Attrition Clause Explained
What is Attrition?
The purpose of the attrition clause is to avoid risk. In the event that a group fails to meet their room block commitment, the hotel will require a payment to make up for the rooms that are not rented. Payment will be according to the terms listed in the attrition clause.
How can a Planner avoid attrition penalties?
Our specialists at ICR are well versed in negotiating contracts and in particular, attrition clauses. We will ensure that the hotel is accountable in areas pertaining to attrition as well. The best way to head off attrition is to apply strategies before the contract is signed. Although there are many to cover, here are just a few tactics that will prevent future problems and risks:
- Contract language: When negotiating the contract, include verbiage that will protect your group from penalties. Although there are many approaches that will keep attrition at bay, the most typical issue would be the hotel’s resell policy. Some hotels will forgive attrition if they sell out. But if you’re at the hotel during a typically slow season, you need to know what their average occupancy would be. If they don’t normally sell out over your dates, you should indicate on the contract that you’re only obligated to the occupancy level that is usually attained over your date’s time period.
- History: The most effective way for you, the planner, to avoid attrition risk is to arm yourself with history. Monitor your sleeping room pickups from past meetings. Keep track of both the final pickup numbers as well as week-to-week reservation patterns 10-12 weeks before your meeting. Understanding your history will allow you to appropriately block rooms for future meetings.
- Share the risk: When both parties agree to equally share the risk rather than trying to place more of the burden on the other party, contract negotiation becomes a less suspicious and more open-minded experience which will eventually lead to a successful and balanced contract.