When Facing Attrition

I write many of these articles due to an experience that I have had with a client. If you follow me at all, you’ll find that I often stress that great planning up front, makes all the difference in the world. Especially, when it comes to mitigating a short fall. Attrition is something better avoided than planned for. In many cases, when you’ve contracted properly and you’ve continually managed and communicated with your venue, all parties walk away satisfied with the outcome.

Unfortunately, there are the times when you do all the things right on the front end, but still come up short. When you realize that you are not going to pick up all you need to avoid paying for damages, there are a few things to do and not do that will make the process better for all involved.
Step 1 – Don’t hope that it will go away by ignoring! I have known many planners that were so fearful their managers would blame them for the shortfall that they refused to address it up front with neither their management nor their venue.
Step 2 – Don’t wait for your cutoff date. If you know that your numbers are trending off what they should be, throw a red flag immediately. Bad news does not get better with time! As soon as you realize that you may have a problem, document it and communicate it to all pertinent parties. A shortfall in attendance not only relates to sleeping rooms, but also meeting space, food and beverage, A/V, transportation, and DMC’s, if involved, as well as many outside suppliers.
Step 3 – Do an audit. Ask the hotel to do a quick audit to see if reservations have been made “around the block.” You may find that there is a reason for the shortfall that you can correct to limit your exposure.
Step 4 – Begin to calculate the financial impact. Take your contract and look at how you agreed to calculate your shortfalls. Did you agree to 80 percent or 90 percent room pickup? Did you remember to stipulate payment on room profit, not rate? Did you agree to pay daily attrition or cumulative? What was your food and beverage minimum? Was the F&B shortfall based on food profit? Will there be concessions removed? Meeting room rental? Take the time to get it all laid out on a spreadsheet, this will allow you to make changes and updates, and see what the negative impact may or may not be.
Step 5 – Don’t agree to pay anything until your event is over. I have seen offers to prepay attrition with discount enticements. If your group is huge and the number is significant, it may be beneficial. But, if your hotel sells out or significantly sells into your shortfall, you may be getting “double dipped.” This is where you pay for rooms not sold and the venue sells those same rooms to another group or transient travelers. Upon the conclusion of your event, ask for another audit and a report from the hotel accounting department on what their occupancy was for your event. Ask to have rooms out-of-commission and under repair deducted as well as rooms held for other groups, rooms held for military personnel or occupied by staff.
Step 6 – Negotiate, negotiate, negotiate. Sit down and strategize how you are going to negotiate what is owed. Ask yourself, “If I was owed the damages, what would I accept?” Put yourself in the position of the hotel. Look at all aspects of your event. Look at the potential for future meetings that will offset the loss. This is a process that may be painful for some. The larger the amount the tougher it may seem, but the hotel wants you to feel good when it is all over. They also want to feel that it was fair, and that you’ll want to come back and refer others to them.
Step 7 – Maintain and track your history. I encourage all clients to spreadsheet and even graph their attendance/reservation history. It is invaluable when planning. You’ll see how far out you “peak” and what your marketing is doing. But most of all, you’ll be able to show future venues your pick-up pattern. Learn from your mistakes. Maybe you changed patterns or dates or are in a location that may have seemed like a great idea but fell short of expectations. There are a hundred and one reasons things may have not clicked and the sooner you figure out what it was, the easier it will be to ensure it doesn’t happen again.
In closing, remember you learn more from your failures than you do your successes. Not that paying for a shortfall is failure, but it certainly is not something you want to occur on a regular basis. Remember all of these steps, and more, are occurring every day in this business. Don’t let any of it stress you. Instead, plan your best, get your contracts to a point where they assist you in minimizing risk and look forward to each successful meeting and event you plan.



“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)

Contract Negotiations Part 2 – Much more than Dates/Rates/Space

In the first part of this series, we discussed four key points necessary to forming a successful agreement: Open communication and full disclosure (on both sides); providing dates for the event as well as any pre/post needs; understanding the going market rate for all types of rooms; and securing a specific, detailed agenda of all space committed by the hotel to your group. Now you are all caught up.

Back in the ’80s many chains went to “simplified” contracts with just the basics. This was done due to customer pressure. Clients loved it; hotels hated it! That was then, this is now. Today’s average contract has four to six pages of legalese that spells out what happens when you over-commit to rooms, miss F&B minimums, cancel, or what will happen in case there is a Hurricane Katrina-type disaster, to name a few examples. You might say it’s like an insurance policy; it is made to cover almost any instance and, primarily, to heavily protect the venue rather than you or your group. Even though you didn’t write the contract, you still can even the playing field. So, get out your red pen and let’s take a look at what contract clauses you can change to better protect your group.

Take a proposal/contract for your next meeting and do the following:

1. Locate and identify any/all non-applicable, vague or inappropriate clauses that need to be changed/deleted.
2. Look for “what’s missing” — items that will further protect you and your company.
3. Determine the best way to incorporate all that is new or that has changed into the document, contract or agreement. This may mean drawing up a new contract; utilizing the current agreement, but striking through certain items; or adding an addendum that specifies agreed-upon changes.

Here are some key contracting issues that have the greatest potential to negatively affect your event and some tips on how to avoid the pitfalls inherent with each.

Attrition

This is by far the No. 1 issue planners have to deal with at one time or another. How it is spelled out in your agreement dictates how you will deal with it if and when your meeting attendance does not materialize. The best way to avoid paying any shortfall is to not have a clause in your agreement that states you will. In today’s economy, many venues will agree to a “no attrition” contract in order to secure your business. But, if you can’t avoid an attrition clause:

• Base the damages you’ll pay on the hotel’s lost profit, not revenue. This will reduce the amount due and the pain of writing the check, especially if the hotel was able to resell rooms originally reserved for your block.

Carefully word your attrition or performance clause to cover:

• Sold-out conditions at the venue — don’t allow the venue to “double dip.”
• An audit of your room bloc. Make sure that you’ll receive credit for all attendees staying at the venue, however they booked/paid for their rooms.
• How damages will be paid. Base them on a cumulative, not daily, basis.
• How any credits for unused comps and free rooms can be used.
• What a re-booking credit will consist of and how it may be applied.

Don’t forget to address food and beverage attrition:

• Stipulate any damages must be based on food and beverage profit.
• Include a clause that will keep you from having to pay taxes/service charges on damages, except where legally required to do so.

Cancellation

Having to cancel an event is never enjoyable. I am not talking about “we can’t do this in May, but we can in August.” I am referring to “this meeting will not happen” situations. Many things can cause you to cancel, such as economic downturns, company merger/acquisitions or a strategic change in company direction. Natural disasters also create an immediate need to cancel or relocate events. A well-written cancellation clause will protect both you and the hotel in the event that something happens. So, when negotiating your cancellation clause:

• Make sure that you specify a specific time period that enables you to cancel without incurring a penalty. For example, “XYZ Company may cancel this event within one year of the start of the event with no cost or penalty.”
• Specify what causes will allow you out of the agreement. For example, a change of ownership/management or a change in financial condition (bankruptcy, foreclosure), etc.
• Define what force majeure (acts of God), impossibility and/or rights of cancellation for cause mean for your group. Pay attention to what will work for you or may work against you. The more specific this clause is, the better the outcome. If you need clarification, think about what happened to groups in the wake of 9/11, the H1N1 outbreaks or the recent volcanic eruption in Iceland and determine what kind of instances might make it impossible for your attendees to travel.

Notice of construction

This is something that should be present in all agreements. There is nothing worse than arriving and finding out that the floor above, below or next to you is being reconfigured during your meeting or event. This clause specifies what the notification process about any planned improvements/repairs that may interfere with your event will be and what the recourse/remedies will be provided by the venue.

Quiet enjoyment clauses

These serve as a way to ensure that your functions will be free from unnecessary noise, distractions, disturbances or interruptions that are in reasonable control of the hotel/venue. For example, if you were trying to conduct certification testing, imagine what would happen if a dance was being held in the adjacent ballroom section. This clause should specify what your venue will agree to compensate you for this type of inconvenience, if not resolved.

Overbooking/relocation (aka “walking your guests”)

Be sure to spell this out in your contract. Specify:

• What type of accommodations and provisions will be provided your guests, if relocated.
• That rooms relocated will count toward group contracted totals.

Sustainable initiatives

I also recommend that you always add “green” or sustainability clauses that focus on encouraging both the venues and the attendees to discover opportunities to renew, reuse and recycle, whenever possible.

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In closing, let me encourage you to do three things:

1. Keep and maintain a complete history on each meeting/event that you do, from contract inclusions/exclusions and room pick-up to how much you spend in all areas.
2. Keep a list of all the items that you must include in your agreements. Develop a list for rooms-only contracts, meeting space-only contracts, and rooms and space contracts.
3. Never, ever, be afraid to ask for assistance. You won’t become an expert doing this once or twice a year. Seek out those who know the market, have the industry contacts and the knowledge to make you a hero.

There are many more items that we could delve into, but if you focus on what was covered in Part I of this article and don’t overlook the above terms, there is a pretty good chance that both you and your venue will be satisfied with the resulting agreements you make. Remember to always assemble contracts with respect to both parties. If you do so, they will foster great meetings as well as long-term relationships that will pay dividends for you and your clients for years to come.

“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)

Dates, Rates, Space & GREEN…please!

I spoke last week at an industry luncheon for Ameila Island Plantation at an invitation  from the  Atlanta Chapter of GMIC. The main reason for the invite was due to the many GREEN initiatives that AIPFL has in place…many of them very cool. Golf on a Segway…who would have thought? Anyway, in other presentations on venue contracts and the greening of events, I refer to the core elements of contracts as being the proverbial Dates/Rates?Space. Without these, there would be no agreement. So why can’t we all begin to make sure that key conservation clauses also be included as standard? It would have such an impact if we added, Recycle/Renew/Reuse to Dates/Rates/Space.  

What are your thoughts? If we came up with a few basic clauses, would you make sure that you added them to your agreements?  Thoughts?

All the best!

KJ

Don’t expect what you don’t Inspect!

Many years ago I had a boss who was the ‘King of Clichés.” His office was filled with motivational or thought provoking sayings. I’d often sit and wonder…why? What was the point. As I got older and had more experience I realized it was not the saying, but how they applied to me…or YOU. Case in point.

In a recent conversation with a planner with nearly 20 years of experience, she commented that over the years she had created many templates, documents and tool. She stated that these would make everything come together easily and seamlessly. GREAT! I am all for that. As the program approached, I took the time to review, in detail, these templates and tools. Templates by definition are made to be modified and customized. These had not, and although they were technically complete, they did not contain the necessary level of detail necessary to ensure complete success.

Lesson #1 – Only use templates as a starting point.

• Often, it may take more time to modify a planning or contract template that it would be to create one of your won. Especially if the software program versions are not compatible.
• ALWAYS make a list of what you need to have included when using or modifying a template so you do not forget.
• Always allocate enough TIME to edit, recheck and check the math. Excel spreadsheets are famously wrong when you forget to check the calculations or forecasts.

Lesson #2 – Some Standardized Contract templates may be older than you are!

• If you or your company has a set of “standardized” agreements, take the time each time you use them to make sure that they are current and up to date. I had a client tell me he used an old addendum and inadvertently agreed to ridiculous attrition stipulations.
• Today’s economic times often nullify older contracts. Terms of past meeting contracts may not be applicable and may cost you in a big way.
• If you have signed a multiple year agreement, go back and review what the future may bring. Based on the current hospitality climate, you may be able to “update” upcoming events that were contracted in the past.

Lesson # 3 – Read, Re-read, take a break,  then look one more time

• Always look at any agreement first for major gaffs, errors or formatting faux pas. They should stand out.
• THEN, look at all the variables and make sure that they “jive.” Room night totals, dates and days, guarantees, misc charges, concessions. The only way that you will be able to walk away with your head held high when all is done is if you have protected yourself by making sure that all is in the document.
• LASTLY, put the document down for a while. Do something else, and then go back for one more look. You would be surprised how many times there are still one or two items that you need to change or that come to mind.

In closing, the morale of this story is that “You can’t expect what you don’t inspect!” If you assume it’s all there, you may get surprised. I still thank that manager with all the sayings on his walls. This one has saved me more times than I’d like to remember.

“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)

It’s EASY Being Green – Contract Wise

Recently at my keynote at PYM LIVE in Atlanta  I started by quoting from the book “Everything I Really need to know I learned in Kindergarten. Sad, but relatively true. Especially the concept of leaving things as you found them. “Greening” or sustainability is not really difficult to grasp. Plan for the future because whether we want to acknowledge it, we’ll get old, time will continue to pass and our kids and their kids will be here to deal with it all. So…let’s plan now to have them complain more about how we spent their inheritance before we died rather than depleted all their natural resources!

It’s not difficult, you just have to plan to plan with a “greenish tint” to all you do regarding your next event. Here are a few things that you can insert into your next venue contract that will make you a better and more sustainable planner:

1. Detail your expectations – insert (via an addendum) that your venue of choice will adhere to the  following sustainable practices which include: waste management, recycling, energy usage, use of renewable resources and conservation of non-renewable resources.
2. Request that they detail and provide for recycling of paper, plastic, glass, aluminum, cardboard, and , oh yes…grease for the entire hotel.
3. Request that they have clearly marked recycling containers throughout the facility AND in the guest rooms. Really, in the guest rooms too!
4. Request that housekeeping shut the blinds and turn down thermostats and turn off lights when guests are in meetings.
5. Ask that they implement a towel reuse program.
6. Ask the hotel to instruct housekeeping not to replace consumable amenities daily UNLESS they are gone. DUH! You’d be surprised on how much this wastes (and costs!). Ask that they participate in an amenity donation program.
7. Use non-disposal plates, cups and glasses.
8. Always DONATE ALL LEFT OVER FOOD!
9. Donate all table scraps to local growers for compost.
10. Ask that produce/goods  be purchased locally

This is my top ten. The key is that you can always ask, but you MUST plan to follow up and ask for an accounting from your venue partners. Ask for weights of recycled goods. Amounts of food donated and to what organizations, etc.

Another easy way to “Go Green” is to choose venues that already have many of these practices in place. Check your venues websites. Ask the CVB’s for assistance and always don’t forget to ask your sales person what Sustainability Practices they have in place.

You see, that in the end, YOU are responsible. Responsible for making a difference. If you don’t ask, don’t take the time, it may not directly affect you, but it will affect others…eventually. Make a difference, plan smarter, plan for the future, THINK GREEN! 

Kermit was wrong. It’s EASY being GREEN!



“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)

MISSION: NO ATTRITION!

It seems that whenever I make a presentation the issue of attrition is always on people’s minds. Typically it is due to a recent episode where a group had fallen short on either rooms, food & beverage or both. Whenever I hear,  “How can I get out of paying it?”,  it is a constant reminder that preparation and planning before contracts are signed is a mandatory! Remember, attrition charges are part of the upfront contracting and negotiation process. Additionally, how you structure and specify how charges will be calculated and on what terms and conditions may could mean the difference between a few hundred and tens of thousands of dollars. Here are a few things to keep in mind:

• “The key to protecting yourself is in spelling out anything that can be “interpreted” rather than understood.”
• Be SPECIFIC!
• Use examples in agreements when calculating fees/damages or penalties

The only way to avoid paying attrition is to not agree to any “performance” clause in your contracts. In some circumstances, venues will agree to this. Overflow or last minute/short term business are good examples.

• Base damages on “profit” not revenue. Always specify that damages will be based on  the profit % of rooms or Food & Beverage, not retail pricing. This will save you up to 25% if you fall short.

• Carefully word your attrition/performance clause. Request the following items be provided at the time that your damages are calculated:
  1. Sold out conditions at the venue. If you are being charged for 50 rooms, were there 50 available. You may find that you were inadvertently being “double dipped” based on rooms available.
  2. Audit and credit for all in attendance staying at hotel regardless of rate. With the proliferation of the internet and the fact that some reservations may not have been identified as with your group, by providing a registration list, an audit may reveal that you had more rooms occupied in the hotel on the nights you were short.
  3. Cumulative not daily calculations. Always ask that any performance fees be based on the total rooms usage, not daily totals. This way a spike on one day will assist in compensating on others where your pick up may not be as strong.
  4. Any Credit for unused comps/free rooms. Specify/request that any unused free or comped rooms be credited toward your totals.

1. If this is a reoccurring meeting or event, or if you frequently do business with this property, request that you get a re-booking credit toward a future meeting. 

Do your homework. Gather your history. Planning is essential. Hotel agreements are crafted in favor of the venue. You can level the playing field and reduce your risk if you take the time during the contracting process to protect yourself and your company or client. Great meetings are profitable ones…WITHOUT ATTRITION!

Go forth, plan well and prosper!

All the best!

KJ

“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)

Contracts, Relationships & Value

Recently, at the Georgia MPI Meetings Exploration Conference, I had dinner with three of the opening general session panelists who would share their outlook for the near term for the meetings industry. We all seemed to share the same sentiment…our business is based on the benefits of people meeting face-2-face. That’s what meetings are, right? An opportunity for two or more to gather, share information, etc. Nothing new. But in the face of continued low occupancy and less meeting activity overall, many of the national hotel chains are moving away from the f-2-f, relationship building sales experience upon which their loyal customer base was built. Now, sales teams that may as well be located on what seem to be opposite sides of the country now contend for my, and your, hotel business. Now if you don’t have a favorite chain, or a relationship with a national salesperson, you are probably thinking, “So what?” The so what can mean higher rates, less concessions, less risk and contracts that are harder to implement.

I believe that “People do business with people they like and people they trust. Anyone can build a great hotel, but it’s the people that keep them running.“ Mostly it’s mutual respect, but in this business I’d like to believe that it’s more of a feeling of being taken care of. And when certain individuals that I trust move from one company to another, I typically will follow right along with them with my business. Why? Because they valued ME! Because they took care of my groups. They stood up for me when I needed a better rate, or more space than I could justify based on room block. We had a relationship. And we both valued the fact that we knew each other well enough to know what each other’s spouses name was, and that that person’s kids were starting school, or that they were moving into a new home. I remember getting a call from a major chain Nat’l Acct Rep years ago that I had worked with for many years. He was calling to tell me that he had taken a job with the Philadelphia CVB and was moving. “I told you you’d be one of the first to know,” he said. “I’ll make sure you are taken care of!” I still smile when we meet at conference and events and I still ask about his family. Relationship.

So what’s the point here? It’s about standing up for your needs as a buyer and also taking the responsibility to invest in your business future. Become the type of client that hoteliers and industry suppliers want to work with. Treat them as more than vendors. Treat them as partners. Here’s why. When you are forced to do business in a way that you either don’t want to, or don’t like to, you will find a way to be more comfortable with another supplier partner. With the trend to consolidate sales teams and sell remotely, the relationship part of this face-2-face business goes away. As does the trust that you had with someone that knows your group and company, and your style and your needs. With that also goes the ease of getting things done. The fun in sharing a cup of coffee or a drink as you put together the contract details. The ability to call when things are not-so-good to ask for assistance.

If this has happened to you and you thought you had no other option, think again. “Do not go quietly into that good night!” Make a call, write a letter, invest in your business relationships. It is OK to ask to be sold they way you like to be sold. And when you develop the type of relationships that I have enjoyed for oh so many years, you’ll be able to make a difference for those who have made a difference for you. I love this business…I mean, the people in this business. It’s why we enjoy what we do!

All the best!

 
“This originally appeared on Plan Your Meetings (http://www.planyourmeetings.com), a free educational and social resource for meeting and event planners. For more meeting industry best practices, news, educational tools and advice, become a PYM Planner.” ( http://www.planyourmeetings.com/subscribe/)