Gone is the day of simple and straight-forward hotel contracts. When we got our start in 1988, the process of signing a contract for your group with a hotel was fairly simple and there wasn’t a whole lot of financial risk involved for our reunion groups. As with any other industry, businesses find any way they can to maximize profit and over the decades we have seen a drastic change in corporate hotel contracts. We can remember the first time reading a “Room Attrition” clause, and how terrifying it became for reunion groups that simply cannot afford financial penalties after their event.
What Does Attrition Mean?
The actual word means about the same it does in any other context – a gradual reduction in the strength or effectiveness of something. So when you think about this in the context of hotel contracts, it simply means the reduction in the number of rooms from what you reserve in your hotel contract, to what was actually used by your attendees.
Understanding Why Hotels Came up with These Clauses
You may be asking yourself.. why should my group have to pay for rooms we didn’t use? This is a great and fair question. When a hotels signs a contract with your group for a certain number of rooms per night, they take those rooms out of general inventory and do not sell them to anyone else. They give your attendees up until 30 days prior to make their reservations, then the unsold rooms go back into the hotel’s inventory for sale to the general public. What a hotel will tell you is that if you do not sell all the rooms you reserved, they may not be able to resell them and the hotel will incur a loss. So they charge your group for these unsold rooms. In reality, a lot of times the hotel is able to resell these rooms, but they still charge you for them. Without a professional in your corner, it can be difficult to account for these nuances and get what is fair out of a hotel.
How Attrition Works in a Hotel Contract
Attrition is based on the cumulative room pickup, or the total number of room-nights sold for the length of the reunion (one ‘room-night’ equals one room sold for one night). A reunion-friendly contract will not have room attrition at all – and maybe not even a Food & Beverage (F&B) Minimum. Let’s say you have a 3 night reunion and contract for 50 rooms per night = 150 total ‘room-nights’. The hotel will require you to sell 80-90% of the total number of room-nights. We’ll go with 80% for this example. This means you must sell a total of 120 room-nights to avoid a financial penalty. What if you sold 110? This doesn’t seem that far off from 120, but let’s look at what penalty this would equal for your group. Using a room rate of $139/night, you would owe the hotel for 10 unsold room-nights = $1,390 you would owe the hotel after your reunion. Who’s going to pay for that??
How to Avoid Room Attrition Penalties
The easiest way to navigate hotel contracts is by seeking the assistance of a professional – which will cost the group nothing, and possibly save it a lot of money in the long run. For groups with less than 50 rooms per night BookMyReunion.com specializes in securing Risk-Free contracts at reunion-friendly hotels nationwide, contracts that remove both Room Attrition and the Food & Beverage Minimum clauses.
Larger reunions may need to enter into contracts with attrition clauses due to your size and number of rooms the hotel will be taking out of their inventory for your use. It helps for all groups to know how many rooms were sold at the last reunion – on each night from the first room in till the last one out. A typical room pickup might be MO-2, TU-12, WE-89, TH-114, FR-119, SA-114, SU-8. A group should block rooms accordingly and never agree to room attrition holding the group responsible for more than 75% – hopefully not more than 65%. It is also important to block a few rooms early and late so the group rate will be loaded in the central reservation system (i.e. Holiday Inn Central Reservations). The reservation clerk will not be at the reunion hotel and may not see that the group rate is available on early or late nights, even though the contract may say rooms are available at the group rate three days before and after the main reunion dates. This is another reason to seek the guidance of a professional – we can ensure a favorable contract and great service to your members!
Charley Dey
charley@afri.com
757-625-6401
