Latest Hotel Contracting Trends

1. Managing Room Attrition

 
What is room attrition? Attrition is a clause in a contract that requires a group to commit to a certain number of hotel rooms. It states that the guest is to pay for that specific room block and should their numbers decrease there will be a penalty charge to make up for the rooms that are not booked.
 
Typically attrition is negotiated between 80-90%. One hotel contracting trend we’re seeing is hotels requesting nightly attrition over cumulative attrition. This means that your group is responsible for booking 80-90% of the block per night instead of 80-90% of the cumulative block. Groups who rely on extended stays and shoulder nights can no longer count on these extra rooms to increase their block pickup. From the hotel’s side, they want to ensure that their hotel is full each night, which is fair. Ultimately you need to find a solution that works for you and your hotel partners. If the group is worth half a million dollars, does it really matter that each night is filled? Likely not. Be transparent with your hotel partners, and ask what holes they are trying to fill. If Tuesday nights have low occupancy and your group is going to bring their occupancy rate up, that’s a win.  Event planners are better off with cumulative attrition as it allows for more flexibility.
 
Late event registration is another complicated trend. Typically hotel room block cut-off dates are four weeks before the event start date. After this date, any unsold rooms are returned to the hotel to resell. With attendees registering less than four weeks out, they are not able to book within the block. This is when historical data is paramount. If you can pull pace reports proving that your block will pick up two weeks out, negotiate a 2-week cut-off date. Another alternative is to keep your block open, but sell rooms at a higher rate. Just ensure it’s not so high that attendees turn to third-party booking sites for a better deal. Most importantly, build a strong relationship with your hotel partners. If your event is the reason that guests are staying at their property, you should be able to count them towards your final block pickup.
 
Here are some tips to manage room attrition in your contracts:

Do:

• Push for cumulative attrition.
• Make sure damages are calculated on a lost profit rate (room rate x 70-75% profit margin x rooms not picked up) vs lost revenue.
• Get credit for all revenue-generated room transactions: first-night deposits held for no-shows or late arrivals, early departure fees, and credit for walked rooms.
• Audit reservations against registration.
• Ask for an extended cut-off date to align with late registration trends.
• Commit to a smaller block with the option to add additional rooms within a set timeframe.
• Use Meetingmax to monitor attrition through alerts and scheduled reports.
• In Meetingmax, disable hotels that have hit attrition to fill overflow properties.

Don’t:

• Accept the hotel’s standard attrition clause.
• Settle for nightly attrition.
• Use vague language; be specific in your contracts.
• Be scared of it; work with your hotel partners.
• Leave it until later; lay it all on the table at the beginning.

2. Navigating Resort Fees

 
I understand the need for hotels to diversify revenue streams. Resort fees allow hotels to make extra revenue while offering complimentary services to guests. They become an issue when there is a lack of transparency around them. Ask the hotel sales manager about additional fees during the negotiation process. Don’t leave them hidden in the small text of a contract. As a planner, you need to be aware of them so that you can communicate the fees to your guests. Have your hotel sales manager sell you their value so that you can easily explain it to your attendees.
 
If your group is unlikely to use any of the services included in the resort fee, see if you can negotiate it out of the contract. Maybe it’s more advantageous to increase the nightly rate nominally and include one complimentary service included with the resort fee. This way the hotel is still earning revenue on the services that will be utilized, attendees have access to a service they will actually use, and the planner can earn more commission on the increased nightly rate. Look for a win-win that benefits all parties.
 
Resort fees can be a tricky component of hotel contracts, but with the right approach, you can manage them effectively:
 
Do:

• Negotiate with hotels to reduce or eliminate unnecessary resort fees.
• If earning commission, can you increase the nightly rate to offset or eliminate resort fees?
• Use Meetingmax features to highlight all fees so attendees aren’t caught off guard when they review their final hotel invoice.
• Update Meetingmax’s event hotel information to share details on included amenities.
• Create a custom amenity in Meetingmax to highlight unique services included with the resort fee.

Don’t:

• Hide resort fees from attendees.
• Avoid discussing these fees with your hotel partners. Are the amenities & services likely to be used by your group? If not, can you reduce or remove them?

3. Clarify Reservation Methods

 
Ambiguities in reservation methods can lead to misunderstandings. When using room block management software, your contracts need detailed language on how hotel reservations managers will securely access the rooming list. If you simply state “rooming list provided” there may be pushback from your hotel partners when you ask them to log in to a third-party software.
 
Ensure your hotel partners understand the benefits of third-party software, such as being able to view the contracted block pickup 24/7. This offers peace of mind that their inventory is selling.
 
One hotel contract negotiation tip is to use detailed language. Focus on this:
 
Do:

• Ensure your hotel contracts clearly state how hotels will access room reservation details.
• Talk to your hotel partners ahead of time about using Meetingmax, or other third-party vendors.
• Implement Meetingmax’s Standard Hotel Agreement and provide necessary access for hotels to monitor pickup.

Don’t:

• Use vague terms like “rooming list provided.”
• Panic at the last minute and take on the hotel’s work. If they push back, educate them on the benefits.
• Specifically in Meetingmax, don’t ignore long-lasting pending rooming list imports. Reach out to the hotel to see what’s up.

4. Implementing Lowest Rate Clauses

 
To ensure your attendees get the best available hotel rates, include a “lowest rate” clause in your hotel contracts. This is also vital to prevent block slippage. Price-sensitive attendees will shop around booking sites to find the best available rates.
 
Most planners are savvy enough to include a lowest-rate clause in their hotel contracts, but what is often missed is what to do when this clause is violated. Most commonly, the hotel will increase publicly listed rates. Alternatively, you could request a price reduction in your rates, but consider how that may negatively impact commission. Another angle is to reduce your attrition percentage. Better yet, you could simply have the hotel honor the booking inside your block, with full commission at your contracted rate, not the lower rate. All this to say, there are options and it’s important that your contracts include your preferred action plan.
 
Here are some hotel contract negotiation tips for lowest-rate clauses:
 
Do:

• Implement a “lowest-rate” clause to prevent hotels from offering lower rates to the general public during your event.
• Include action to be taken if lower rates are found.
• Communicate to your attendees that you have contracted the lowest available rates and to reach out directly if they find a lower or matched rate.

Don’t:

• Fail to act if a lower rate is found.

 
Whether you’re dealing with room attrition or negotiating resort fees, these insights will help you navigate the complexities of hotel contracting trends and ensure successful event planning.
 
Here’s a quick cheat sheet on the latest hotel contract negotiation tips: