I write many of these articles due to an experience that I have had with a client. If you follow me at all, you’ll find that I often stress that great planning up front, makes all the difference in the world. Especially, when it comes to mitigating a short fall. Attrition is something better avoided than planned for. In many cases, when you’ve contracted properly and you’ve continually managed and communicated with your venue, all parties walk away satisfied with the outcome.
Unfortunately, there are the times when you do all the things right on the front end, but still come up short. When you realize that you are not going to pick up all you need to avoid paying for damages, there are a few things to do and not do that will make the process better for all involved.
Step 1 – Don’t hope that it will go away by ignoring! I have known many planners that were so fearful their managers would blame them for the shortfall that they refused to address it up front with neither their management nor their venue.
Step 2 – Don’t wait for your cutoff date. If you know that your numbers are trending off what they should be, throw a red flag immediately. Bad news does not get better with time! As soon as you realize that you may have a problem, document it and communicate it to all pertinent parties. A shortfall in attendance not only relates to sleeping rooms, but also meeting space, food and beverage, A/V, transportation, and DMC’s, if involved, as well as many outside suppliers.
Step 3 – Do an audit. Ask the hotel to do a quick audit to see if reservations have been made “around the block.” You may find that there is a reason for the shortfall that you can correct to limit your exposure.
Step 4 – Begin to calculate the financial impact. Take your contract and look at how you agreed to calculate your shortfalls. Did you agree to 80 percent or 90 percent room pickup? Did you remember to stipulate payment on room profit, not rate? Did you agree to pay daily attrition or cumulative? What was your food and beverage minimum? Was the F&B shortfall based on food profit? Will there be concessions removed? Meeting room rental? Take the time to get it all laid out on a spreadsheet, this will allow you to make changes and updates, and see what the negative impact may or may not be.
Step 5 – Don’t agree to pay anything until your event is over. I have seen offers to prepay attrition with discount enticements. If your group is huge and the number is significant, it may be beneficial. But, if your hotel sells out or significantly sells into your shortfall, you may be getting “double dipped.” This is where you pay for rooms not sold and the venue sells those same rooms to another group or transient travelers. Upon the conclusion of your event, ask for another audit and a report from the hotel accounting department on what their occupancy was for your event. Ask to have rooms out-of-commission and under repair deducted as well as rooms held for other groups, rooms held for military personnel or occupied by staff.
Step 6 – Negotiate, negotiate, negotiate. Sit down and strategize how you are going to negotiate what is owed. Ask yourself, “If I was owed the damages, what would I accept?” Put yourself in the position of the hotel. Look at all aspects of your event. Look at the potential for future meetings that will offset the loss. This is a process that may be painful for some. The larger the amount the tougher it may seem, but the hotel wants you to feel good when it is all over. They also want to feel that it was fair, and that you’ll want to come back and refer others to them.
Step 7 – Maintain and track your history. I encourage all clients to spreadsheet and even graph their attendance/reservation history. It is invaluable when planning. You’ll see how far out you “peak” and what your marketing is doing. But most of all, you’ll be able to show future venues your pick-up pattern. Learn from your mistakes. Maybe you changed patterns or dates or are in a location that may have seemed like a great idea but fell short of expectations. There are a hundred and one reasons things may have not clicked and the sooner you figure out what it was, the easier it will be to ensure it doesn’t happen again.
In closing, remember you learn more from your failures than you do your successes. Not that paying for a shortfall is failure, but it certainly is not something you want to occur on a regular basis. Remember all of these steps, and more, are occurring every day in this business. Don’t let any of it stress you. Instead, plan your best, get your contracts to a point where they assist you in minimizing risk and look forward to each successful meeting and event you plan.