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How to Deal with Mitigation
A mitigation provision is an important part of a contract, in case you have to cancel the meeting or can’t fill all of the rooms you reserved.

Mitigation in relation to conferences and meetings is where it’s the hotel’s duty to minimise the customer’s damages by trying to fill the cancelled or released rooms. It is a part of the compensation process whereby the hotel tries to recoup the losses incurred by your cancellation.

If a hotel does sell some of the rooms after your cancellation then the question occurs of how to take this into account. It stands to reason that a hotel shouldn’t receive full damages from you and also receive new bookings in the rooms that you cancelled. That would mean that they would have actually done better out of the cancellation than if you’d not cancelled.

A Cancellation Example

How should you work out the amount of damages after mitigation? It’s easiest to use an example:
  • A group cancels its meeting.
  • It had 100 rooms booked at £100 (0) each, for three nights.
  • It owes 75 percent of unsold room revenue.
  • It therefore should owe either 75 percent of the contracted room revenue or the revenue from rooms that weren’t resold that day, whichever is less.
Night One
  • Formula 1: 75 Percent of Block
    75 percent of 100 rooms blocked = 75 rooms
    75 x £100 (0) = £7,500 (,000)
  • Formula 2: Rooms Unsold at Hotel
    Total hotel rooms = 200
    Total unsold = 10
    10 rooms x £100 (0) = £1,000 (,000)
  • Amount Due
    The group should owe the hotel the smaller amount, £1,000 (,000), because the hotel recovered its losses from other bookings.
Night Two
  • Formula 1: 75 Percent of Block
    75 percent of 100 rooms blocked = 75 rooms
    75 x £100 (0) = £7,500 (,000)
  • Formula 2: Rooms Unsold at Hotel
    Total hotel rooms = 200
    Total unsold = 100
    100 rooms x £100 (0) = £10,000 (,000)
  • Amount Due
    The group should owe the hotel the amount from formula one, £10,000 (,000), as they were liable for 75 rooms and the hotel didn’t manage to sell 100 rooms and so manage to recoup its losses from the cancellation.
Attrition

The above calculation has is for a cancellation. However, the same rules apply for attrition, where a group doesn’t fill its contractual percentage of rooms. Here, you should calculate how many rooms under the required percentage were occupied and then use this figure in formula one.

Documentation

You must request all of the relevant documentation from the hotel to do your figures. This doesn’t just include the number of rooms that you occupied. It also includes how many rooms were resold and how many were out of order. With all of these details at hand, you should be able to arrive at an amicable agreement – provided that you had the mitigation clause in the contract in the first place.
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