DOCKSIDE JOURNAL ENTRY / September 21, 2017
The Art of Attrition
So you’re planning your first big event, and you need a room block. Like all contract negotiations, negotiating the best terms you can get takes a lot of finessing, so here are some of our tips so that you come out on top.
Let’s talk about attrition.
Attrition is one of the main things to take a close eye to, and it can get a little confusing. So what, exactly, is attrition? Well, in this case, attrition refers to the percentage of the room block or expected revenue that goes unfulfilled. For example, say you have a conference planned and reserve a room block of 200. You can estimate how many people you’ll have, but at the end of the day there’s really no way of knowing the exact number, and the hotels don’t want to be left with empty rooms with no chance to fill them. There are three main things to keep in mind:
Cumulative vs. Nightly: Cumulative is much easier to calculate (total room nights multiplied by the attrition percentage) whereas nightly has to be monitored more closely. Cumulative offers you more flexibility, but nightly doesn’t allow for rollover, so even if you don’t to release all rooms allowed one night, it still can’t carry over.
Room Block vs. Revenue: Room block is calculated based on the total room nights, but revenue is based on the total dollar amount that the hotel is missing out on, which can get you into trouble if you’re contracting multiple kinds of rooms. If you’ve contracted varied room rates, you could meet your minimum room nights, but still end up in attrition because you didn’t use the more expensive rooms.
Cut-off vs. Departure: Basically, the hotel either sets a cut-off date a few weeks before the event or calculates attrition at departure and simply adds it to your final bill. Departure allows for the fluctuation in reservations that you could see, but cut-off means that the hotel can resell those rooms. Be careful, without a clause about crediting you for resold rooms, you might still be held responsible for the rooms you released.
So now you know what you’re talking about, and you’re ready to negotiate. But where do you even start? If you haven’t done much before, negotiating can be a little overwhelming. Here are a couple tips and tricks to help you out.
Keep risk low—for you and the hotel.
Especially if this is recurring, it might be good to start building those strong relationships with hotels. Our site sourcing team here at SHW spends countless time making sure that our hotel partners want to keep working with us, which means that we’re constantly trying to balance making a deal that benefits both our client as well as the hotel. You’ll get the best deal making it worthwhile for both sides!
Understand which concessions you’re willing to make.
At the end of the day, you’re trying to get the best rates on both room nights and meeting spaces. Understanding your program, and what you’re willing to give up in exchange for other more favorable terms can make negotiations go much smoother. Remember, also, that some hotels have more strict policies in place (more common with larger chains), and you may not be able to budge on those. Instead, use that to push for the things that you know are more important to you.
To learn more about our site sourcing team and the awesome work they do, or for inquiries regarding our services, visit our webpage by clicking here.