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Home NE Planning NE Expert Advice How to Avoid Hidden Costs in Venue and Supplier Contracts

How to Avoid Hidden Costs in Venue and Supplier Contracts

By Lauralee Wren

It doesn’t matter if you are brand new to the meetings industry or a seasoned veteran, venue and supplier contracts can seem overwhelming at times. They are full of conditions and many legal terms you may or may not be familiar with.

If you are like most planners, you are working on your event several months, if not years, ahead of time. People come and people go, but the event carries on.

Contracts ensure consistency. Regardless of whether you, the sales manager or GM are still around, someone within your organization can run with the event because everything is spelled out—from the room block to the cancellation provisions.

Attrition is one of the most challenging issues meeting planners face. Attrition is when a group doesn’t live up to the room-block commitment, a payment is required to make up for the rooms not used, per the terms of the contract. Planners beware—if a contract lacks an attrition clause, that actually means the client is responsible for 100 percent of the booking vs. the attrition percentage offered by the hotel, usually 85 percent.

If you’re planning for 1,000 attendees but only 800 show, your venue will not only have unused rooms, but also a lot of wasted food. 

You’ll likely be expected to pay for the food and beverage or the damages caused by not using the guest rooms (which is a standard industry practice). Most contracts will allow for 10 to 15 percent of the agreed number of rooms to be released without assessing damages, but if the number of unused rooms is higher than that, you could be paying thousands of dollars. 

Of course, there are negotiable elements when dealing with attrition, including date by which you must have a final head count to the venue (the closer to the event, the better, from the planner’s perspective). Additionally, you’ll want to make sure you’re only responsible for the venue’s lost profits, and that you get an audit of your room block so that all of your attendees’ rooms are counted, regardless of how they booked or paid for them. 

To help the bottom line, communicate often to your attendees about their need to book their hotel room. Be transparent and let them know when that rate ends. Send tailored emails to individuals that have registered for your conference but not booked their room yet. If you do all of these things and you are still concerned about your guest room pickup, communicate this as early as possible to the hotel so there is adequate time to potentially mitigate attrition damages. If you do need to release rooms back to the hotel, remember to include the food and beverage minimum to the conversation.