By Barbara F. Dunn O’Neal, Esq Partner, Barnes & Thornburg LLP
As we move through the year 2016, here are two summaries of key trends we have observed among our association and foundation clients, and among meeting and hospitality industry members. We’ve included corresponding legal issues relevant to each area.
As I so often recommend, managing issues at meetings requires a “before, during and after” strategy.
TOP TRENDS AMONG ASSOCIATIONS AND FOUNDATIONS MEMBERSHIP
Associations continue to reinvent the membership model to ensure its relevancy. Often as a result, new membership categories are added. As they are, it is important to review the association’s bylaws to ensure that no revisions to the bylaws are required. In an organization with members, bylaws revisions will require a membership vote to finalize.
Associations continue to re-evaluate their meetings and trade shows. As they do, often the changes affect the room block, number of meeting
dates, and ending day of the meeting. Each of these changes will have an impact in the association’s hotel and convention center contracts. As such, associations will need to have an approach to renegotiating such contracts which often may require modifying key concessions or contracting with the hotel for future meetings.
Associations are continuing to expand the scope of their use of new technology and social media. What one was recognized as a passing fad, have proven to be very effective. Yet with the new technology comes new potential areas of liability which must be examined such as trademark and copyright infringement, defamation, and compliance with laws. Associations should review their technology related contracts and social media policies to ensure all key legal issues have been addressed.
TAX AND FINANCIAL
As the IRS continues to evaluate the operations of tax exempt organizations, there has been increased scrutiny on association chapters and affiliates. More associations have received IRS questionnaires regarding their relationship, control and oversight of their chapters and affiliates. Responding to such inquiries will involve an overall evaluation of the corporate and tax relationship the association has with its components.
BOARD AND GOVERNANCE
Just as associations have worked to redesign their membership categories and meetings, the size and role of association boards is changing too. Board sizes are decreasing and boards are become more strategic in their direction thereby allowing staff to focus on the tactical efforts of executing the board’s strategic plans. Board governance roles and oversight remain a critical focus as the IRS heightens its scrutiny. Further, board recruitment and retention continue to be of importance as associations compete for their volunteers’ precious time.
INCREASED DEMAND, LIMITED SUPPLY
Watch your head – the pendulum has swung back and it’s a seller’s market for groups. With a limited supply of full service hotels and renewed demand in the business/corporate travel sector, many groups have been pushed to look at other cities or to change their dates or
patterns. But with the right marketplace and timing, there still are great deals for groups. Remember in negotiations, if you don’t ask, you don’t get, so ask away! The request for proposal (RFP) is a great vehicle to contain all of the various requirements and “wish lists” of groups.
The RFP should also include key contract provisions.
CANCELLATIONS BY HOTEL
With increased demand comes the possibility of hotels replacing contracted association business with corporate business. Other recent circumstances for hotel cancellations include hotel closure for renovations or so that the hotel may be converted in whole or part to condominiums. When cancellation by the hotel occurs – regardless of the circumstance – groups need to ensure that they are protected with strong language in the hotel contract which provides for the recovery of all costs associated with moving the meeting to an alternate hotel as well as indirect damages and attorney’s fees.
Many hotels are adding exclusive suppliers that groups are required to use for at the hotel. Such exclusive suppliers include not only suppliers of safety items such as rigging but also for services such as audio-visual and decorating. For groups which have their own contracts
with outside providers, this requirement raises a number of issues. The best way to manage this development is to include language in the hotel contract which permits the group to utilize the suppliers of its choice. Further, if groups want to utilize their own equipment at the meeting, such as an LCD projector, they should also include a provision in the contract permitting them to do so at no charge.
OPTION AND CUTOFF DATES MATTER
With increased demand for rooms and space comes the importance of the option and cutoff dates in hotel contracts. While many groups assume that the option dates will be automatically extended by hotels, many groups have discovered, to their unpleasant surprise, that the hotels will not extend the option dates as the hotels have alternate pieces of business ready to be booked. So if groups need more time to consider a contract, the groups should contact the hotel and secure a written modification to the option date. The cutoff date is also critical as many hotels seek to have this date extended to 30 days so that they can sell the remaining portion of the group’s room block. As such, groups should ensure that they are comfortable with the cutoff date.
With a busy marketplace and attendees striving for the best deal, many groups have fallen prey to the efforts of companies contacting their attendees and exhibitors under the guise of the group to sell them hotel rooms at a lower rate for the group’s meeting. These so called “housing pirates” are back with quite a vengeance and their tactics have become increasingly more aggressive in noting that they are calling “on behalf of the group.” While it is critical to send housing pirates a “cease and desist” letter regarding their unauthorized actions, it is equally important to notify attendees and exhibitors of the tactics of these companies and remind them of the proper channels for reserving hotel rooms for their conference.
Barbara F. Dunn O’Neal, Esq., is an attorney and partner with Barnes & Thornburg LLP in the firm’s Chicago office. Barbara can be reached at (312) 214-4837 or [email protected]
© Copyright 2016. Barbara F. Dunn O’Neal, Barnes & Thornburg LLP. Chicago, Ill., USA. All rights reserved under both international and Pan American copyright conventions. No republication permitted without the express written consent of the copyright holder.