The meetings and events industry has seen a lot of changes over the past decade. As an event organizer, you will have witnessed an increased complexity in the hotel contracts you negotiate. You are now faced with the inclusion of minimum performance guarantees which come in the form of food and beverage minimums, sliding scales, cancellation policies and guestroom block attrition.
For this article, let’s focus on guestroom block attrition and strategies you can use to manage it. It is important to understand attrition and methods for dealing with it as it can be very costly when mismanaged. The cost may be more than financial; it can potentially damage or strain business and professional relationships.
What is attrition? An attrition clause requires the event organizer to pay damages to the hotel for a shortfall (slippage) in pick up of the contracted room block. In other words, the attrition clause assures the hotel revenue from the guestrooms even though they are not utilized.
Let’s look at some ways you can manage guestroom block attrition and mitigate slippage:
- Contract negotiations – The best scenario is to avoid signing a contract that includes an attrition clause. When one is required, ask the hotel to include the ability for you to make future adjustments to the guestroom block. Most hotels will allow reductions of 15 to 20 per cent. Also ask the hotel to include a clause stating that they will not undercut your contracted rate with discounted online rates.
- Historical data – Obtain historical performance data if your event has been held in the past. In addition to aggregated guestroom pick up reports, pace reports are very helpful as they show pickup on a weekly basis. If this information is not available in prior event records, the previous host hotels may be able to provide you with the data.
- Location – When selecting a property for your event, consider a location with a minimal amount of additional hotels in the vicinity. If there are others within a walking distance, you may lose delegates due to preference of another brand or because of reward programs.
- Incentives and registration policies – Provide your delegates with incentives to book within your guestroom block. An effective method is to offer a discount on registration fees for reserving within the block. The difference paid by delegates who stay outside the block can help offset attrition damages you may incur.
- Education – Delegates need to understand the impact that booking outside the guestroom block has on your event. If you educate them on the financial repercussions affecting your current event and how it can affect their costs in attending future events they will be more likely to reconsider booking outside the block.
- Post-event audit – Ask the hotel to do a post-event audit where they will cross-reference your delegate list with their reservations. Most hotels will provide you with credit for delegate rooms booked outside the guestroom block. They may also include guestrooms picked up before and after the contracted guestroom block dates.
If you are found liable for attrition damages, consider the following:
- Seek credit for revenue amounts (eg. food and beverage) that exceeded expectations as specified in your contract.
- Ensure you are not charged attrition fees for contracted guestrooms the hotel has resold after the balance of their inventory has been diminished.
- Ask that the amount you pay in attrition damages be credited towards future events you may hold at that hotel.
In 2004, the Convention Industry Council completed Project Attrition and published resources to help you develop attrition management plans for your events. The final reports are available at www.conventionindustry.org/ResearchInfo/ProjectAttrition.aspx.
About the author
Brent Taylor, CMP, CMM is a Managing Partner at Timewise Event Management Inc. based in Edmonton, Alberta. He is very passionate about the meetings industry and believes strongly in education, professional development and setting industry standards. Connect with Brent online at www.twitter.com/brentjtaylor and www.linkedin.com/in/brentjtaylor.
This entry was posted in Event Budgeting, Event Operations, Site Selection and tagged contract negotiations, guestroom block attrition, hotel contracts.
