Cancellation Policies: To Fee or Not to Fee

October 3, 2001, 12:00 AM EDT

By Chad Kaydo

Of the countless difficult situations to arise from the World Trade Center attacks, this is far from the worst. But it has serious ramifications for the people involved, and it's indicative of larger questions now facing the special events industry.

We talked to someone at a small event planning company who was working on an event for the evening of Wednesday, September 12. On Tuesday afternoon--mere hours after the city watched the twin towers collapse--the planner's client called to cancel the event. A common, understandable response, but it left the planner with rented trucks already packed with all of the equipment needed for the event, including rented audio visual equipment and newly purchased linens. Most of the planner's work for the event--hours spent inspecting the site, coordinating the other vendors, and planning the details--was already done.

But the client doesn't want to pay. And that leaves the planner to figure out how to pay the subcontracted vendors who had already supplied their products. “I think people should be paid,” the planner told us. “No one didn't deliver.”

At a time when New York is still plastered with flyers showing the smiling faces of thousands of missing loved ones, such business transactions can seem trivial. Yet many event companies are facing cancellations costing them thousands of dollars, and reading story after story with socialites and other party people speculating that most events in the near future will be smaller, more subdued and therefore less lucrative for the companies that put them on. For the special events industry, those changes in tastes and moods aren't just cultural trends. They threaten an industry that earns an estimated $4 billion a year, and includes many small businesses that may not survive a few months with drastically reduced revenue.

Even as event professionals worry about such ramifications, most people we spoke with in the weeks following the attacks said they weren't charging customers for cancelled events--even if their contracts allowed them to do so. “I can't profit from grief,” Rachael Dworsky of Connections Unlimited, a destination management and special events company, told us, adding that maintaining her relationships with customers was more important than any immediate financial losses. And Stephen Kennard, president of caterer Canard Inc. echoed her thought: “I think goodwill counts more than immediate gratification.” In some cases, he felt that his contracts would have permitted him to charge customers for cancelling, but he didn't.

The question that remains is, when will companies stop being forgiving? Most of New York is physically unaffected by the attacks. Travelers can come here now if they choose, and guests can mostly come and go in the city as they please. The choice of whether or not to cancel events is the client's decision, based on travelers' fears, the perceived mood of the city or changing corporate travel policies--not necessarily reasons that legally force vendors to refund deposits. “When do we start saying, if you're not going to come, your liable for [the fees]?” asks Anthony Napoli, president of Briggs Red Carpet, an event planning and destination management company that didn't charge any cancellation fees and refunded all deposits to customers for cancelled events.

Many national hotel companies developed similar policies that don't impose fees, but they differ over the length of time they're willing to forgive cancellations. Fairmont Hotels & Resorts isn't charging fees for cancelled events that would have happened between September 11 and September 30. For Ritz-Carlton, it's between September 10 and 26, and for Hyatt, it's within 30 days of the attacks. Hilton and Loews are both extending their no-fee period to October 31, but Loews is requiring customers to rebook their cancelled events within one year. Wyndham says it's working with group customers individually.

Many New York venues are similarly willing to work with customers. The TriBeCa Grand and the SoHo Grand aren't charging for cancellations through the month of September, and are determining policies for future events based on the individual situations. Patrick Ieva, vice president of sales and marketing for Tavern on the Green and the Russian Tea Room, said the venues were applying deposits from postponed events toward their rescheduled dates, and cancelled events were being addressed on “a case-by-case basis”--a popular phrase among those describing their policies. ”We're trying to do what's best for both parties,” says Metropolitan Pavilion's Fred Seidler. “It really depends on the situation.”

Posted 10.03.01

How are you dealing with cancelled or postponed events? Let us know. Send an email to Executive Editor Chad Kaydo at ckaydo@bizbash.com.

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