Monday, May 23, 2016
The Truly Honest Attrition Clause
And over all those years and those untold number of contracts, I've yet to come across the truly honest attrition clause.
Attrition, in case you're not familiar with the term, is what hotels call the fee you are required to pay in the event the sleeping rooms you contracted for your meeting or convention don't get used by your attendees.
The clauses in hotel contracts that describe them are usually full of convoluted language, focused mostly on how much the hotel will be harmed if the association doesn’t fill its block. They mostly are, in my experience, dishonest in the sense that they force the association to agree to things that aren't true (like it's difficult for a hotel to calculate lost profit) and to promise to do things it typically can't (like force its members to book rooms in the hotel, and cover the cost of those rooms if they don't).
So what do I mean by a truly honest attrition clause? Well, it might look something like this:
Hotel and Group acknowledge that they both have the same objective. Namely, both parties want a full block of happy conference attendees, spending money in the Hotel's outlets and utilizing the Hotel's services. As such, both parties agree to work together in good faith, sharing information and identifying mutually-beneficial strategies designed to achieve that goal.
Both parties also acknowledge that Group is an association, with no binding authority to compel its members to attend its conference, or to book rooms at the Hotel. Both parties have therefore reviewed Group's history of rooms utilized and pace of reservations at previous conferences, assessed market forces that may impact the decisions of the Group's members to attend the conference, and hereby mutually agree that the contracted room block represents the best possible estimate of rooms expected to be utilized by Group's members.
Despite these mutual agreements and understandings, both parties also acknowledge that fewer rooms than anticipated may be used by the Group's members. This risk of this occurence represents a potential loss of anticipated revenue to Hotel, a situation neither party expects nor desires. To protect against this unfortunate situation, both parties agree to mutually review weekly pickup reports. Should reservations fall behind the Group's historical pace, Hotel is allowed to remove an appropriate percentage of rooms from Group's block and sell them to other parties at rates of their choosing. Should reservations exceed the Group's historical pace, Hotel will add an appropriate percentage of rooms to the Group's block and offer them to Group's members at the group rate. There is no cut-off for this activity.
I've been reading hotel contracts for twenty-four years, and I've never seen anything like this. It's honest because it first recognizes the partnership that must exist between a hotel and an association for a successful conference, and then provides a mechanism for both parties to achieve a positive outcome for themselves.
And although it wasn't my intention when I set out to write it, I realize now that the best part of this attrition clause is that the word attrition does not appear in it.
Who's with me?
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This post first appeared on Eric Lanke's blog, an association executive and author. You can follow him on Twitter @ericlanke or contact him at firstname.lastname@example.org.