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.