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Mandalay Bay Sues Over Convention Cancellation

LAS VEGAS -- Mandalay Bay recently filed a lawsuit against a California company that cited fear of traveling in the wake of the Sept. 11 suicide hijackings for canceling an October conference at the South Strip property.

The company responsible for planning the conference canceled it due to "the tremendous swelling of sentiment among (its) attendees regarding a resistance to travel at all," Mandalay Bay's filing noted.

The 3,700-room megaresort argued that the California company's claim "is bad faith and a pretext. (The company) ... seized upon the tragedy as an excuse to breach its contract."

Mandalay Resort Group, the company that owns Mandalay Bay, doesn't believe the California company's claim that the conference was canceled because of Sept. 11, said Senior Vice President John Marz.

"There are numerous companies that honored their commitments to conventions around the country and in Las Vegas," Marz said. "We tried to work with companies facing problems, finding them other dates. This particular company we couldn't come to an agreement with, but everyone else is fine."

Marz said the lawsuit is the only one the company plans against conferences canceled following the Sept. 11 tragedies.

Mandalay Bay's lawsuit was filed as Las Vegas recovers from the low midweek hotel room occupancy and depressed room rates that followed the terrorist attacks.

Convention and travel-package tourists generate the bulk of Strip midweek revenues.

Strip hotel-casinos reported the loss of about 250 separate meetings, conferences and conventions in the weeks following the attacks, said Las Vegas Convention and Visitors Authority senior research analyst Kevin Bagger.

According to the lawsuit, filed Thursday in Clark County District Court, Irvine, Calif.-based Conference and Travel Management Inc. signed a Sept. 8 contract with Mandalay Bay to hold the Tenet Financial Leadership Conference from Oct. 26-31 at the megaresort.

The contract allowed CTM to cancel the conference without cause by paying Mandalay Bay at least $391,041, or 60 percent of the revenue the megaresort would have received for its hotel rooms and food and beverage services, the lawsuit noted.

Other than the cancellation provision, CTM's contractual obligation to pay for the conference was excused only by an event of "force majeure," the filing argued.

Force majeure is defined by Black's Law Dictionary as "an event or effect that can be neither anticipated nor controlled, including both acts of nature and acts of people."

The lawsuit claimed that on Sept. 18 CTM called the megaresort seeking to postpone the conference, claiming it was entitled to do so by the contract's force-majeure clause.

Mandalay Resort executives explained to the company that a postponement would be treated as a cancellation, and CTM would be liable for damages.

CTM, however, argued that the Sept. 11 terrorist attacks "were unforeseeable events precluding us from holding the event at Mandalay Bay."

Mandalay Bay is seeking more than $10,000 in damages, lawyer's fees and costs.

CTM executives failed to return Friday phone messages.

MGM Mirage spokesman Alan Feldman said his company, the Strip's biggest operator, has already filed a similar lawsuit against Xelus, a company that on Sept. 13 canceled a conference slated for Oct. 6-13 at MGM Grand.

The company is also prepared to file a lawsuit against another group that waited until two days before its conference's scheduled start to cancel a meeting at The Mirage earlier this month, Feldman said.

"We allowed everyone to cancel conferences scheduled in September," Feldman said.

He noted that MGM Mirage executives already knew the Xelus conference, which had reserved 980 room nights, was having trouble before Sept. 11 booking the room nights it had committed to.

"They used Sept. 11 as a pretext to cancel," he explained.

Park Place Entertainment allowed September conferences slated for its five Las Vegas properties to cancel without penalty, spokeswoman Debbie Munch said.

Meetings scheduled for October or later that were canceled were assessed cancellation fees, but Munch noted that the company treats each client circumstance individually.

Park Place has not filed a lawsuit against any conventions canceled in the weeks following the terrorist attacks.

Harrah's Entertainment had only one conference canceled after Sept. 11, company spokesman Gary Thompson said.

A U.S. Department of Defense group canceled a December meeting scheduled at Harrah's off-Strip Rio property.

Harrah's understood why the DOD group canceled and levied no charges for the action, Thompson said.

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