By Michael M. McCurry, CMP — Experient
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.
- 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!