Q: Our largest client is a trade association. For several years, at the client’s request, we have signed hotel contacts in our agency’s name for the association’s meetings and conventions. The client then reimburses us for any attrition charges that we paid to the hotel. Lately, these charges have been quite large as we get fewer participants than anticipated, and getting reimbursed by the client has been like pulling teeth. Is there anything we can do to reduce attrition charges?

A: Hotel contracts have become stricter than they were before or during the height of the pandemic because properties are trying to recoup their pandemic losses. However, you don’t have to agree to the contract as written by the hotel, as there are ways to reduce your risk of attrition charges.

In case you aren’t familiar with such contracts, here is a little background: All hotel group contracts contain a set number of room nights that must be paid for (the “room night commitment”), and most contain a minimum dollar amount of food and beverages for group functions (the food and beverage commitment or “F&B minimum”). An attrition clause enables you to reduce the room night commitment one or more times by an agreed percentage (the “attrition allowance”) without liability by a fixed deadline, and the F&B minimum is usually reduced proportionately.

If you reserve and pay for fewer rooms than the room night commitment, as reduced by any attrition allowance taken (the “reduced room night commitment”), you get billed for the difference between reduced room night commitment and the lower number booked (the “attrition charge”). You may also get billed for the difference between the F&B minimum and the amount of F&B consumed.

Here are four ways to try to reduce attrition charges:

First, make sure that the attrition clause is unambiguous, so that the hotel can’t try to enforce it in ways you don’t expect. For example, if a contract states that you can reduce the room night commitment by 10% at 90 days before the event and a further 15% at 30 days before the event, does the 15% apply to the original room night commitment or the number of rooms left after you took the 10% allowance? With hundreds of room nights in the contract, it can make a big difference.

Second, try to specify that the hotel will waive all attrition charges on nights that the hotel is sold out. If the hotel claims it was not sold out, you can ask for proof if the contract allows you to do so.

Third, try to get the right to audit the hotel’s guest list for the nights in question to see whether any members of the association booked directly with the hotel instead of through you, so that you can get credit toward your room commitment.

Fourth, try to provide that you can roll over any attrition charge to next year’s convention and that if you meet the room night commitment at that time, the hotel will waive this year’s charges.

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