Addressing nightly attrition in hotel contracts

Introduction:

We are excited to share insights from a recent webinar that delved into an increasingly pertinent issue in the world of hospitality: managing nightly attrition in hotel contracts. 

Sean Whalin (Co-founder and CEO of HopSkip), sits down with seasoned hospitality attorneys, Barbara Dunn (Partner at Barnes & Thornburg LLP representing groups), and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) to discuss the shift from cumulative to nightly attrition rates and its implications for event planners and hotel management.

Whether you're in the hospitality industry or organizing events, this engaging discussion offers insightful tips to elevate your approach to managing hotel contracts effectively.

The information provided in this video does not, and is not meant to, constitute legal advice; all information, content, and materials available on this site are for general informational purposes only. This video's information may differ  from the most up-to-date legal or other information. Please know that readers of this website should contact their attorney for advice about any particular legal matter.

Addressing nightly attrition in hotel contracts:

Transcript:

Lisa Sommer Devlin:
I'm going to start with that one because it is on the hotel side. And to be honest with you, I can understand your frustration. Depending on the marketplace and the dates of your meeting, it can be very important to the hotel to make sure that you pick up your rooms on particular nights, not just overall.

On the flip side, I always suggest to my clients that if the contract is for $500,000 in room revenue and you get that at the end of the meeting, does it really matter that much which night you generate that?

And I think that's a subject for negotiation. I think hotels are trying to drive things to their bottom line because of the room revenue they get and the ancillary revenue. 

And so if they're sitting empty on Sunday, employees aren't working.  It means they're not generating the other revenues in the hotel. And so they want to push those revenues onto the nights that aren't as busy. But I think if you're willing to make a revenue commitment most of the time, you can convince the hotel to go for a total revenue commitment rather than a nightly revenue. Barbara, what are you seeing?


Barbara Dunn:
I agree with your strategy, Lisa. As you said, this is something that we used to see only rarely per night: attrition versus cumulative. But we are definitely seeing it.  I am seeing it more now, more frequently. That said, it speaks to how carefully you must review a contract.

You'll see a phrase like "per night" or "nightly" or even something like "on each night," and that might not necessarily resonate with you in and of itself.

But what that's saying to you and should be in pink neon, flashing lights, this is nightly.  So again, if you have a four-night room block, it means that if you have to hit 80%, it's not 80%. After all, the four nights, adding up the highs and the lows, it's per night.  The 80%, let's say, is hard for many groups, especially when you consider that many groups may experience folks coming in a day early, staying a day late, and vice versa. So, the pick-up on any given night can be very volatile. So I agree. From a group's perspective, cumulative is the best bet.

I think Lisa's point about total revenue packages is a good one. If it's nightly and you have to live with that, I would carefully examine your block. I would also look for more slippage on those nights because you'll probably need more cushion. But I think, generally speaking, I would seek to have cumulative per night leave.

But again, just be careful when it comes to reviewing that part of the contract because if you haven't seen it, I've had many seasoned planners over the years have this be a bit of a "gotcha" to them after the fact. So, you'll certainly want to avoid that.

Conclusion:

Navigating hotel contracts with an eye for attrition rates per night versus cumulative can significantly impact events' success and financial outcomes. Lisa and Barbara highlighted that careful contract review and a strategic negotiation approach can safeguard your interests and ensure favorable terms.

We hope this webinar clip has shed light on these critical aspects and equipped you with the knowledge to tackle them effectively. For more insights and expert advice, stay tuned to our blog and ensure you're prepared to turn every contract negotiation to your advantage!