Frequently Asked Questions

Six clauses carry the most financial risk in any hotel event contract: attrition and room block commitments, food and beverage minimums, cancellation and termination terms, force majeure definitions, exclusivity restrictions, and liability and indemnification language. Of these, attrition is the most dangerous. Attrition locks you into booking a minimum percentage of your contracted rooms or spending a minimum on catering. Penalties apply whether or not the shortfall was your fault. Review all six before signing, and get every verbal commitment from the hotel in writing.

Attrition is a penalty that hotels apply when a client fails to consume the minimum number of sleeping rooms or the minimum food and beverage spend committed to in the contract. It is expressed as a percentage — typically 75–80%. It means you are contractually obligated to hit that threshold or pay for the shortfall regardless of how many rooms are actually booked or how much food and beverage is actually consumed. For example: if you contracted 100 room nights at $250 per night with an 80% attrition clause, and your attendees only book 70 rooms, you owe the hotel the revenue equivalent of the cost of the 10 rooms that fell between your actual number of bookings (called “pickup” in the corporate events industry) and your attrition percentage. Attrition is one of the most financially punishing clauses in hotel event contracts for three reasons: It applies even when the shortfall isn’t your fault. Low attendance, travel disruptions, or last-minute cancellations don’t automatically excuse you unless force majeure applies. It is often calculated on full rack rate, not the discounted group rate you negotiated. It compounds — room block attrition and F&B attrition can both trigger simultaneously on the same event. The “open secret” of the hotel industry is that a hotel event salesperson expects you to push back on attrition in the original contract before signing. They will typically lower it upon request. When negotiating, push to lower the attrition percentage, define the calculation method explicitly, and build in a rebooking provision as an alternative to cash penalties. And don’t forget to guarantee that online hotel booking sites will never offer a lower room rate than your negotiated rate for the room block.

A complete hotel event agreement should include: a detailed scope of services specifying rooms, AV, catering, and staffing; pricing and payment schedules with clear definitions of what triggers additional charges; attrition clauses with specific percentage thresholds and penalty calculations; cancellation policies with a sliding scale tied to proximity to the event date; a force majeure clause with explicit triggers; a substitution clause defining the hotel’s rights to reassign your space; exclusivity provisions for catering, vendors, and AV; and dispute resolution and governing law. Missing any of these creates exposure that is difficult to remedy after signing.

Cancellation policies are among the most negotiable elements of a hotel event contract, particularly when you’re booking well in advance or committing to significant spend. Start by requesting a sliding scale: Penalties should increase incrementally as the event date approaches, not apply at full value from day one. Push for a rebooking provision: Rather than forfeiting your deposit, you retain the right to apply it to a future event within 12–18 months. Negotiate a force majeure carve-out that includes military action, government-mandated restrictions, and public health events. Hotels will work with you more on cancellation terms at times of the year when room bookings are slow, or when your event represents meaningful revenue to them.

The biggest ones to watch: F&B minimums that exclude service charge and tax (meaning a $20K minimum can cost $28K+ out of pocket), attrition penalties if your room block goes unfilled, AV exclusivity clauses that force you to use the hotel’s vendor at inflated rates, and service charges (typically 22–26%) that go to the hotel, not the staff. Also watch for Wi-Fi fees in event spaces, room turnover charges, shoulder night penalties, and cancellation clauses with no sliding scale based on date. The rule of thumb: if a cost isn’t explicitly capped or excluded in writing, assume it will be billed.