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How to beat cancellation charges

3 August 2018

Victoria Deprez, Senior Event & Team Manager at ETM, shares best practice on how to avoid paying 100% of costs if you have to cancel an event.

The best advice is to read the contract thoroughly and be aware of the cancellation policy and your liabilities. Make a note of all important dates.

Re-booking at the same venue at a later date will save you paying the full cancellation fee as the hotel, for example, should take into consideration that they will pick up the delegate dinners and other F & B revenue so they should not charge you for those losses. “Don’t hold anything back, lay it all out to them,” advises Victoria. “Get them to see that it’s a revenue generating event rather than a revenue loss.” And if your department can’t re-book the event at the same venue, perhaps another department can.

Victoria cites an example of a cancelled event re-booked on another date at the same venue where contractually the client should have paid £328,000 for the bedroom cost but only paid £185,000 as a hotel amendment fee. When you cancel is crucial as the sooner you can let the supplier know the better chance they have of recouping their losses and rebooking the rooms. “The earlier the cancellation the smaller cancellation fee you’ll pay,” says Victoria. For example, six months out may only be a 50% charge, but three months out might be a 75% charge and one month out the full 100% charge.

The earlier the cancellation the smaller cancellation fee you’ll pay,” says Victoria.

The hotel’s Revenue Manager needs to be your best friend in these circumstances as the outcome of the negotiation will depend on your relationship with the supplier. “You need to have a very open and frank conversation with them, “ advises Victoria. “Take the line, ‘We put £500,000 worth of business your way so what can you do?’ Most of the time they want to help and win the repeat business. The key is not to see your supplier as the enemy. If you have that approach you’ll never win.“ The hotel will be working out the possible loss of yield as it’s unlikely that they will pick up another event to replace it so will be reliant on transient business to fill the empty rooms.

It’s equally important to keep a close eye on the supplier’s attrition policy because as the date of the event comes closer, you will have less flexibility to change delegate numbers – known as droppage – without incurring a cost. “Put the dates in your diary two days before the deadline,” says Victoria. “There are normally three stages to verifying delegate numbers say, three months out, two months out and one month out.”

At contract stage, take the upper hand and negotiate the attrition percentages in the contract. “Don’t just take what they give you,” she says, “particularly if the event is happening during a quiet time of year.” Check what confirmed delegate numbers were at different times for the same event the previous year for guidance. It will help in your negotiation. Remember that if you drop rooms the hotel will put them up for re-sale.

“Don’t just take what they give you,” she says, “particularly if the event is happening during a quiet time of year.”

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