Attrition and cancellation live in the same contract and get confused constantly. Attrition is the penalty for filling less of the block than you promised. Cancellation is the penalty for calling the whole thing off. They are priced differently, triggered differently, and — in the situations that actually hurt — the boundary between them is worth real money.
How each one is priced
Attrition damages scale with the shortfall: rooms below the threshold, times rate, times nights. Cancellation damages usually follow a sliding schedule keyed to notice — cancel a year out and owe little or nothing; cancel inside the final month and owe most of the block's value. The schedules are separate, and one does not cap the other.
The boundary case that matters
An event that shrinks badly sits between the clauses. Filling 30% of a block means paying attrition on the missing 50 points below an 80% threshold — sometimes more than a timely cancellation would have cost. If attendance is collapsing, do the arithmetic both ways before the cancellation schedule steps up: there are dates on the calendar where cancelling the block and rebooking a small courtesy hold is the cheaper honest answer.
- Read both schedules the day you sign, and diary the step-up dates.
- A force majeure clause governs neither penalty unless it says so explicitly — do not assume it rescues a soft year.
- Everything is negotiable before signature: attrition basis, cancellation steps, and whether a downsized rebooking offsets damages.
The deeper fix is not needing the bet to be precise. A conservative block with a wash clause rarely meets either penalty, and the demand you decline to guarantee still books — late, through the open market, where an offer on your own pages can catch it without a contract at all.
The crossover arithmetic
Put numbers on the boundary case. A 100-room, two-night block at $170 with an 80% clause: if the event shrinks and pickup projects to 30 rooms, attrition damages run 50 rooms × 2 × $170 — $17,000. If the cancellation schedule at your current date charges 40% of anticipated block revenue, cancelling costs about $13,600 — and rebooking a 25-room courtesy hold for the attendees who remain costs nothing. In that year, cancellation is the cheaper honest answer by thousands, and it gets worse every week you wait as the schedule steps up. Nobody enjoys running this comparison; the organizers who do it anyway keep their events alive through the bad year.
The mirror case matters too: a modest shortfall — pickup at 70 against 80 — almost never justifies cancellation. Ten rooms of attrition is a manageable known cost; a cancellation is a relationship reset with the only property that now has your history. Use the crossover math for collapses, not disappointments.
Dates to diary at signing
- Each cancellation step-up date, with the dollar cost of crossing it.
- Each reduction-schedule date from the wash clause, if you negotiated one.
- The cutoff, and a self-imposed decision date two weeks before it.
- A mid-cycle review where you honestly project pickup and run both formulas once.