Attrition

How is an attrition penalty calculated?

Four numbers decide it: the room nights you committed, your pickup floor, the room nights you actually picked up, and the rate the hotel bills the shortfall at. Multiply committed room nights by the floor to get the minimum you must fill. Subtract actual pickup. Multiply the gap by the rate.

Take a fictional three-night block at the Meridian: 100 rooms a night, so 300 room nights committed, with an 80% floor and a $189 group rate. The floor is 240 room nights. The group picks up 210, which is 30 short, so a cumulative clause bills 30 × $189 = $5,670.

Measured per night, the same pickup costs more. The peak night fills all 100 rooms, but the two shoulder nights fill only 55 each. Each night has its own floor of 80, and the 20 spare rooms on the peak night cannot cover the shoulders.

Cumulative or per-night attrition: which does my contract mean?

Read the clause for the word that names the basis. Cumulative (sometimes "aggregate" or "total room nights") adds every picked-up room night across the stay and compares the total with the floor once, so a strong peak night carries a soft shoulder. Per night (sometimes "on a nightly basis") gives each date its own floor, and a surplus on one night never offsets a shortfall on another.

In the example above, that one word is the difference between $5,670 and $9,450 on identical pickup. If the clause does not say, ask the hotel to write the basis in before you sign rather than assuming it.

What is a typical attrition percentage?

Many contracts start at an 80% floor, which lets the group miss 20% of its committed room nights without penalty. A lower floor is better for the group. Groups with uncertain attendance often push for 70% or 75%, or for a floor that steps down through a rolling release schedule.

The rate the shortfall is billed at matters as much as the percentage. Some contracts bill the full group rate; a negotiated clause can bill lost profit instead, often around 75% of the rate, because the hotel saves housekeeping and other costs on a room it never turns over.

Is attrition measured at the cutoff date?

Usually not. The cutoff date is the deadline for the rooming list, after which unbooked rooms go back to the hotel. Attrition is typically measured at performance: the room nights actually used during the stay. A missed cutoff and an attrition shortfall are two different bills, so treat them as two deadlines.

How do you reduce attrition exposure?

Most of the protection is set on paper before you sign. The rest is acting early enough that the hotel can still resell what you will not use.

• Block the shape of your real demand, night by night, instead of the same number every night.
• Negotiate a lower floor and a cumulative basis.
• Ask for a rolling release schedule, so rooms you will not fill go back at 90, 60 or 30 days without penalty.
• Ask for credit on rooms the hotel resells, and for a lost-profit rate on the shortfall.
• Get force majeure language that names the events it covers.
• Push guest names in before the cutoff: every confirmed name is a room night counted toward the floor.
• Track pickup per night, not as one blended percentage.