Meetings mean business: Planning association events in unpredictable times.

IT HAS BEEN A ROLLER COASTER RIDE OF UNCERTAINTY FOR ASSOCIATION executives during the past several months. In particular, the meetings environment--redefined by the events of September 11--continues to reel from safety and security concerns, fear of flying, and frustration over travel delays caused by heightened security and reduced flight schedules. In fact, nearly one in five business travelers says that his or her future travel plans will be affected by the terrorist attacks, according to a November 2001 national survey by Yesawich, Pepperdine & Brown, a travel marketing services firm based in Orlando, Florida.

As associations continue to grapple with significant drops in meeting attendance, risks associated with hotel contracts, and the revenue implications of canceling events or moving forward with them, they are learning that there aren't many black-and-white answers, mostly just gray areas. Shirlyn Adkins, executive director of the American Association of Electrodiagnostic Medicine (AAEM), Rochester, Minnesota, says that her organization is always trying to come up with ways to increase revenue, but acknowledges that meetings are the biggest moneymaker. "We have reserves for a rainy day, and this is a rainy day."

Navigating the roadblocks

Clearly, the travel industry was particularly hard-hit by September 11--the Travel Industry Association of America (TIA), Washington, D.C., forecasts a 12 percent drop in U.S. business travel in the fourth quarter of 2001 and projects that 2002 expenditures will be $27.4 billion below 2000 levels. Economic concerns continue to be cited as a reason not to plan a trip.

The airline industry's woes are so severe that they've spurred the creation of a new nonprofit organization, Keep America Flying, based in New York City. And in an unprecedented move for the White House, President Bush agreed to be part of TIA's ad campaign encouraging Americans to start flying again.

For most associations, meetings and conventions represent a significant source of revenue. According to ASAE's 2000 Operating Ratio Report, the combined fees from educational programming, registration, exhibits, sponsorships, and other miscellaneous meeting revenue make up an average of almost 30 percent of an organization's total revenue.

On the business front, then, association executives have had good reason to be concerned about meeting attendance and the revenue associated with it. One of the biggest questions on association executives' minds after September 11 was, will members feel safe enough to get on a plane and fly to a meeting destination?

The Pacific Coast Society of Orthodontists, San Francisco, went forward with its annual meeting that began on September 29 in Honolulu. Phil Rollins, CAE, president of Phillip Rollins and Associates, an association management company based in San Francisco, says that his client held the meeting despite concerns about reduced attendance. "There is only one way to get to Hawaii," Rollins notes. "We had the real problem of needing the airlines to get there." The organization had its highest preregistration in history as of September 10, and expected 2,600-2,700 attendees. While the final numbers weren't too much below that--about 2,350--there were 100 no-shows and 250 cancellations.

While air travel safety is not as much of an acute concern now as it was in the immediate aftermath of the terrorist attacks, it remains a consideration for association executives who are planning meetings. Rollins says that the hotel was accommodating, but the experience shed light on some of the issues that meeting planners must now confront. "All of us need to be more aware than ever of the guarantees that we're asked to make to hotels about attendance, room pickup, food functions, and so forth," he cautions. Rollins also realized how crucial it is to communicate effectively with your members. "To me the lesson was more about how to gently lead the membership in a difficult time around a difficult issue," he notes. "And the issue was, are you comfortable taking your family on an airplane to Hawaii two and a half weeks after September 11? It really ended up being about the relationship between the leadership, the board, and the membership."

Moving on. The International Facility Management Association (IFMA), Houston, held "World Workplace"--the organization's largest event--in Kansas City, Missouri, September 22-25. A meeting that usually attracts 7,000 total attendees dropped to 2,900. IFMA uses a risk model that anticipates revenue shortfalls in key areas and outlines corresponding cuts. This model has enabled the association to cover some of the shortfall from operational savings, rather than entirely from reserves.

"We learned very quickly that we had to offer alternate means of transportation, even with our own staff," says President and CEO Dennis Longworth. "Many of our members' employers had no-fly policies in place. It creates a new dimension regarding liability, use of personal vehicles.... Because we're an international association, we learned another thing that's unique to global associations. In some cases, the national government intervened and would not allow delegations to travel to the United States. With it being so close to September 11, officials wondered what was going to happen in the airline industry and how the industry would respond, and if their citizens were going to get stranded somewhere."

Longworth believes that one of the most significant changes to meetings relates to employee travel. "Those attending the conference could make a personal decision about whether to attend and how to get there," he points out. Many members took the train, drove, or rented large vans and carpooled. IFMA's event management staff is looking at alternative means of transportation for future events. "For IFMA staff and for exhibit personnel, employers could not force employees to fly. They had to provide alternate means of transportation. Exhibitors had to decide how to support their exhibits and staff booths in different ways. The exhibitors learned a significant lesson, and I think they will probably change their strategies in the future."

Longworth canceled a seminar series scheduled for November 2001 as well as the organization's leadership conference scheduled for this month, primarily because he knew that members would be dealing with emergency preparedness issues at their own company sites. "We canceled prior to the activation of our attrition clauses, and I think we'll be more aware of that in the future--everyone will be paying significant attention to attrition clauses," he notes.

IFMA rolled out a new education program after September 11 focusing on emergency preparedness, which will be offered in 19 locations throughout North America so that members will not have to travel long distances to attend. "We're not using hotels; instead, we are using our members' facilities," Longworth explains, which meets members' needs and will presumably keep attendance up. "A significant number of our members manage facilities that have conference centers. We're taking a different approach because of some of the uncertainties with hotel contracts and who will be able to attend, until we start seeing some new trends established."

Safety first

Meeting planners and event venue managers are also reevaluating their security measures. "With our membership being responsible for emergency preparedness at their own facilities, the question we heard was, 'What about the facility we're in?'" Longworth says, noting that security in the Kansas City conference center locale for the annual meeting was the most pressing issue for his members. "It put us in what was almost an evaluation process for the facilities we were using. We're going to have to make sure that we have full knowledge of what a particular entity's emergency preparedness and antiterrorism plan is when we negotiate contracts in the future."

IFMA will also do more planning for exit strategies--the organization had a Greyhound bus on retainer during its September conference, which would not have been an issue prior to September 11, Longworth adds.

While emergency planning hasn't been foremost on every executive's radar screen in the past, some organizations, such as the California Association of Marriage and Family Therapists (CAMFT), San Diego, have had experience in dealing with unpredictable situations. "We held an annual conference in Los Angeles during the time of the Rodney King verdict and we didn't cancel," recalls Michele Hyson, CAMFT's conference and meetings director. "Since then, we've been strong about thinking, 'What if this happens or what if that happens?'" For example, they provide hotels with their emergency procedures and discuss the hotels' policies as well.

CAMFT is emphasizing contingency planning over cancellation because the association's workshops can be canceled easily on short notice. The organization did not cancel any of its events in the months immediately following the attacks and does pot have cancellation insurance. "We probably won't look into getting it anytime soon because of escalating prices." She adds that from her conversations with other meeting planners she has learned that many organizations are compiling disaster manuals and getting emergency policies in place.

"I don't know what future meetings are going to look like," Hyson admits, noting that she has shared CAMFT's catastrophe manual with more than 500 people looking for a sample plan. "I think people are going to find grounding again and do business as usual."

Giving business a boost. The city of Washington, D.C., is keenly a are of the need for extra sensitivity to security, says Bill Hanbury, president and CEO of the Washington, D.C. Convention and Tourism Corporation "We worked very closely with the federal government to ensure that the messages we're sending as a city are cautious messages, not overreactions to security issues," he explains. "We're cognizant of the safety issues.

"One of the things we have found is a heightened awareness by meeting planners that security is important in convention centers and hotels," he continues. "So we have connected meeting planners and association executives with law enforcement officials in a way that we haven't in the past [by bringing them into direct contact with each other]. The D.C. Police Department has been very helpful in assuring our customers that security is job one."

Hanbury expects convention attendance to be down in 2002, but sees the city rebounding and says that the group market is beginning to stabilize. "Washington, D.C., continues to be the focus of this story of war, terrorism, and closures that goes way beyond what other communities are dealing with," he observes. "But we are making progress. Our hospitality industry is coming back."

Perhaps more than any other location, New York City has born the financial burden of September 11, losing close to $5 million because of canceled meetings and $32 million from postponed meetings. But the news isn't all bad: As of late December, more than 15 associations had moved their already-scheduled meetings from other locations to New York City to help bolster the economy. "We gained $11 million in new meetings that came because of September 11," says Christyne Nicholas, president and CEO of NYC & Company, the city's official tourism and marketing organization. The group is doing whatever it can to attract business to the area, and Nicholas stressed that the city is still a safe venue for events. "There is no difference between security in New York City and any other city," she points out. "If anything, we're more aware and cognizant of those issues, and it's safer than it was pre-September 11."

Nicholas says that while the city expects $2 billion less in revenue in 2001 from tourism--a 12 percent decline from 2000--New York has benefited from some new business and the city's reputation has improved. However, she adds, "This is an industry that needs a lot of attention right now and a lot of investment."

Planning for "What if?"

AAEM's Shirlyn Adkins says she saw a significant decline in attendance at her organization's annual meeting in early October, which usually attracts about 1,000 of the organization's 4,500 members. When the decision was made to go forward with the meeting in New Mexico, Adkins knew that without cancellation insurance, AAEM would have to absorb the lost revenue through its reserves.

"The insurance industry is in such flux right now," she observes, explaining that an insurance representative could only give her a rough idea about cancellation insurance rates for a 2002 or a 2003 meeting and indicated that she probably couldn't get a solid rate until a few months prior to the event. "I can't even budget for it. We're looking seriously at obtaining the insurance, but after September 11, it may no longer be affordable for small associations."

Contracts have also become much more top-of-mind since September. "I've definitely been paying far more attention to the way the force majeure clause is written and trying to see that it's written as broadly as possible," she says. "We had already signed the contract [for our 2003 meeting], but the hotel agreed to go back and rework it. Those clauses are far more important than ever before."

Contract considerations. John Foster, an attorney with Foster, Jensen, & Gulley, LLC, in Atlanta, agrees that knowing what provisions are in your contract is essential, and the key is deciding what the standard is in the force majeure clause. "Most of the clauses to date have to do with total impossibility," he says. "Contingencies need to be tied into the contract. That's not new since September 11, but it's not something that everyone thinks about."

You can't get cancellation insurance for terrorism anymore, Foster says, because insurance companies now exclude losses from acts of terrorism. (For a more detailed discussion of cancellation and attrition issues, see the "Legal" column on page 17 of this issue.) "It's all the more important for parties to discuss this," he urges, particularly for international conventions. "A lot of people overseas don't want to fly to the United States. If you have a large number of overseas attendees who can't come and you don't want an attrition clause, you need to put it in your contract." To avoid attrition penalties, Foster advises executives to be realistic about room blocks. "With the economy down as it is, underforecast your block," he recommends. "If you had 500 last year, plan for 300 this year. It's easier to go back and ask for more rooms. The biggest mistake planners make is booking more rooms than they need."

Negotiation know-how. Ty Helms, vice president of sales for the Hyatt Hotel Corporation, Chicago, believes that most hotels reacted quickly and offered flexible cancellation clauses. "We're certainly watching pick-up and the amount of rooms that groups have contracted for and trying to make some good decisions," he says. Most associations were not looking to renegotiate contracts, but rather to postpone events or rebook at different locations. "Some groups really wanted to consolidate meetings and turn regional meetings into one large meeting," he recalls. "Other associations felt that one large meeting needed to be broken up and put into local markets."

Helms says that Hyatt will take the necessary steps to remain competitive in the marketplace, and his hotels are working with customers on a case-by-case basis, looking at the merits of each situation, and communicating with customers as often as possible.

Association business did pick up in 2001, which was "a nice bright spot for Hyatt," Helms says, adding that most of the difficulty stemmed from corporate events. "The association market was one--by our statistics and other competitors who I've spoken with--that came back the quickest after September 11," he notes. "The business of doing business will have to come back." Helms expresses concern that resort business will continue to suffer. "We'll probably have a good full year before we see things getting back."

Foster discourages associations from trying to renegotiate existing contracts with hotels. "The better practice is to wait and see what happens," he suggests. "There is really no motivation for a hotel to renegotiate in advance, and it's not a good business practice for either side." Something like a terrorist attack is unpredictable, which is why a force majeure clause exists and why you need to be specific when drawing up your contract.

Likewise, to avoid attrition fees, make it clear in your contract that you expect to get credit to your room block for all of the attendees staying at the hotel, regardless of whether they booked through your organization or through the hotel directly. "I put an audit provision in every contract, Foster says. "Meeting sponsors can sit down with a hotel and compare lists to make sure that the association identifies people who are there because of their event. People who include audit provisions always end up getting credit for more rooms than they started with."

Getting back on track

Leaders in the meetings industry are hopeful that the public's cautiousness about flying will subside and that attendance will improve in 2002 and beyond. Ty Helms is optimistic that business will start to pick up. "I still believe that especially in the association market, the planning process will stay as constant as it can based on the financial situation of the individual association," he says. "There is certainly a great interest in outsourcing [to third-party meeting planners] right now, which seems to be taking a greater emphasis on the association side."

Phil Rollins believes that face-to-face meetings are still a necessity and that they won't change much. "My plan is to stick with what we've done," he says. "We're going to go right back to the same things we've done in the past."

For the Richmond Convention and Visitors Bureau, Virginia, the first six weeks following the terrorist attacks were hard on business, but area hotels are getting back on track as far as scheduled meetings and conventions go. "We have not seen cancellations for 2002 and beyond," says Cleo Battle, vice president of convention sales. "We're forecasting attendance to pick back up in the first quarter of this year." Battle points out that the CVB typically deals with organizations three to five years in advance, if not more.

"Meeting planners who are coming to town are talking about events years down the road," he continues. "They have to keep doing their jobs. It's up to us to continue to market and bring these folks to town. We haven't stopped doing what we do in light of what's happened."

Battle doesn't expect to see any permanent changes in the meeting planning process as a result of September's events, and indicates that business is returning to normal. "If there is any type of long-term impact, it may be that people start building even stronger relationships between the bureau and the planner so if you are in a city where we face another issue like this, you feel like you've got a partner to help you get through it, which is really what you need," he observes. "Associations will have higher expectations of their planners, so there will be higher expectations of bureaus and cities to produce the best program possible. But I see the market stabilizing and getting back to business as usual."

Jane Eisinger is associate editor of ASSOCIATION MANAGEMENT.

RELATED ARTICLE: Technical Touch-Ups

While the need for face-to-face meetings isn't going to disappear, some new enhancements in the meeting planning process are starting to emerge. One area that executives are already exploring is a broader use of technology. In this new era we live in, we have to program events to be effective both in person and in an electronic mode," asserts Arthur Esch, managing editor at The Aristotle Institute, Leonardtown, Maryland, a not-for-profit organization focused on bringing electronic tools to the meetings industry. "It's a whole new fundamental. I think you're going to start to see a lot of people focusing on creating content for both live and on-demand electronic events. Associations have to keep their audience share out there or they will lose financially and lose their positioning."

Esch predicts that electronic pre-events will become more popular to enhance the physical meeting experience. The meeting business traditionally hasn't been receptive to new technologies, he points out, so "meeting managers who embrace new technologies are going to be the winners over the next five years."

A survey by the International Association of Conference Centers, St. Louis, indicates that many organizations saw an immediate increase in the use of videoconferencing facilities at meetings after September 11. Esch argues that simulcasting isn't always the best solution and is often very expensive. "Less than 5 percent of what goes on at a meeting is appropriate for simulcasting," he contends. "The person who is remote now has to make himself or herself available at a precise time during the day.

"The correct solution," he continues, "is to look at your meeting events and decide on the top 30, 40, or 50 percent of them. Pick the top third and record them and make them available to play back on demand." Technologies that allow for this option include compressed video or providing audio with still-frame images.

IFMA's Longworth says that feedback from his members indicates that videoconferencing and Webcasting will become more popular. "Our members are being asked by their executive managers to look at what they need to do to get their facilities up to speed or to install the latest technology and to look at alternatives to travel and face-to-face meetings," he notes. "We just did a Webcast that was very successful and user-friendly. I think we'll see more of that."

Longworth also predicts that technology currently available in Japan that provides televideo to your cell phone will eventually make its way to the United States. "If all meeting attendees have that type of access... I think you'll see that type of technology exploited to address the current situation. Even in larger meetings that are face-to-face, people will use that technology if they can't attend. It will absolutely make us focus on emerging technologies as a way to address these issues in the future."

Resources

The most pressing meeting issues facing association and hospitality leaders following the September 11 attacks relate to cancellation insurance and attrition. The following Web sites and organizations are good starting points for those who wish to learn more:

* ASAE's newsroom archives (www.asaenet.org/newsroom/archives). Click on 2001 and then "Must the Show Go On?" to read a summary of ASAE's September 21 audioconference about meeting cancellation. Links to information about crisis management and insurance resources can be found at the end of the article.

* ASAE's Meetings & Expositions Section listserver. From ASAE's home page (www.asaenet.org), click on "Networking Listservers," which will take you to the open lists. All ASAE members can access the listserver's archives, which include discussions about insurance, attrition, contracts, and other related topics.

* "Associations: Where Do We Go From Here?" presented by Fusion Productions at ASAE's Management and Technology Conferences last December. To order an audiotape of the session, contact ASAE's Member Service Center by calling 202-371-0940 or 888-950-ASAE.

* The Convention Industry Council (www.conventionindustry.org). A summary of the issues discussed at CIC's Issues Summit last December is available online, as are the results of an industrywide survey of meeting planners regarding canceled and postponed events.

* Professional Convention Management Association (www.pcma.org). From the home page, click on "PCMA Meeting Crisis Management Exchange" to link to resources and online discussions, or click on "Education" to learn about or order recent audioconferences.

Showstoppers Event Cancellation Insurance Includes Terrorism Coverage

The ASAE-sponsored Showstoppers Event Cancellation Insurance Program, offered through the Gulf Insurance Group and Aor Association Services, is now the only major association event cancellation insurance policy to include terrorism coverage. The coverage protects associations in the event of cancellation, interruption, or postponement of an event caused by terrorism, including bioterrorism, threats, fear of travel, or prohibition of travel by employers. Coverage is limited to sublimits, location, and time period for any terrorist act.

The Showstoppers policy form also includes important coverage features such as all-risk coverage for the loss of revenue and up to $150,000 of coverage for the physical loss of personal property while in transit or at the meeting venue. The policy also provides up to $125,000 in coverage for door registration receipts at the event or while en route to the bank.