When The Numbers Don’t Add Up
Have you ever had someone say “if you do this for me….I’ll do that for you….”? Hotels operate in much the same way when it comes to meeting room rental (MRR). Depending on the hotel and how much meeting space they have to sell, very often there is a food and beverage minimum tied to the securing of meeting space for your meeting.
When business is “good”, many hotels waive the MRR in exchange for a food and beverage minimum. When business is “slow” they will sometimes give the meeting space with no stipulations or other revenue commitment. When business is “great” you will see the hotels charge for the meeting room rental AND a food and beverage minimum. It’s all about the mighty dollar. Ownership wants to maximize revenue when they can. But, even when business is good or great, the revenue expectations need to be reasonable and attainable.
When the numbers don’t add up…..so what does this mean? The RFP should outline the specific group food and beverage needs. Assuming the hotel provides their average pricing for their banquet menus, the food and beverage minimum should be attainable. For example, if the hotel is requiring a food and beverage minimum of $10,000.00, then based on the average menu pricing for all of the group meal functions it should add up close to that amount. If the average menu pricing provided, multiplied by the agenda F&B needs, adds up to $6,000.00, how can they possibly expect the group to spend $10,000?
Well, the group will use the hotel restaurants too…..that should count, right? Wrong. Most hotels will NOT count outlet dining towards the food and beverage minimum. The outlets sometimes are not owned or operated by the hotel and even if they are, they fall under a different department with their own revenue goals to meet. Outlets and banquets are two completely different departments.
There is good news though, because everything is negotiable. So if you get a bid and the numbers don’t add up, don’t hesitate to go back to the hotel and negotiate the numbers. Or better yet, work with a meeting professional (like me!) who can ensure that the numbers add up. This will not only save you money, but will also reduce your liability.
Want to know more? Visit www.LauraleeShapiro.com.