Ms. Fields

Sales & Marketing

Catering Sales: How to Maximize Revenues and Optimize Sales Productivity

By Brenda Fields, Founder, Fields & Company

One of the biggest challenges in small hotels is to clearly define catering responsibilities. Does it belong with Food and Beverage or does it belong with Sales? Is it an operations function or a direct sales function?

Over the years, customer needs and tastes have evolved, and new competition has emerged with demand for free standing restaurants, lofts and penthouses, and tourist attractions. With the many venue choices for customers, it is important to understand how to drive business into your venue. And with the impact on GOP, it is important to maximize those revenues generated. The components of this generation are: direct sales, operations, marketing, pricing, and yield management.

The first step is to clearly define the "sales" and "operations" responsibilities" of the staff, to maximize performance.

The Components

• Direct Sales - Many times, we refer to "Catering Sales Managers" as sales people. But in reality, the catering sales manager handles only inquiries that come into the property, sends out contracts and event orders, and oversees the functions in an operations capacity. "Sales" is really just order taking and takes a back seat to operations.
  
  By definition, "sales" is the proactive approach to identify and solicit business person to person. If "sales" is the goal, it is important to establish an action plan based on an overall strategic plan. The strategic plan should include targeted market segments, position in competitive set, and demand/need periods. The action plan should be very specific and targeted, addressing in great detail, how to achieve the targeted revenues.
  
  If "sales" is the operative function, then ensure that proper sales training takes place, as "sales" is a skill. Good looks and personality may open doors, but they don't replace professional skills to identify customers, understand their needs, and close the business.
  
  Even with good skills, goals are critical to ensure success. Top athletes will tell us that they are much more competitive with score-keeping. Therefore, establish specific goals into two criteria:
  1) New business booked
  2) Business consumed
  
  Breaking it down into the two goals provides a balanced way to achieve the goals. If new business booked is not tracked, it is easy to fall behind in the consumed business goals.
  
  Additionally, effective booking goals are based on specific targets such as food, beverage, and other revenues, or based on specific market segments. Revenue goals should match or exceed the budgeted goals. A rolling 12-month advanced sales report will assist in maximizing revenues and in identifying need periods.
  

• Operations - Small hotels, in particular, tend to have limited staff. Therefore, it is typical to have one catering position with sales and operations functions combined. But, it is important to analyze the pros and cons of having two positions vs. one combined position. Sometimes, a direct sales function can generate substantially more revenues than the cost of the two positions of sales and operations. But that analysis can only be done effectively if a strategic plan and specific goals and have been established.
  

• Marketing - Once the position in the market place has been established, then all standards, operating and pricing philosophies are established. The quality and look of all collateral, web site, and in-house signage establishes an identity. Once that identity is in place, a plan should be devised and implemented to cost effectively reach the targeted markets. The marketing efforts will support the direct sales effort as well as reach other segments such as weddings and social functions cannot be solicited through direct sales. Demand from these segments is generated through targeted marketing programs and initiatives.
  
  The Web is rapidly becoming the most cost effective means to reach potential customers, and is the great equalizer. High profile hotels, large, small, independent, or chain-affiliated hotels, all have the same opportunity on the Web when done with expert planning and implementation.
  

• Pricing - Pricing is established based on the product offered and an understanding of the marketplace. Those responsible for booking business should have information on costs in order to negotiate. For example room rental could represent 75% profitability whereas, food could represent 33% profitability. The catering sales person will understand where discounting is less likely to impact profitability.
  Knowledge of demand periods is key for negotiating effectively as well. Understanding these two elements places the catering person in a position of strength and confidence when dealing with customers, ensuring that the best financial interests of the hotel are met as well as inspiring customer confidence.
  

• Yield Management - As in rooms, each segment for catering sales has its own booking trend and demand period. Therefore, by understanding each segment's patterns, the hotel can proactively establish selling guidelines to ensure that the space is sold effectively. For example, if wedding demand is high for weekends in June, it is important keep the space available for that lucrative business, rather than selling out to low rated business prematurely. Or if October is high demand for corporate meetings, monitor the selling of the space so that by capturing the natural demand, space is sold effectively. Booking a one-day group meeting on a Wednesday in peak periods would displace the potential revenues of selling a four-day meeting.
  

Additionally, it is critical to budget and forecast catering revenues on a daily basis, broken by meal period, and/or by market segments. Many times, owners and managers will project increases based on percentages, without looking on a daily basis. This can lead to faulty projections. For example, there could be greater revenue opportunities from weddings because of an additional weekend in June. Or a mid-week holiday could decrease the corporate group business potential, compared to the previous year.

A thorough understanding of where the business falls will lead to booking business which gives the highest return. And a proactive plan to generate business for low demand periods will create financial success.

Having an in-depth understanding of each component and how to successfully integrate each one into a strategic plan, will ensure that the owner/manager cost effectively impacts catering revenues, and ensures profitability regardless of market conditions.

Brenda Fields is a strategist and sales and marketing expert honed from a successful track record in the hospitality industry. Brenda is a member of the prestigious ISHC, recently served on the Americas Board of Directors for HSMAI, and is Immediate Past President of the Hospitality Sales & Marketing Association International. Brenda was honored as one of "The Top 25 Most Extraordinary Minds in Sales and Marketing" by HSMAI as well as the "Leadership Development" award. She is an industry leader and spokesperson; a member of the Editorial Board of HotelExecutive.com; contributes regularly to international publications Hotel News Now; Hotels Online, Hotel Resource Weekly Network News, eHoteliers, and many others. For more information visit www.fieldsandcompany.net Ms. Fields can be contacted at 518-789-0117 or brenda@fieldsandcompany.net Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.