It seems that whenever I make a presentation, the issue of attrition is always on people’s minds. Typically it is due to a recent episode where a group had fallen short on either rooms, food and beverage or both. Whenever I hear, “How can I get out of paying it?”, it is a constant reminder that preparation and planning before contracts are signed is mandatory! Remember, attrition charges are part of the up-front contracting and negotiation process. Additionally, how you structure and specify how charges will be calculated, and what terms and conditions will apply, could mean the difference between a few hundred and tens of thousands of dollars.
Here are a few things to keep in mind:
- The key to protecting yourself is in spelling out anything that can be “interpreted” rather than understood.
- Be SPECIFIC!
- Use examples in agreements when calculating fees/damages or penalties
- The only way to avoid paying attrition is to not agree to any “performance” clause in your contracts. In some circumstances, venues will agree to this. Overflow or last minute/short term business are good examples.
- Base damages on “profit” not revenue. Always specify that damages will be based on the profit % of rooms or Food & Beverage, not retail pricing. This will save you up to 25 percent if you fall short.
- Carefully word your attrition/performance clause. Request the following items be provided at the time that your damages are calculated:
- Sold out conditions at the venue. If you are being charged for 50 rooms, were there 50 available? You may find that you were inadvertently being “double dipped” based on rooms available.
- Audit and credit for all in attendance staying at hotel regardless of rate. With the proliferation of the Internet and the fact that some reservations may not have been identified as with your group, by providing a registration list, an audit may reveal that you had more rooms occupied in the hotel on the nights you were short.
- Cumulative not daily calculations. Always ask that any performance fees be based on the total rooms usage, not daily totals. This way a spike on one day will assist in compensating on others where your pick up may not be as strong.
- Any credit for unused comps/free rooms. Specify/request that any unused free or comped rooms be credited toward your totals.
- If this is a reoccurring meeting or event, or if you frequently do business with this property, request that you get a re-booking credit toward a future meeting.
Do your homework. Gather your history. Planning is essential. Hotel agreements are crafted in favor of the venue. You can level the playing field and reduce your risk if you take the time during the contracting process to protect yourself and your company or client. Great meetings are profitable ones … WITHOUT ATTRITION!