Hotel attrition (when a group fails to meet its room commitment) is one of the most significant and misunderstood challenges in group sales.
NB: This is an article from Canary Technologies
Subscribe to our weekly newsletter and stay up to date
This article breaks down exactly what hoteliers need to know to manage attrition. From structuring contracts to optimizing room block performance and using modern tools to stay on top of every detail, here is how to minimize risk, maximize revenue and keep client relationships strong.
How Attrition Impacts Revenue Management
The best group bookings don’t just fill rooms; they maximize every revenue opportunity your property offers by aligning with your hotel revenue management strategy. That means wedding blocks that also fill your banquet halls and spa appointments, or conference groups that book meeting spaces, use catering and accrue bar tabs.
Every group contract feeds into forecasting models, staffing plans, pricing decisions and ancillary revenue projections. So when a group falls short on booking contracted rooms, it creates gaps that can’t always be filled in the remaining lead time. The ripple effects from this can impact your bottom line across multiple departments.
Meeting planners can use an attrition calculator to predict their risk relatively simply. However, on the hotel side, it’s much harder to predict how much fallout will result from booking shortfalls.
A sudden drop in group bookings could mean missed upsell opportunities, wasted staffing hours or the need to lower rates to fill leftover inventory. That’s why it’s essential to factor attrition into your broader revenue strategy from the very beginning of the sales process.
Understanding the 3 Main Types of Attrition Clauses
The way you structure attrition clauses can make or break your ability to protect revenue if a group booking falls short, but drafting a contract isn’t one-size-fits-all.
The right format for your property depends on your goals across all departments, the nature of the group and how much flexibility you’re willing to offer. Below are the three most common types of attrition clauses and how they impact your bottom line.
1. Revenue-Based Attrition
A revenue-based clause provides a minimum dollar amount that the group must spend on their room block, rather than tying performance to a specific number of rooms. This gives planners the flexibility to shift room types or pricing tiers to make sure the total contracted revenue is met.
- Pros: Offers adaptability to the group while still ensuring a revenue baseline for the hotel.
- Cons: Requires close tracking and management by the client to strategically release lower-rate rooms. It can also be more complex to calculate and enforce.
Read the full article at Canary Technologies
