Attrition Clause
A contract provision specifying penalties if actual attendance falls below committed room nights or attendees.
Definition
An attrition clause is a contractual provision in hotel and venue agreements that specifies penalties or charges when an event's actual performance falls below the guaranteed commitments. The most common applications involve room block attrition (penalties when fewer hotel rooms are used than contracted) and food and beverage attrition (penalties when F&B spending falls below minimums).
Room block attrition typically works as follows: An event planner commits to a block of rooms at a negotiated rate. The contract specifies an attrition percentage—commonly 80% to 90%—meaning the planner must use at least that percentage of the block without penalty. If pickup falls below the attrition threshold, the planner owes the hotel for a percentage of the unused rooms, calculated based on the shortfall and a specified rate.
Food and beverage attrition operates similarly but involves spending minimums rather than room counts. If the contract guarantees $100,000 in F&B and actual spending reaches only $80,000, the attrition clause may require payment of some portion of the $20,000 shortfall.
The purpose of attrition clauses is to protect venues from financial losses when events underperform against commitments that led the venue to turn away other business.
Why It Matters
Attrition clauses represent one of the most significant financial risks in event contracts. A large event that falls short of room block commitments can face penalties of tens or hundreds of thousands of dollars. Understanding and negotiating attrition terms is essential for protecting organizational budgets.
The risk is particularly challenging because attendance shortfalls often occur for reasons beyond the planner's control—economic downturns, travel restrictions, weather events, competing events, or simply optimistic projections. Yet attrition penalties apply regardless of why attendance fell short.
Strategic attrition management involves several practices: making realistic projections based on historical data rather than hoped-for attendance; negotiating favorable attrition percentages and calculation methods; building attrition risk into event budgets; including review dates that allow block reductions as the event approaches; actively managing room block pickup through communications and incentives; and exploring creative solutions when shortfalls become apparent.
The financial stakes make attrition negotiation a critical planning skill. Experienced planners know which terms to prioritize, which creative provisions to request, and how to build relationship leverage that enables favorable terms.
Examples in Practice
A conference contracts for 500 room nights over three nights at $200/night, with 80% attrition. If only 300 room nights are picked up, the planner is short 100 nights below the 400-night minimum (80% of 500). At a typical calculation, the hotel might charge 70% of the room rate for each unused room night—potentially $14,000 in attrition charges.
An experienced planner negotiates a "review date" clause allowing them to reduce the block size 60 days before the event based on registration pace. When registrations track below projections, they exercise this option, reducing the block and avoiding attrition exposure.
A corporate meeting planner includes a force majeure clause in their contract that specifically addresses circumstances that could prevent attendee travel. When a weather event affects attendance, the clause provides relief from full attrition penalties.
A planner facing likely attrition proactively contacts the hotel to negotiate alternatives—rebooking some unused rooms to a future event, converting rooms to meeting space credit, or accepting a reduced settlement. The collaborative approach often yields better outcomes than simply paying the penalty.