M3:01 Solving Problems and Making Decisions

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Unit 301 – Solving Problems and Making Decisions
In the following pages I will discuss the nature, scope and impact of problems that can arise within the industry, what can be done to resolve the issues, and how we can evaluate the final outcome. A common problem that is faced within my industry, and the problem which I have chosen to concentrate on in this document, comes in the form of clients cancelling events after signing a formal agreement or contract with a venue. There are numerous reasons that cancellation of an event may be necessary. These include: Changes in the clients financial situation; issues that have arisen between the client and the venue or the venue’s affiliates; a decrease in the number of attendees meaning that it is no longer feasible to run the event; an increase in the number of attendees meaning that the venue is no longer suitable; a venue may encounter an issue which means that they are no longer capable of holding the event (therefore the event is cancelled by the venue). These are just a small number out of a myriad of reasons that I have encountered in the past. I will be concentrating on cancellations made by the client in this discussion. Agreements or contract include clauses which state the penalties involved in cancellations. These terms are there to protect both the client and the venue. By signing these contracts, the client are agreeing to honour the terms described. Many venues will show flexibility with these terms as a gesture of good will, however this is not always the case and is completely at the discretion of the venue. Dependant on the amount of notice of cancellation provided by the client, cancellation charges that are incurred can vary greatly. The notice periods required can also vary greatly from venue to venue. For example, the following has been taken from the terms and conditions provided by a chain of UK hotels: Date of cancellation

Cancellation payable as a percentage of Revenue for all facilities, equipment and ancillary services reserved In excess of 36 weeks prior to the start date
No charge
Between 36 weeks and 24 weeks prior to the arrival date
25% of the revenue
Between 24 weeks and 8 weeks prior to the arrival date
50% of the revenue
Between 8 weeks and 2 weeks prior to the arrival date
75% of the revenue
Less than 2 weeks prior to the arrival date
90% of the revenue
This shows that should the client cancel their event more than 36 weeks prior to the start of their event then they will not incur any cancellation charges, however as the date of the event draws nearer the charges are increased in stages. Staggered terms such as these are common with major hotel groups. The terms above are unusual, however, as this particular group will charge a maximum of 90% cancellation charges whereas many venues will charge up to 100% of the contracted revenue at their specified notice period. Another venue may have a clause in their terms and conditions which states that should a cancellation be made once the contract is signed then there will be 100% charges regardless of the notice period. In order to solve the problems encountered under these circumstances, we need to know: what has been agreed between the client and the venue; what the client expects as an outcome of the cancellation (i.e. does the client want charges reduced or waived, or do they accept the fact that these charges will be made?); and the reason for cancellation. Finding out what has been agreed between the client and the venue would usually involve checking the contracted terms and conditions, however in some cases there may have been further agreements negotiated subsequent to the contract being signed. It is always best to ensure that all correspondence is acquired to gain a full understanding. Written correspondence is essential as this ensures that all terms are mutually understood. With regards to the client’s expectations, the client would usually outline this when...
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