What Is Attrition and How Can You Avoid Paying Too Much in Attrition Fees?

Have you dealt with the headache of attrition fees? You're not alone in that struggle.

Unforeseen attrition fees can significantly impact your event budget. Attrition, also known as occupancy shortage, is often overlooked until it becomes a costly reality. 

Many of our clients struggle with understanding and managing hotel attrition fees, often finding them challenging to navigate. Understanding the intricacies of attrition is important, as you may not have the event budget to support large attrition penalties. 

In this article, we’ll explain what attrition entails, the factors influencing it, and strategies you can use to prevent excessive attrition fees. 

Short Summary

• Attrition is a clause in your hotel contract that outlines the expected room revenue that your group commits to utilizing and paying for. 
• The three types of attrition are nightly attrition, cumulative attrition, and an attrition schedule. 
• Consider internal and external factors that affect attrition such as the location of your event, whether it's mandatory, and if there are any competing events. 
• To prevent excessive attrition fees, consider implementing strategies during the hotel contracting phase, event planning phase, and post-event wrap-up.

What is Attrition?

Attrition is a clause in your hotel contract that outlines the expected room revenue that your group commits to utilizing and paying for. 

Hotels use this clause as a safeguard in case your group falls short of the anticipated number of attendees.

Once the hotel contract is signed, the hotel is committed to reserving a certain number of rooms for your event, prioritizing your booking over other potential business. 

Therefore, this protection is in place for the hotel.

What Are the Different Types of Attrition?

When planning your event, it's important to carefully consider the type of attrition you agree to in your contract. Attrition comes in various forms, each bringing its own set of implications and challenges that can affect your events.

We always advise our clients to advocate for cumulative attrition at the lowest feasible percentage in their hotel contracts. These days, achieving 80% is typically the best you can do.

Let’s explore the different types of attrition and how they can impact you.

Nightly Attrition

Nightly attrition means you are committed to utilizing a certain percentage of the rooms in your block each night.

For example, if you have a block of 100 rooms on a Friday night with an 80% nightly attrition rate, you will be responsible for paying for 80 rooms, whether they are filled or not.

Cumulative Attrition

Cumulative attrition is calculated based on the total number of room nights in your combined room block. 

For instance, if you have reserved 1,000 room nights over a five-night period with an 80% cumulative attrition rate, you would be responsible for paying for 800 rooms.

Attrition Schedule

Sometimes, hotels may have an attrition schedule, which allows you to adjust the number of rooms in your block at various intervals leading up to the event. 

For example, your contract might specify releasing 10% of rooms 90 days before the event, 5% at 60 days, and another 5% at 30 days, totaling 80% flexibility. 

This schedule is designed to help coordinate room reservations and prevent financial penalties due to unmet booking requirements.

Internal and External Factors Influencing Attrition

Let's explore how internal and external factors can impact attrition, and highlight ways to mitigate potential fees. 

Internal Factors: Avoiding Attrition Fees

Is your event mandatory for attendees? If so, it's important to have a good understanding of who actually needs to attend your event. Be mindful of any potential changes leading up to your event, such as additional hires or shifts in attendance estimates that could impact your rooming needs. 

The location of your event can also impact how attendees plan their arrival. How many guests need to stay overnight before the event versus those arriving on the day of?

If your event is not mandatory, consider analyzing past attendance and room booking data when creating next year's room blocks. This could give you good insight into who will actually attend your event based on previous history. 

If your event is not mandatory and you’re not sure who will attend, you might also consider a reduced room block or limiting attendance. 

Pro tip: Building anticipation for your event and encouraging guests to book accommodations early can help reduce dropouts. This could also help boost future years’ attendance as well.

External Factors: Avoiding Attrition Fees

When planning an event, it’s especially important to understand your attendees and their habits. 

Consider whether they are inclined to look for more affordable lodging options nearby and assess the availability and cost of alternative hotels in your event's location. Are you in a location where there are other hotels attendees can even look at? 

Also, consider if your attendees prefer certain hotel brands. If all of your attendees leverage Marriott for travel, it makes sense to host your event at a Marriot to encourage them to book at your preferred hotel. 

Additionally, be mindful of any competing events going on around your event, as well as potential holidays, graduations, or peak seasons that could affect attendance. 

Programming Strategies: Avoiding Attrition Fees

You can also curate your program in a way that prevents attrition fees. Consider how to keep attendees engaged and excited until the end of your event, so they don’t end up leaving a day early. 

Think about incorporating elements that will draw attendees towards the conclusion of the program, such as scheduling a popular keynote speaker or offering fun activities that will encourage attendees to stay.

How Can You Avoid Paying Too Much in Attrition Fees?

Here are some helpful tips to minimize your chance of incurring high attrition fees. Make sure to follow these steps during the contracting phase, the planning phase, and post-event to protect your event budget.

During the Contracting Phase

Navigating attrition fees during the contracting phase requires you to practice some strategies behind contract negotiation. 

First, analyze your program history to identify patterns from prior years. Avoid overly aggressive increases in room block commitments unless there is a very good reason to do so.

Second, pay close attention to the attrition percentage offered by the hotel. Is it based on the cumulative room block or per night? Often cumulative offers greater flexibility. 

Advocate for attrition based on your final room pick-up. 

Some hotels will give you release deadlines when you can release 5% of the room block several times pre-event. However, once you have made those releases, the hotels expect you to pick up the full remaining block. You want flexibility with your actual room pick-up simply for no-shows, early departures, etc.

Ensure there is a resale clause in your agreement. This means that if the hotel resells rooms, and you fall short of your block, they will offset your attrition.

Ensure the hotel puts a clause in the contract enabling you to compare your registration list to their hotel guest list. Sometimes attendees book on their own at a different rate. You should get credit for those rooms in your room block.

Lastly, consider hotel and local demand during your event timeframe. If there is a city-wide event or high demand in the area during that time, you may want a little flexibility to block more rooms with some security. With this type of demand, you want to have rooms available for your attendees, but if you do not use them there is a good chance the hotel will sell out.

By incorporating these strategies during the contract stage, you can reduce your risk of unnecessary attrition.

During the Planning Phase

Proactive communication and strategic planning will help you optimize your room block and avoid unwanted attrition. 

Try to gain insight into the hotel's forecasted occupancy during your program dates to anticipate any potential challenges or opportunities. 

Be proactive in discussing the possibility of giving your rooms back to the hotel for general sale if they are forecasting high occupancy. On the flip side, gauge if there is a possibility of getting additional rooms at your group rate if your pick-up is strong. 

Communication here is key.

• Keep a vigilant eye on your room pick-up and other important dates, such as your attrition deadline. This ensures you are proactively managing your room block. 
• Know when your cut-off date is. This is the last date, contractually, that the hotel will allow your group to make reservations at the group rate.
• Remember that you can negotiate with the hotel to extend your cut-off date or offer more rooms at the group rate if you pick up your full block. This will depend on the hotel’s demand over your group dates and their forecasted occupancy. But don't be afraid to ask.

Additionally, schedule milestones in your planning timeline to monitor rooms booked outside your block and track pick-up rates compared to historical data. 

Lastly, plan regular communications with attendees to remind them of deadlines and encourage them to book within the room block. For external events, consider offering discounts to incentivize attendees to book within your block rather than at alternative accommodations nearby. 

Post-Event

To avoid unwanted attrition, here are the steps you need to follow after your event concludes: 

1. Double-check the registration list against the hotel guest list to ensure all attendees are accounted for within your room block.
2. Review the overall room pick-up numbers.
3. If there's no attrition, congrats on a job well done!
4. If attrition is present, have a conversation with the hotel.

When should you follow up with your hotel contact if attrition is present?

• Ideally, you begin working with the hotel pre-event and on-site if it looks like attrition is a possibility. Waiting until after the event concludes to address it leaves very little opportunity to negotiate or partner with the hotel to create a better solution

Here’s what you need to discuss with the hotel if attrition is present post-event:

1. Determine if the hotel sold out or came close to it. If so, consider how your resale clause impacts the numbers.
2. If there are still available rooms, leverage your relationship with the hotel. Ask if there is flexibility. Can they reduce the number? 
3. If you're considering booking the same venue for future events, use discounting or removing your attrition as a bargaining chip. Just be careful not to let them lock you into more than you are comfortable with committing to.

Need More Help Navigating Attrition?

For more than 15 years, GoGather has delivered incredible corporate events while successfully avoiding and managing attrition fees. Need some help with your room block and hotel contract negotiation? Let's chat about how GoGather can help you with every aspect, from choosing your venue to managing your budget.