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September 18, 2012
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John Hooker – Where is the contract when it all goes wrong?




It has been an interesting summer. On one hand the seamless and spectacular London 2012 Olympics showcasing event management at its very best where suppliers were procured and contracted before work commenced. The security firm G4S failed in part of its contract and paid a hefty price for non-performance, but a contract was in place and a contingency plan too. On the other hand a number of recent examples of why the industry disregards contracts and terms and conditions at its peril.



The problem is not a new one, but it is certainly magnified by a number of issues from the ever-present short deadline from enquiry to event date; inexperienced event staff; a fear that terms and conditions will “scupper” the deal and thus best left on the shelf; and the time it takes to finalise the same.

The idea that faith, hope and charity will save the day is naive to say the least.

There is the assumption by some that a site inspection taking place this is confirmation of the event. Not so. How many DMCs take the time when the client is in town to “run them through the terms and conditions” so any issues can be ironed out? It is no different than talking about risk assessment or contingency planning as all are part of today’s events landscape. How many DMCs even send a quotation before the inspection visit because if the event does not confirm then costs have been incurred? 

It is interesting how many agents charge time for their part of the site inspection, but expect the DMC to offer a totally complimentary service. Is this a case of someone getting rich at someone else’s expense?

Destination suppliers, restaurants especially, are less generous with complimentary services these days so someone is going to have to pay.  There is also a time element too which you can argue is cost of sell, but even so needs to be recovered or budgeted if the event does not go ahead.

So the inspection visit results in a confirmed group and this is the crucial point. It is at this stage a contract needs to be in place before work commences and this is as true for the agent as it is for the DMC.  It is even more important if there is a short deadline with an unknown quantity. It is all too easy to be seduced by the planning process with so little time available. Take a leaf out of the hotel and airline industry, where contracts are expected and accepted, but I doubt if it is carefully scrutinised other than to see when payments and names are due.

The strength of an email saying “we will be working with you on this project” is insufficient and won’t stand up in court.  The starting point has to be “Has the agent got a signed contract from the corporate client, or something pretty close to it?”  How often, I wonder, does the agent start work with the suppliers with no contract in place and when it starts to go wrong an awful lot of people may have done work with no recourse to compensation for the time spent or other bookings turned away.  Should a DMC dare to submit terms and conditions to the agent then the professionals in the industry accept this as the norm and the others huff and puff and consider it an affront when they should have their own house in order first?

The pricing model for many DMCs is wrong too. The quoted per person or per unit price with a “mark-up” is a throwback to the travel industry and tour operating roots.  It does not sufficiently cover the time it takes to plan the event.  The agent can forget that the DMC is doing more than just providing local product from hotels to restaurants. They do plan the onsite transportation logistics, risk assess from the procurement of their suppliers to health and safety compliance of every element of the event; ensure special diets are catered for and a whole more besides and that all takes time.  So when a partial cancellation occurs the DMC is left with no recompense for the work done. Here is another good reason why a fair and equitable contract needs to be put in place from the outset. I doubt if many agents today work on anything other than some sort of fee so why should this not work for the DMC too.  When corporates work direct then I know of number of DMCs who take this fee based approach and this will grow.

Eventia, the UK Trade Association for the events industry, has drawn up a decent set of terms and conditions, easy to read and understand, which work well for service suppliers (agents and DMCs) and this is a good starting point (I sit as a co-opted member of their Regulation Committee and worked with a cross industry group to put these in place).

In some countries and Brazil is a good example, only a paid deposit will secure space and reconfirm a rate and “don’t you realise who we are” counts for little.  So send your client an invoice at the point of confirmation as that tends to focus the mind and ensure it has the line, “by paying this invoice you accept our terms and conditions” is on the invoice.  Once paid, then you can start the planning and everyone knows that it will cost when things go wrong but at least you know who is responsible for paying the bill. If you are a DMC then also recognise what is being asked of you needs to be reflected in your terms and conditions with your suppliers and that is another issue altogether when you are dealing with the world and his elephant.(which may well be in the room)

John Hooker is a change management specialist and the Managing Director of JHCP Limited based in the UK and a Founding Partner of the collection destinations based in Brazil.


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About the Author: John Hooker



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