Ways Around Cancellation and Attrition

As the economy worsened and stricter oversight on government contracts were mandated, two pesky clauses became harder and harder to sign for without conversation and friction.  Some years ago, more government agencies than not were able to sign almost standard cancellation and attrition clauses.  Today, those agencies are in the dissenting minority.  And it won’t be long before those days are gone entirely.

Indeed there is a substantial amount of risk hotels take on when entering into contracts – er, letters of agreement with the government.  The government can cancel for convenience and the government shall take no liability when it comes to meeting their room performance obligations.  So it begs the question, what can hotels do to mitigate their risk at least a little.  I’ve had success with softening the “no cancellation, no attrition” argument in a few ways. For cancellation, agencies are still apt to sign non-binding rebooking clauses.  In essence, there’s no more legal liability here than if the contract were written to say, “The government can cancel for any reason without compensating the hotel any more notably than saying `nanny nanny boo boo’” and yet, hotel management is still often appeased by the general assurance of future business.  All kidding aside, agencies who sign rebooking clauses, in good faith, more often than not will make good on this promise

In the case of attrition, there’s potentially even more hope for the hotel sales professional.  While agencies are wary about signing for attrition because it may hold the government liable to pay for goods or services not rendered, there’s hardly ever any buzz about the government signing for meeting room rental.  Even egregiously high meeting room rentals.  In this case, tying room rental to room performance by using a sliding scale is a wily way around the nuisance of an attrition clause and nearly satisfying it precisely.

These solutions are likely not permanent, I caution.  Scrutiny on government contracts will likely get even more fervent in the coming months and years – it just begs for increased creativity on the part of the hotel sales professional.  That’s all.

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