8 Creative Techniques For Avoiding/Reducing Attrition Expense

Michael McCurry

Michael McCurry

By Michael M. McCurry, CMPExperient

In April, Experient hosted three Meetings and Events industry forums in Chicago, St. Louis and Washington DC.  Experient team members, as well as prominent association and corporate executives met to discuss and brainstorm hot industry topics.  This is the third in a three part series of articles recapping the highlights of those events.

Coinciding with renegotiation of a hotel contract is the sometimes painful topic of attrition.  In these tough economic times room block performance has become a pervasive issue with most organizations hosting meetings and events.

Thinking creatively and acting proactively is paramount to alleviating, or at the very least minimizing attrition risk.  The following are some suggested techniques for addressing this issue.funny hotel cartoon

  • Mitigation Clause — Make certain you get credit for “re-sold rooms”.  If your hotel contract does not contain a provision crediting your organization for room nights resold by the hotel request that it be added to it.
  • Attrition Buyout — If you are certain your event will have an attrition expense then offer an early payment in exchange for a reduction to the liability.  For example if you believe you will owe $100K, negotiate to pay a smaller amount (i.e. $50K) several months in advance.  The hotel deposits the funds earning interest on them, and enhancing their cash flow.
  • Credit For No Shows — if the  hotel is collecting lost deposits for no shows this should be credited against the attrition obligation.
  • Off Site Catering — Move off property Food & Beverage events back into hotel.  This provides an alternative unexpected revenue stream to help offset the room shortfall.
  • Leverage Brand Relationship — In a city where several hotels with the same hotel company co-exist negotiate an agreement where your organization gets credit for rooms booked at all the hotels operated by the contracted brand, regardless of whether they were contracted or not.  As part of this arrangement, you must conduct room audits with all the designated hotels.  For cities with relatively large hotel room inventories this technique is particularly effective.
  • Bring Attendees Back to Contracted Hotel — move attendees that have booked outside the block into the contracted hotel(s) and pay the rate difference.  This will be less expensive than paying full attrition on unused rooms and is a winning proposition for everyone.
  • Convert Attrition Expense To Gift Certificates — Attrition is converted to gift certificates and then sold to the attendees to giveaway as incentives, etc. Every time a gift certificate is used – a proportionate reduction is made to the attrition obligation.
  • Future Events Booked into Attrition Hotel — If your organization is able to place other future business into the affected hotel, then you should be able to negotiate a reduction of the attrition obligation based upon that event’s projected value.  This arrangement is most effective if you are able to provide new business during the same calendar year.

Do you have a technique for addressing attrition concerns to share …. if so we’d like to hear from you!

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6 Responses to 8 Creative Techniques For Avoiding/Reducing Attrition Expense

  1. Tracy Riggan says:

    Some really creative ideas here. Any suggestions out there on getting attendee reservations to come in earlier? With attendees holding off on making reservations, it is hard to know whether or not we can afford to reduce blocks before cut-off. So far, we’ve offered special early bird rates and for one event tied special rates to early payment for booth space. I’m so glad hotels have been extending our rate past the cut-off date to accommodate.

    • Michael M McCurry, CMP says:

      Tracy, another possibility is to offer a drawing for a prize of some sort, which attendees making their reservation by a certain date will qualify for. For example Dinner for two at the hotel’s gourmet restaurant, or a spa pass for two, etc.

      We tried this with an event I am working on and it created a significant spike in reservation activity.

      Thanks for your comments!

      Mike McCurry

  2. Dave Ryder says:

    How about offering them a “buy 2 nights, get 1 free” option, and build the cost of that free night (or at least a significant portion) into the registration fees? Or perhaps you have some corporate sponsors / supporting partners whose dollars may off-set some of these costs. Give them a cut-off date that is well before your block reduction date. Something “Free” almost always works. Or perhaps you can negotiate a “three-fer” package at the hotel whereby as part of your program, you buy two nights and get a third night free? I’m sure you will have to identify some other revenue stream for the hotel – perhaps F&B – but that might be a creative way to start. Something to consider!

  3. Nancy Wise says:

    Mike, those are some great suggestions. How are you identifying those who stay outside the block hotels so that you can move them to the group block? Do you send out a e-mail blast to all registrants? My clients have been using the early bird rates a lot and the hotels have been very receptive. One other thing that is key is to be in tune with your block and pickup early enough so that you can release rooms back to the hotel soon enough so they have a chance to re sell them. And then be flexible if they get another group to take them. I had a client this spring who released a significant number of rooms back that they could not use. The hotel was able to sell some of them to a short term booking and consequently oversold on one of the group’s peak nights. In return for my group relocating a number of people to another property (next door and less expensive)the hotel forgave all of the attrition. So a lot can be done if a group is proactive and flexible.

    • Michael M McCurry, CMP says:

      Nancy, thanks for your comments and your post! In the situation I was referencing the organization is communicating with attendees through electronic newsletter sent weekly.

      Your points about timing of communication with regard to block releases are right on target!

      Thanks again for your contribution to the discussion

      Mike

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