Separating Group and Local Banquet Sales
By David Lund Hospitality & Leadership Expert, The Hotel Financial Coach | July 16, 2017
If your hotel has a reasonable amount of meeting space (+10,000 ft) and your banquet business is a significant contributor in your Food and Beverage Department (+20% of F&B revenue), you are going to want to separate local banquet business from group banquet business on all of your financial statements, forecasts, budgets and daily reporting.
At this moment you may be asking, “Why would I want to do that? That sounds like a lot of work.”
There are some very good reasons to make this practice a standard in your hotel. I see many hotel financial statements and most are missing the boat because they do not separate group and local banquet revenues. Separating this reporting and setting it up properly provides powerful information you can use in your hotel to make better decisions and ultimately be more profitable. When you take the process apart and look at each piece, it is not complicated. It just requires someone who wants to do it. That begs a question: “Why would I want to set up separate revenue reporting for groups and locals inside my banquet department?”
First Reason - Track the Revenue and Follow the Profitability
You want to know how much banquet revenue is generated by groups in-house who occupy your bedrooms vs the revenues generated by local customers who use your hotel’s meeting rooms and banquet facilities, but don’t occupy rooms.
We normally refer to the business coming from in-house groups as Conference Service. We call the business that comes from customers who do not occupy rooms as Catering and we also call them Group and Local.
If a significant portion of your F&B revenue comes from banquets, there is a very good chance that you have two competing elements inside this revenue stream. You want to know how much revenue comes from each separate element. In rare circumstances (like a remote resort without significant local business), this separation may not be necessary. All other hotels that have a good mix of business would benefit from reporting this data separately.
You want to know the revenue separation for all types of sales in the banquet department. The following areas need separate reporting: food, beverage, room rental, audio visual, gratuities and miscellaneous.
Groups vs. Local
The Hotel Business Review articles are free to read on a weekly basis, but you must purchase a subscription to access
our library archives. We have more than 5000 best practice articles on hotel management and operations, so our
knowledge bank is an excellent investment! Subscribe today and access the articles in our archives.