Canceled! Or is it?

Online services and social media tools are helping reduce or eliminate cancellation and attrition fees by rebooking or reselling canceled meeting space.

By Don Sadler

The recession has taken its toll on the meetings and events industries this year. With revenue down, many companies and organizations are cutting back on their meetings and events calendars, either scaling back activities and expenses at already scheduled events or cancelling meetings altogether.

But there’s usually a price to pay for cancelling meetings and events outright in the form of cancellation fees that can range as high as 100 percent of the value of the program. To help reduce these costs, some planners are using online services and social media tools that enable them to rebook cancelled meeting space or resell it to others in need of space in the same city at approximately the same time.

Strategic meetings management

Corbin Ball, CSP, CMP, an industry consultant and expert in the area of meetings technology innovation, says that the broader issue here is the growing importance of overall strategic meetings management, especially in light of the uncertain economy. “This is one of the benefits of developing an overall corporate meetings calendar,” says Ball. “One division of a company can see overlapping space or space that has been canceled by another division. It also provides a forum for space to be resold without paying steep cancellation fees.”

Casey Cote, the president of Atlanta-based Meeting Consultants, Inc., notes that due to the economic downturn, many facilities are being more flexible when it comes to enforcing the payment of potentially steep cancellation fees. “The industry goes through cycles in terms of who has the power,” he says.

“Two years ago it was the venues and properties, but with the weak economy it has now shifted to event planners. It’s the law of supply and demand. Right now, venues are being more flexible and creative and more willing to work with clients to reschedule meetings and events. We had $2 million worth of space cancel in the first half of this year but the facilities were mostly willing to work with us to rebook it for later with no fees.”

Ball concurs: “It’s definitely a buyer’s market right now for meeting planners. Most facilities want to retain clients for future events so they’re not being as strict as they have been in the past.” But he adds that this doesn’t mean organizations can always get off scot-free. “If cancellation fees are charged, they can be a big hit, and organizations are looking for good alternatives to save them money.”

A big issue

One of the industry leaders in providing the opportunity for sellers and buyers of cancelled meeting space to connect is StarCite, a meetings technology platform provider that helps companies plan, source, budget, and manage meetings and events.

“Canceled space has become a big issue for our clients this year,” says Kevin Iwamoto, StarCite’s vice president of enterprise strategy. “It’s an even bigger deal for clients that don’t have a consolidated meetings management program and aren’t protected by legal documents (like a hotel addendum) that limit their cancellation and attrition liabilities. This creates a whole new level of complexity when it comes to trying to negotiate these liabilities away or postpone events until a later date.”

“In working with our clients, we’ve found that many have large numbers of meetings that get cancelled,” adds Christine Ottow, StarCite’s communications director. “Giving clients the ability to list and promote their canceled space within our resale center has been very valuable for them.”

Cancellations among StarCite’s clients reached as high as 30 percent last year due to the economy and changing environment, Ottow adds. According to a survey conducted in August by Meeting Professionals International, 47 percent of meeting professionals anticipate a decline in future business levels. This number had been as high as 69 percent in April. Three of the top five answers to the question “What trend do you see most affecting the meetings and events industry over the next six months?” were “budget cuts,” “lower attendance” and “indecision due to economic worries.”

“2009 is shaping up as a decisive year for the global meetings and events industry, in which cost savings, value, flexibility and innovation will be the key drivers of success,” stated the MPI Future Watch 2009 Report. Clearly, flexibility and cost savings are the biggest potential benefits of cancelled space reselling services.

Reselling space: A value-added client service

Rebooking and reselling canceled meeting space has become a key value-added client service for HelmsBriscoe, a meetings and events procurement and planning company headquartered in Scottsdale, Ariz. “We book such a large volume of meetings and events that we thought it would be helpful for our clients and hotel partners if we showcased cancellations and attrition in an attempt to help everyone minimize potential damages,” says Jenny Summers, HelmsBriscoe regional vice president.

She says they have been successful in negotiating with hotels and facilities to help mitigate damages for clients. “We ask hotels if they will allow clients to rebook space for their own use within a time frame, such as one or two years, or if they’ll refund a percentage of the client’s cancellation and attrition fees if we rebook space and rooms with another HelmsBriscoe client. With the current economic climate, hotels have been very eager and agreeable to explore this solution.”

The bottom line, Summers stresses, is that hotels need and want to recoup their money. “However, how they go about this process will determine if a customer is likely to return to the hotel. The goal for most hotels is to establish a loyal, repeat customer following. If we can help the hotel and customer agree on a solution and resale space, we create win-win scenarios where everybody can feel better about a bad situation.”

The first step is going back to the original contract to determine exactly what a client’s obligations and potential damages are. The degree of flexibility a facility has depends largely on the size of the cancellation and its proximity to the date of the planned event. The later the cancellation, the higher the cancellation fee and the less flexibility there is to rebook it.

If everyone agrees to allow a resale of cancelled space, the space is posted on HelmsBriscoe’s intranet, HB Connect. “For example, if I’m searching for a facility in Chicago on a certain date, I’ll check HB Connect to see if there are postings from hotels trying to resell canceled space from other HelmsBriscoe clients,” says Summers. She adds that the site also provides postings where clients may be experiencing attrition. “We are booking so many meetings that it’s possible another associate can fill the attrition gap with a new booking.

“Because we book thousands of meetings a year, this service has been very successful for our clients,” Summers continues. “The real key to success is open communication between all parties. The facility and the client have to come together and agree on terms that benefit both parties.”

Using social media tools

Social media is another tool that may help organizations resell canceled meeting space and absorb attrition, says Ball. “Social networking sites have the ability to target specific audiences rapidly. Although these tools should almost never be used for direct sales —this will get you unfollowed rapidly — they can be used creatively for reselling cancelled meeting space.”

For example, a meeting planner facing cancellation charges could announce the space availability to his or her Facebook or LinkedIn friends or on one of the many meeting planning groups on Facebook and LinkedIn, or via a Twitter tweet. Online industry forums like MeCo (meetingscommunity.com) and groups like the MiForum on Google groups (groups.google.com/group/MiForum) or Meeting Trader (meetingtrader.com) are also great ways to publicize and try to sell canceled meeting space and attrition.

“If their network is large enough or the deal good enough, you may get takers,” says Ball. “Of course, the transfer of the block would need to be worked out with the hotel, but in most cases, it should be fine.”

How the StarCite resale center works

StarCite has created what Iwamoto calls the world’s largest online meeting planner community, which includes Fortune 500 and Global 1000 corporations, as well as leading travel and meeting management companies.

“Reselling canceled space is all about making the right connections, which makes our resale center invaluable for any company that wants to find a buyer and save itself potentially hefty cancellation fees,” says Iwamoto. “The StarCite resale center was created and designed based on requests for this kind of service from our customers.”

The StarCite resale center is designed for either rebooking space internally to other parts of your organization, or promoting and reselling it externally among the broader meeting planner community. “When a meeting planner logs into our software to start sourcing a meeting, any space that has been canceled within his or her company and is available will appear first,” Ottow explains.

However, not every company has the resources or is large enough to rebook space internally. “This is why we created our online resale center to link buyers and sellers with canceled space opportunities,” says Ottow. “It’s a great tool for organizations that need to resell meeting space to minimize steep cancellation fees, or for those looking for a bargain on a venue for an upcoming event.”

The StarCite resale center consists of two parts: one targeted to sellers and one to buyers. Canceled space listed on the buyer’s site is marketed to StarCite’s online meeting planner community — meeting planners worldwide can simply click on the Buy link to view all space currently available for resale. The facility name, event location, opportunity dates, total room nights and total cancellation value are all listed, along with details like whether the client is willing to negotiate cancellation terms and conditions or whether there are restrictions on the size of programs the facility is willing to accept.

Sellers of canceled space contact StarCite directly, which for a fee will serve as a go-between to help negotiate terms between potential sellers and buyers that are favorable to all parties. “We try to keep it as simple as possible,” says Ottow. “In many cases, the company facing a cancellation penalty is willing to work something out with a potential buyer that will help reduce the penalty.”

Is the tide turning?

Most experts agree that, given the economic environment, many hotels and facilities are being very flexible in working with clients to help them save money by rescheduling or reselling canceled space. As Cote noted, however, the industry is cyclical and it’s only a matter of time before the leverage shifts back their way again.

In its August 2009 MPI Business Barometer report, MPI notes the trend toward a more positive business outlook among meeting planning professionals, with favorable forecasts continuing to rise, though cautiously.

“Respondents no longer cite the ‘poor economy’ as the most influential trend affecting their business in the coming six months,” states the report. “This implies that the effects of a worsening economic environment are less present in the marketplace, compared to the previous six months. Budgets remain low, but more organizations are showing signs of increased booking in 2010.”

“I don’t think the current trend (of facility flexibility with regard to cancellations and attrition) is going to last,” says Iwamoto. “As the economy and travel and meetings pick up again, facilities will revert back to stricter enforcement of cancellation and attrition clauses.

“When that happens, reselling services will become even more important to clients,” he continues. “Savvy buyers know how to capitalize when the tide is in their favor and look for good alternatives when it isn’t.”