ATTRITION CLAUSE STANDARDS

Meetings & Conventions: Planner's Portfolio September 2000 Current Issue
September 2000 PLANNER'S PORTFOLIO:

The Law & the Planner

By Jonathan T. Howe, Esq.

ATTRITION CLAUSE STANDARDS

Q: In reference to attrition clauses and sliding scales in contracts, the industry school of thought is that a contract with both is charging double attrition. How should this issue be approached from a planner standpoint and a legal standpoint?

Catherine Sullivan, CMP
Manager, Meeting Services
American Society of Clinical Pathologists
Chicago, Ill.

A: Contracts are full of confusing terminology, aren’t they? Sliding scales are used in cancellation clauses to determine the penalty to the planning organization should a meeting not go forward. Attrition clauses kick in after the meeting has taken place, but the guaranteed room block was not filled. You will not have to pay both, so it is not double-dipping.

Let’s look at why attrition clauses exist. Their purpose is to protect the interests of the hotel if the meeting organization fails to fulfill its obligation under the contract. The hotel has taken the room block out of inventory for the exclusive use of the planner. If rooms are not used, the revenue opportunity is lost forever.

Yet attrition goes beyond room block and can come into effect in several ways. First, it can be the failure to pick up the number of rooms that have been contracted for the event. Second, it can be a failure to meet food and beverage guarantees. Also, it can be (though I have yet to see this in a contract, but stay tuned) the failure of the meeting planner to utilize other hotel services such as audiovisual, room service, etc., which were anticipated when the group was booked.

Sliding scales are really escalating scales based on what has been promised vs. what is delivered. Generally, this is a cancellation issue concerning when notice is given, increasing in dollar amount as the meeting date approaches and the hotel’s ability to resell the rooms decreases.

It is important for the meeting professional to understand thoroughly that attrition clauses work to protect the integrity of the contract you have negotiated. Today, too many meeting professionals feel that contracts are one-sided in the supplier’s favor. That is not the case. If you want the other side to perform, expect them to want you to perform.

LIQUOR LIABILITY
Q: In Professional Meeting Management, 3rd edition, edited by Edward G. Polivka (Professional Convention Management Association; Birmingham, Ala.; $54.95) under the topic of “Host or Liquor Liability,” the writer says, “Check to see if the facility is covered by host liquor legal liability.” What exactly is that coverage?

Kathleen Peterson
Director of Strategic Initiatives
ADP
Alpharetta, Ga.

A: The facility shouldn’t have host liquor liability coverage your organization should have it. The facility will have its own coverage, too, as a licensed provider of alcoholic beverages.

Host liquor liability is insurance coverage that is afforded under most comprehensive general-liability policies. The important thing for you to look for is a provision that says your organization is covered for any claims arising out of your hosting or sponsoring the serving of alcohol. Be sure, also, that your own liability insurance applies to off-site activities that take place away from your headquarters.

When evaluating your insurance policy, be sure there is an obligation on the part of the carrier to defend you. This means the carrier will take on the expense of defending you from day one should a claim be made.

Jonathan T. Howe, Esq., is a senior partner in the Chicago and Washington, D.C., law firm of Howe & Hutton, Ltd., which specializes in meetings, travel and hospitality law. Legal questions can be e-mailed to him at [email protected].