Let’s face it: Even discussing conference and banqueting business right now drips of tone deafness. We get it: There’s not much of it on the books. According to HotStats data, year-to-date revenue from conference and banqueting is down 72% to $8.38 per available room compared to the same period last year.
The days of the iced-over raw bar are over, for now.
The regret is that conference and banqueting, based on normal times, has the potential to bring in a heaping helping of revenue. One study by Oxford Economics saw that eventgoers spent $38 billion in direct sales in 2016. Those events also generated 300 million room nights.
Of course, it’s not all roses. Such events can also come with high costs that spread throughout the operation, forcing hotels to tap into everything from food and beverage (F&B) and marketing to information and telecommunications (I&T) costs. Those expenses can make a dent in a hotel’s profits and losses (P&L).
This is why data is so crucial when setting up hotel events in both a normal and COVID-influenced world. It can show hoteliers where they need to spend to turn hotel events into profit makers.
Wondering how to take control of such a volatile part of a hotel’s operations in such a volatile time? Here’s a simple benchmarking 101 guide to conferencing, banquets and other hotel meetings.
How to Implement a Benchmarking 101 Strategy for Meetings
Conferences, banquets and other hotel meetings don’t operate in a vacuum. A successful event brings together departments across a hotel’s operation. For instance, banqueting relies on efficient F&B, but it also depends on more general event staff, room maintenance and a marketing department.
With so many factors influencing these events, benchmarking isn’t as easy as tallying a single number and moving on.
It requires a holistic approach.
Here are some simple steps to executing a performance-based benchmarking 101 strategy for conferences and banquets.
Benchmark for Operational Efficiency
If hoteliers want to bounce back from pandemic damage, they need to squeeze as much profit out of their hotel’s operations as possible. Because conferences and banquets are so intertwined with the whole hotel operation, it makes sense for hoteliers to focus on driving operational efficiency. That means measuring every cost associated with an event, including:
- F&B costs
- F&B labor costs
- General labor and admin costs
- Property and maintenance costs
- I&T costs
By getting a handle on all the expenses feeding into each event, hoteliers can set up a better plan for streamlined operations. From there, they’ll be ready to see how costs stack up against the money coming in.
Focus on Revenue Beyond Rooms
RevPAR, like dried cement, has become a monolithic KPI within the hotel industry. Now, even as room revenue dries up, RevPAR remains the go-to metric for many. But RevPAR on its own doesn’t tell hoteliers much about hotel performance. Worse yet, it completely ignores nonroom revenue from conferences, events and banquets. Here are some clearer metrics for measuring how well hotel meetings are performing:
- Total revenue per available room (TRevPAR) — This accounts for the revenue from all of the hotel’s or resort’s sources, including things like conferences or banquets.
- F&B revenue as % of total revenue — This metric compares food and beverage revenue to total revenue. It can be a helpful figure for anyone trying to cut down on F&B operations for banquets.
- Gross operating profit per available room (GOPPAR) — This metric dives into how cash is flowing to the bottom line. It shows whether events are churning out profit gains or eating into the bottom line.
Overall, these more precise metrics will take the guesswork out of measuring income from hotel meetings.
Measure the Full Value of Conferences and Events
Beyond watching broader revenue numbers, hoteliers can go a step further by considering how conferences and events are contributing to the whole operation. How? By asking these questions:
- How much direct revenue is coming from the conference itself?
- How many repeat customers or references are booking after a successful event?
- Is the meeting or conference being booked for the following year?
- How much secondary revenue is trickling into other departments because of the event?
By identifying the true value of events, hoteliers can decipher whether all that cash and effort is paying off in profit.
Use Benchmarking to Chart New Opportunities
With a full picture of costs and revenue, hoteliers can see which events are actually hitting the bottom line. And it can reveal new opportunities in a COVID-influenced hotel market. It can also shine a light on the hotel’s strengths and weaknesses. Hoteliers can then use those insights to inform new event plans. For example:
- Food-centric events — Are F&B operations lean? It might be worth adding food events or more banquets.
- Business retreats — Hotels that are investing money in special amenities like pools, spas or lush gardens may consider hosting more business functions. This is a good way to add ROI to those high-expense items.
- Private functions — If P&L reveals high spending on vacant space, private functions may be a way to recoup losses. Consider special events such as weddings or reunions to collect on costs.
- Off-season events — If seasonality is hitting a hotel especially hard, conferences can help hoteliers catch up during slow months. As long as operations are running lean, adding special events could open up new revenue streams.
By diving into numbers and cutting costs first, the hotel can make investments in new opportunities that hit the bottom line.
Take a Holistic Approach to Benchmarking
With the right benchmarking data, a hotelier can tap into new conferencing, capitalize on new events and jump-start the hotel’s finances. But plans need to feed into a broader hotel performance strategy that drives profit.
The hope is that demand for conferences and events climbs back to pre-COVID levels soon after the pandemic has run its course. Hotels have much to gain back.