What Is Hotel Attrition?

You may think "hotel attrition" refers to the hotels' worn carpets and scratchy towels, or what happens when you take those little bottles of shampoo and conditioner home.

The confusion around hotel attrition benefits the big hotel chains when you plan an event.

If you don't know exactly what attrition is and how it works, it could cost you.

When you book a room block along with an event at a hotel, whether it's a wedding or a corporate event, you're committing to fill a certain percentage of those rooms. Typical attrition rate is 80 or 90%. That means you're committed to filling those rooms even though you have no control over your attendees behavior and you don't really know how many rooms they're going to book.

Hotel Attrition: An Example

Let's do the math. You book a 200 room block. The contract sets attrition at 80%. That means you've committed to filling 160 rooms every night. This target amount of rooms is called a floor, not to be confused with an actual floor in the hotel. Average daily room rate at this particular hotel is 250 a night. If your group only books 140 rooms one night, you owe the hotel $5,000 for rooms that nobody slept in. On a midsize corporate event, I've seen this number climb past $20,000. And on a citywide event, it can run into six figures.

Advice on How to Negotiate Your Hotel Contract to Minimize Attrition

First of all, it's extremely important to insert a clause into the contract that says that they won't offer rooms through the discount online booking sites at rates below what you're able to offer in the room block. If they do, you'll see attendees cancelling right before the event, and those rooms will count towards your attrition, even though the attendees are technically booked at the hotel.

Two Kinds of Attrition: Cumulative and Nightly

Now, here's what the hotel won't tell you, and this is where you can regain some money and power. There's two kinds of attrition: cumulative and nightly. They sound similar, but they're not.

Nightly attrition is brutal. If your group has a slow Thursday night because of a three-ight event and the attendees are checking out early and going back home, you owe attrition for that Thursday night. Even if Tuesday and Wednesday night were sold out, every night that doesn't meet expectations becomes its own individual hotel bill. Cumulative attrition, however, is on your performance for the whole three nights stay. So, a sold out Tuesday and Wednesday night makes up for that less than stellar Thursday. Always negotiate cumulative attrition, not nightly. It can save you thousands of dollars.

Next, ask for a sliding scale. The standard contract hits you with the entire room rate, whether you missed your target booking rate by one room or by 50. A sliding scale says the closer you get to filling your target amount of rooms, the less money you owe per missed room. It's like getting a discount on the empty rooms for being a good client who filled most of their room commitment. Most hotels will say yes to this if you ask, but almost no new planners know to ask. Here at Event Nation, we scan hotel contracts for free privately by stripping out the personal data before scanning and sending you back a marked-up copy of the contract ready to send back to the hotel in minutes. Attrition is the very first thing that Event Nation flags when we sign a contract because it's the highest dollar trap in the document and the easiest one to miss when you're reading the contract in a rush before a signature is due. If you've got a hotel event contract in your inbox right now, and I know some of you do, this is the line to find. Read it twice, then read it again before you sign. Know every line.

If you are staring at a hotel event contract and just want a quick, easy and free way to scan it for all the issues you should be aware of, plus advice about industry best practices to negotiate a better deal, sign up for a free account at https://eventnation.com

Faith Keiser is founder of EventNation.com. She has 20+ years of experience in the events industry. Faith loves to explain the complexities of the events industry and have some fun while doing it.