Attrition penalties are an issue meeting professionals must contend with day in and day out. They are fees charged by hotels if a meeting uses fewer hotel rooms than were agreed upon in the contract. There are ways these penalties can be dealt with, and Prevue reached out to its advisory board for tips.
Numbers Don’t Lie
“Numbers do not lie,” says Susan Avery, head of innovation-meetings and events, Andromeda Group, when asked about attrition. She had an experience with a hotel that did not calculate the room block or revenue correctly. “We had more upgrades producing more revenue for the hotel, that went way over the contract dollar amount. I find salespeople do not have enough experience to look at both and planners need to be very careful when contracting as the clause needs to state, ‘Room block numbers OR revenue achieved, whichever is greater.’”
Communication is Key
Nikole Fridenmaker, CMP, business events expert, says a key is to have open communication and a good relationship with your sales partners.
Her tips include utilizing booking history and carefully selecting the block size. “Negotiate for the best attrition clause possible. Read it carefully, and make sure all parties and everyone working on the program understands and doesn’t miss deadlines,” she says.
She also recommends doing an audit. “Even if you meet your numbers or you don’t get back the commission. It will help ensure you know your true buying power,” adds Fridenmaker.
A tip she suggests keeping in mind was given to her by a rooms coordinator who enjoyed working with her team. “In an audit, the computers will not pick up the difference between Stephen Smith or Steve Smith. So get an intern. Have them go through the housing list versus attendee registration. Anyone not on the housing list, place in a spreadsheet, and then if they have names that use a common nickname, put both versions on your list.”
F&B and Attrition
Another planner, who requested anonymity, shared an attrition story from hell. “My nightmare happened last year when a huge, four-week training program was scaled back. The property was willing to work with us based on our history; however, we did not have any meeting we could place there of equal size in the next six to nine months. We went back and forth several times, and even though the property gave us $110 thousand to work with, when we redesigned the training program and shaved back, we ended up shoveling out $220 thousand in attrition/cancellation fees.”
The July program was scaled back in February. “I often wonder why food and beverage is affected by attrition. My frustration is that if I cancel on you four to six weeks out, I understand. However, if you have notification months in advance, I feel like food and beverage hasn’t been purchased, so concessions should be made.”
Doug Wheeler, principal, Summit Performance Group, says the key is to have thorough safeguard clauses in the contract. “Over the years of operating SummitPG LLC, we have had cancellations and force majeure events that we have had to deal with, but they have worked out well for us,” he adds.