Source: Robin Roth, Senior Contracts Editor
E-Specs: June 14, 2005

In the past ten years attrition clauses have become progressively more detailed. Vague statements that were difficult to calculate (where two people would be unable to agree on the same amount due) have evolved into specific formulas that are fair and easier to work with. Now all you need is a checklist for the essential terms as follows:

Prevent multiple charges for the same room block slippage by allowing only one room block performance term – usually attrition or a meeting room rental scale.

Set a specific date or time frame for determination of the final adjusted room block, which is the figure that will be used to calculate attrition. Indicate there will be no charge for room block adjustments up to that date or time frame.

Include the following formula for calculating the amount due if the group fails to pick up a specified minimum percentage of the final adjusted room block. This amount is considered “liquidated damages” and should be labeled as such.

• Determine the Minimum Commitment by multiplying the number of rooms blocked per night by the negotiated percentage. Then subtract the actual group pickup, including miscoded and relocated rooms.
• Determine the number of Unsold Rooms Available for Sale in the hotel by subtracting complimentary, out-of-order rooms and total occupancy from the hotel’s total inventory.
• For each night, the group will pay 75 percent of the group’s single rate (representing the lost profit on the rooms revenue) multiplied by either the Minimum Commitment or the number of Unsold Rooms Available for Sale for the night, whichever is lower.

When adding the amounts due for each night to arrive at the cumulative total, factor in resold rooms, rooms unavailable for sale, miscoded and relocated rooms, rooms outside the block and rooms exceeding the block that offset slippage on other nights. Require documentation for the hotel’s numbers.

State that after receipt of the attrition charge, the hotel will not seek additional performance damages.

Note: This checklist is excerpted from the Hotel Contracts Checklist that is being distributed with the June issue of Meeting Mentor. If you would like to subscribe to the Meeting Mentor and receive a copy of the complete checklist, please contact Donna Kastner at 330-486-0326 or email her at donna.kastner@conferon.com

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)