Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: January 13, 2004

Industry news sources are carrying reports of plans that have been developed to help groups limit their risks of attrition. One such plan is the Salt Lake City CVB's offer to eliminate attrition charges for groups that meet certain conditions, such as offering incentives to attendees for booking contracted hotels. Some groups are also pressuring hotels to have no attrition in their contracts. But before you think you have waved goodbye to attrition, consider some possible contractual pitfalls.

If there is no attrition, the hotel contract should state it clearly. Not long ago, Hyatt Hotels sued Women's International Bowling Congress (WIBC) for attrition charges.* There was no attrition clause in the contract and Hyatt lost the case, but a group cannot sit back and assume that the lack of an attrition clause is an insurance policy against attrition charges. The facts could be different another time and a court could hand down a different ruling. Consider too that even simple words can help tip the balance, as this quote from the case shows:

That the contract does not include an implied promise by WIBC to pay for all the rooms held, regardless of whether they were occupied, is supported by a plain reading of the contract and its addenda, including the terms "hold," "estimate," "picked up," and "reservation," taken individually and in conjunction with the Agreement as a whole.**

In the absence of a clear no-attrition statement, it is possible that subtle changes in verbiage, such as referring to the room block as being "reserved" rather than "held," or a statement about the group promising to "occupy," could make a difference. Where significant liabilities may be at stake, it is only sensible to take the utmost care and state clearly in writing that there is no liability for not picking up the entire block.
Here is a suggested clause to use when there is no attrition:

The guest room block that the Hotel is holding on a definite basis in this contract is an estimate of the number of rooms required, not a guarantee of actual pickup. Group will promote the use of Hotel in material listing housing for the meeting and will have no liability for guest room slippage other than that, if any, specified in this Contract.

When it comes to contract language, you may avoid disputes later on by including language that clearly covers all terms both parties have agreed upon.

As we move through 2004, the buyers' market is expected to slowly return and you should expect hotels to want to book the groups that have the least risk and greatest return to their owners. This will include tougher negotiation stances on areas like attrition.

*Hyatt Corporation v. Women's International Bowling Congress, Inc., 80 F. Supp. 2d 88, 1999.
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