event something happens.”
Grimes also suggested that a force majeure determination should be made as soon as you can demonstrate that the meeting cannot go forward because it’s commercially impracticable to do so, not make you wait until the week before the meeting. And also, to include the purpose of the event at the top of your contract. That way, it should be easier to declare a force majeure event if something happens that makes it impossible or impracticable for that stated purpose — networking, group activities, relaxation, etc. — to happen. If you do have a force majeure, also consider options other than cancelling, such as postponing the event or reducing its size. If you do have to cancel, ensure that your force majeure clause includes how and when you get your deposits back.
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