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Group Booking: Understanding Contract

Here are a few of the biggest terms you should when it comes to a group booking contract:

Deposit Amount: Some hotels will have a set deposit amount that needs to be paid at the time the contract is signed.

Cut-off Date: Generally, hotels will set a cut-off date say 30 (or even 60 days) prior to check-in. This refers to the last date your guests can book rooms reserved in your block before being released for sale to the general public. You may decide you want to hold onto those rooms even after the cut-off date, and this is where you’ll want to be hyper-aware of your attrition clause.

Cancellation Policy: Its important to understand exactly what the damages will be should you cancel your room block for any reason. If you cannot negotiate a no-penalties cancellation clause, ask to have the cut-off date be the last date you can cancel without any fees. And while we never like to be Negative Nancy’s, with contracts you should always go in assuming the worst case scenario because if it happens to you, you don’t want to be stuck. Make sure there is a force majeure section that talks about what will happen in the event you need to terminate the contract due to an emergency totally out of your control (sudden illness, death, weather or any other act of God).

Allowable Shrinkage Clause: The percentage of rooms allowed to go unfilled (typically around 10-20%)

Attrition Clause: The percentage of rooms that must be filled to avoid a penalty (typically 80-90%). This penalty can be the $ sum of each room that was left unbooked for your quota goal. It’s a hotel’s way of making sure they make the profit promised to them one way or another, and if it ain’t your guests pocket it’s coming out of… it’s yours. Let’s just say, this is one clause you want to avoid at all costs if you can. You may want to tell the sales agent that this is a deal breaker, and many will find alternative options since they do want your business. If they won’t drop their poker face, perhaps it’s in your best interest to move on or negotiate a mitigation/re-sell clause.

Mitigation/Re-Sell Clause: The hotel is required to try and sell the unfilled rooms in your block after the cut-off date. This way, you are off the hook for rooms unfilled by your guests that are later sold to other guests.


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