Just as event hosts can cancel their venue contract for "justified reasons" (breach of contract by venue, change of flag or property management of the venue, diminished performance standards) and "no reasons" (too large to fit venue, desire to host in another facility, internal business decision) – venues have the same CANCELLATION options – they can cancel WITH REASON and WITHOUT REASON!
Let's look at QUADRANT 3… where the VENUE can cancel the group's contract WITHOUT REASON!
Unless you are willing to "take a chance"… it is clearly our responsibility as event hosts to protect ourselves with written RIGHTS and REMEDIES should the venue cancel our contract for no contractual reason.
In 20+ years of reviewing venue contracts for clients, I have only seen 1 venue contract that realistically acknowledged the FINANCIAL IMPACT on my client (with real dollar values!), should the venue WANT to cancel my client's group contract! WOWEE! That means that in all of the other venue contracts, I've had to negotiate for a BALANCED contract.
So, what do you need to consider?
Here are 2 THOUGHTS, an EXERCISE and 1 NEGOTIATION TIP!
DIRECT and INDIRECT DAMAGES
In the situation where a venue cancels an event contract – with no reason upheld in the contract – the event host needs to have considered (and absolutely include in the contract!) the DAMAGES that will/could be encountered to either relocate or postpone their event. There are going to be financial implications that are clearly measurable (DIRECT damages) and there are going to be financial implications that are less obvious (INDIRECT damages).
DIRECT DAMAGES can include, but are not limited to:
Expenses associated with relocating the event to another facility (perhaps even to another geographic location)
Increased costs for a higher rental fee in the alternate location
Site inspection trips
Process for notifying attendees of the changes
Staff overtime hours
INDIRECT DAMAGES can include, but are not limited to:
Potential loss of registration fees
Potential loss of sponsorship pledges
Potential loss of exhibit fees
Potential loss of goodwill with stakeholders
RETURN OF DEPOSIT
If there is any reference to the venue having the right to cancel the contract, it most likely only indicates that it will return "any deposits paid by group". This is woefully insufficient! We must hold the venue to a much higher standard of accountability! As the event host, the return of deposits AND the calculation of DAMAGES (see Tip #1) needs to be expected.
What real expenses have I incurred to date?
What expenses would I incur if I needed to move or postpone my event?
What non-financial damages would be done if my event was moved or postponed?
Who would be affected by moving or postponing my event at this point in time?
And finally, my NEGOTIATION TIP: If you encounter a situation where the venue does not want to include an appropriate "cancellation by venue" clause in the contract... i.e., "we would never and have never cancelled a group" – then I would suggest that you strongly defend the premise that a contract is between 2 parties and that BOTH parties should be held accountable – not just one! This means then that the event host needs to articulate "if you are aren't going to be held accountable to me for breach of contract, then I shouldn't be held accountable to you"!