By Kristi White
Meeting space, the last bastion of unmanaged revenue in a hotel. Some of you may balk at the thought, even argue that you effectively manage meeting space. However, for all too many hotels, managing the meeting space looks something like this:
The list would go on and on, detailing each room and each time period, however, it often becomes the Ron Popeil “set it and forget it” method of revenue management. Oh, we pull it out once a year and pretend to look at it but really, it only gets the cursory “if it ain’t broke, don’t fix it” glance.
Are you nodding your head yet? Perhaps, there is a sheepish grin because you know this is a bit too true. It’s ok, you can admit it. It will be our dirty little secret. Because, we believe it’s served us well. But has it really?
If you went back and analyzed your meeting space by day over time, how efficiently have you managed your space? Has it been managed as tightly as your guest rooms?
There are two ways to think about occupancy as it relates to meeting space. The first way is looking at it strictly by the number of rooms available, much like we do guest rooms. In the example below, we look at the occupancy by day for the meeting space strictly by count of meeting rooms.
Meeting room occupancy isn’t great across any of the days. Monday achieves the highest occupancy of the week at 42.9%. However, if we look at this same chart, but add in the day-to-day hotel occupancy does the story get better or worse?
Monday, the day with highest meeting room occupancy, is the day with the 3rd highest occupancy rate of 87.20%. However, the two days with the highest occupancy rate for guest rooms have some of the lowest occupancy for meeting space.
Now, if we change the way we calculate occupancy, and calculate it based upon square footage, what happens? In this scenario, the Meeting Room Percentage story worsens on Tuesday and Wednesday.
On those two dates, the meeting rooms ran the lowest occupancy while the hotel itself ran the highest occupancy.
Even if we analyze the business mix for the hotel and assume the Tuesday and Wednesday occupancy levels were driven by transient demand, it means the catering team was never given the go ahead to sell meeting space outside of the normal free-sell parameters. Or perhaps they were, but the food and beverage requirements were so restrictive that business was turned away.
Now let’s look at this same week from a revenue perspective. If on each of those days where the meeting room rental was charged (vs. waived due to other spend), what would the hotel have collected?
Once again, the two highest occupancy days produced the lowest revenue and two of the lowest room occupancy dates produced the most revenue.
Now, if we assume on any given day, the hotel could collect $8,600 in meeting room rental, how well did the hotel maximize its revenue daily? Once again, the Tuesday and Wednesday are the least efficient days relative to hotel occupancy.
Obviously, other factors play into revenue calculation but for simplicity we will stick with just room rental. This allows us to understand how well the hotel maximizes its meeting space to revenue ratio.
Meeting space isn’t simply an amenity to capture group business. It can be optimized much the same way we optimize guest rooms. However, if we aren’t measuring its usage in the same way we measure our guest rooms, we can’t hope to optimize the revenue received from it. You can’t manage what you can’t measure.
That old saying always rings true – you can’t manage what you can’t measure – and reporting plays an invaluable part of any business decision. Meeting rooms are no exception. Identifying patterns allows hotel operators to better understand the value of their meeting rooms and to optimize profits.
In order to make business decisions relating to the profitability of meeting rooms, properties need access to the right data. Smart hotels use data to gain these types of insights and powering their competitive advantage.