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July 13, 2009

Cancelled meetings cost UK plc £119m a year

Research conducted by BDRC and commissioned by Regus, the global provider of innovative workspace solutions, into the small print of hotel meeting room terms and conditions has found that cancellation charges are costing British companies at least £119 million annually.
“At a time when businesses are struggling to survive, such blatant profiteering is remarkable,” said Mark Dixon, chief executive of Regus.

“One well-known national provider charges 90% of the booking fee for a cancellation with 60 days notice! The average cost of cancellation up to 30 days is 59% and 43% for 60 days’ notice. This might have been acceptable practice 30 years ago, but in today’s market there is simply no justification.
“Recessions bring such archaic, unethical and inefficient business practices to the surface and force their resolution. A great product or service at a good price with fair terms and conditions should be the bedrock upon which all businesses are built.”
Meeanwhile, Matt Costin, a director at research consultancy BDRC, commented: “Flexibility is key to driving recommendation and repeat business for external meetings, and in the current climate, cancellation terms may be coming under greater scrutiny.

“The figure of £119 million is conservative, as we have only looked at small meetings and not the entire market. We were surprised by the significant variation in terms and conditions offered by properties operating under the same brand, something which risks confusing venue buyers.”
“I would encourage businesses of all sizes to find alternative providers, of which there are many, who are structured to provide a flexible, efficient meeting room service purely for businesses, with prices, terms and conditions which are rooted in this century and not the last,” Costin continued.
BDRC found that the average charge for cancellations up to 15 days in advance was 82% of the hire fee. Average cost of cancellation up to 30 days in advance is 59% and up to 60 days in advance is 43%. The average cost of cancellation for each delegate is £26.40.

BDRC contacted 30 hotel meeting room providers by phone in the week commencing 15 June, two in each of the UK’s top 15 brands by distribution. The hotels were selected to be broadly representative of events volume held in key locations across the UK.

Using day delegate scenarios of between 10 and 20 delegates, mystery callers collected information on the quoted rate and the cancellation charges that would apply at 15, 30 and 60 days in advance of the event. The average day delegate rate (DDR) was then calculated and multiplied by the average cancellation charge, and in turn by the number of delegates. For the purpose of the calculation, a midpoint of 15 delegates was used. This gave the typical cost of a cancellation. This data was then scaled up to provide a national figure.

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