The sense that life came to a screeching halt in March 2020 is real to many of us, but for Susan Kushner, it’s a literal truth. That month, Kushner was prepping for her company’s retreat in northern California to celebrate what was to be their busiest year ever. Then came the pandemic. Her business — she is president and CFO of Kushner & Associates, which provides transportation management for meetings and conventions — evaporated.
The last shuttle rolled the first week in March 2020, in New Orleans, “and then, slowly, over the next six months, it was a waiting game while client after client canceled,” Kushner told Convene. During this time, “I had no choice but to remain open and keep staff employed to continue servicing the accounts — making changes and adapting to ever-changing COVID protocols — so that if the meetings did not cancel, we would be able to perform.”
Kushner called the process “a long, drawn-out force majeure,” and like the rest of the events industry, her company’s force majeure clauses “were written for single events, such as a hurricane in a single city, and not intended for an ongoing, 18-month-long shutdown, nationwide,” she said. “Eventually by late summer of 2020, all business was canceled and by late fall 2020, it became apparent that the first quarter of 2021 was canceling. I was able shut down and reduce expenses.”
During this time, most clients did not provide prompt notice forcing Kushner’s shuttle company to remain open. “Some clients understood how this was impacting our business model,” Kushner said. “We collaborated and were paid modest and reasonable management fees. However, some clients expected to be able to wait until well past the time when it became apparent that it was unlikely their show would happen and then still be able to simply walk away from contracts.
“You have to imagine, if you could step outside the hospitality industry,” Kushner said, “if the clients of any other small business required that business to remain open in standby mode with overhead to maintain the trained staff and business infrastructure for an unspecified amount of time while waiting for revenue — we would all understand that is not a practical business model. We offer a complex service requiring a robust internal infrastructure and experienced staff and can’t just turn off and then back on, like a light switch.”
No Pivots to Be Made
For Kushner, there was no Plan B to pivot to during the pandemic, when planners and suppliers moved online. “Obviously, virtual meetings do not need transportation,” she said. Any kind of pivot would have meant starting a brand-new business.
“We provide a niche service to plan and implement on-site transportation systems for in-person conventions. Our pre-pandemic business model was to provide year-round, ongoing support in designing and revising shuttle plans, doing advance logistical planning without the ability to realize profit until after the event was complete,” she said. “We allowed clients a lot of flexibility to make changes and reduce their requirements, which for us means more work for less revenue.”
Now, as the industry is re-opening, Kushner is facing a lag in supply and labor while vendors rebuild. To outlay funds to rehire staff and rebuild fleets both Kushner’s company and the bus company vendors they work with need firm commitments from clients for revenue.
Kushner’s business model seems straightforward, but she’s found that not all convention organizers understand how it works. “Over the years, clients have wanted to have a set bottom line without any fluctuation in pricing which precludes direct payment for advance logistical payments,” she said. “Many clients also had a general unwillingness to pay fees for commission, administration, or management, and expected us to shoulder those costs related to managing their events out of profit. Moving forward, the transportation management industry is revisiting the sustainability of this business model which will shift to be more in alignment with those business models for booking other travel arrangements, such as air.”
Kushner said she is working in partnership with her clients to reshape the business model with changes in the planning timeline, and updated payment and refund schedules. No business, she said, can be sustainable for such an extended period of time by only covering expenses. “We are thankful for the support and understanding of our many clients who are working with us to develop this new business model and making firm commitments so that we can hire back staff, and plan for the future with an understanding that both risk and reward should be shared,” she said.
She also is thankful for the “reasonable and practical clients who used their discretion to work out a fair settlement amount” with her when their events canceled, she said, allowing her to maintain staff to service their accounts during and after the pandemic. But it has not been a straightforward process. Kushner has furloughed and laid off staff — “a crushing experience for a small company with long-term staff,” she said — bringing some back with PPP funds which ran out well before the industry opened, so the entire process had to be repeated.
Kushner kept key people who she didn’t want to lose, “because there was always the sense that things may open up soon.” She was concerned that if she let her entire staff go, they would take other jobs and she would not be able to service clients.
New Way to Fuel the Business
While much uncertainty remains about in-person events in the short-term, Kushner and her team are educating clients about the need to make commitments so that she can allocate staff and resources to their events.
Pre-COVID, the business model for shuttle transportation was to “give the client a budget, they paid us, the shuttle happened, we got profit from the shuttle, and that’s what ran the business,” Kushner said. “We had a lot of business — 60 to 70 conventions a year. There was never a cashflow problem. We just kept moving forward. Made a profit, had good people who earned good salaries. I had staff that have worked for me for 20 years.”
Now, when a client calls with anticipated business, Kushner says, “’Well, we have a contract with existing terms, but obviously those terms for payment cancellation, force majeure, are not working in this situation, nor are we following it, because if we were following this, they would have given me a deposit six months ago. We normally get deposits a year in advance. We work on a show a whole year. That’s fairly standard in our industry that when one show ends, meeting planners immediately begin working on the next year — no different for shuttle companies.”
“I think there is a chasm between the way that these shuttles have been procured pre-pandemic and what the realities are now,” said Bill Reed, FASAE, CMP, chief event strategy officer, American Society of Hematology, a client of Kushner & Associates. “I think the buyer is trapped in a paradigm of the past. Many of these vendor companies are small businesses, and while many perceive them to be bus companies, they are really consulting companies with a specific expertise and specialized labor to manage subcontracted equipment from other small operators.”
Reed noted that “the legacy model was based upon the eventual delivery of service, and there was no pre-payment for the planning labor and overall project management that is incurred well in advance of the meeting dates. The challenge now is these companies have been crushed during the pandemic and have limited labor to do the pre-planning work for upcoming events because contracts don’t call for payment until post-event. How can they bring back staff if there is no hope of revenue coming in for months and months down the road?”
Reed thinks that planners need to be flexible with vendors like Kushner & Associates as in-person events start to return. “If these companies go under,” he said, “citywide meetings are in jeopardy.”
Partners, not Suppliers
Lexy Olisko, vice president, expositions, PRINTING United Alliance, has approached the relationship with Kushner & Associates as more of a partnership than service provider. “I think you have to recognize that, okay, fine, they didn’t provide you a shuttle bus — because we ended up canceling our event as well — however, they still had to reserve buses,” Olisko said. “They still had to map out and figure out where our buses were going to go. Perhaps they had to apply for permits. It’s not an on-off switch. It’s stages of work that they have to do. I think as planners, we have to recognize that.
“Everyone says,” Olisko continued, “’We’re all in this together.’ It’s a nice thing to say, but we have to recognize that these are businesses — they have costs, they have employees, they have to pay those employees. It’s not as simple as, ‘Oh, well, I’ll just cancel and not pay anything, and they’ll be fine. They’ll get some other business.’ That may not be the case.”
Mandy Davis Aitken, vice president, meetings, for the American Society of Clinical Oncology (ASCO), likewise approaches ASCO’s vendor relationships with a similar “spirit of partnership,” she told Convene. Planning for ASCO’s events in 2020 and 2021 have been “incredibly challenging,” she said, and “this doesn’t go away post-pandemic.”
Not knowing how many in-person attendees there will be in the “new hybrid meeting environment,” Aitken said, will require a “balancing act” in terms of planning shuttles with Kushner & Associates, and involve “lots of close communication about options and decisions about how to move forward together. ASCO needs to be upfront about what information, details, and services we need on what timeline and understand that some of those staff costs will need to be paid upfront. Similarly, the transportation company needs to share with us what has to be reserved and when and help us understand how late we can go in the timeline and make changes so that we can decide what kind of risk is appropriate. We need to communicate throughout the process and both sides need to make concessions to go forward in the best interest of the meeting.”
The New Normal
Kushner said the current, uncertain environment has forced her to shift the way she had worked with clients and vendors. “Every single client has a different circumstance,” she said. “I’m customizing agreements and collaborating with both clients and vendors so that we are working in sync to meet all our needs with share risk. Many clients have offered and now expect to pay non-refundable retainer fees and/or other payments to initiate the planning process and confirm equipment and staff knowing that at some point, payments will be non-cancelable, non-refundable for any reason — if the building blows down, whether the event was canceled for COVID, it’s just old-fashioned, liquidated damages. I need to know what my revenue will be, both in terms of profit and management, so that I know how to manage cashflow, and who I can hire back. I have to make a commitment to the bus companies, because they’re not interested in taking orders on spec.”
Kushner said she also is running up against a supply-and-demand problem: Bus companies that have had no business have parked their fleets, perhaps missed lease payments, skipped insurance, or shrunk their inventory of vehicles. In addition, bus companies have other demand from sporting events paying “top dollar,” booking in advance — and paying for COVID tests for the bus drivers, which Kushner noted is something that most other organizations cannot afford.
Despite all of the challenges of the past 18 months and the difficulties ahead, Kushner said that she is “hellbent” on getting her company “up and running. I want jobs for my employees who have worked for me for a very long time, and they want to come back. They’re like my family,” she said. “I am going to figure out a way — shuttles will be needed on some level. I’ve got to get them settled and back on their feet. That’s my motivation — jobs for my employees.”
Michelle Russell is editor in chief of Convene.