Hotel Revenues: Banquet Operations Vs Real Estate Space

Are You Looking at Your Banquet Spaces Differently?

By S. Lakshmi Narasimhan Founder, Ignite Insight LLC | April 03, 2016

Almost every banquet operation in recent times in its key performance indicators carries out a measurement of revenue and profit per square foot of banquet space. Why is this? Given that highest and best use has become the primary motivation for managing an asset including banquet spaces, the metrics for measuring performance have also shifted dramatically. No more, is it just revenue dollars less cost dollars resulting in a profit. It is now a matter of leveraging every square foot of space and its worth to earn revenues and profits. You could say that the owners and stake holders are now looking at every foot of space for returns.

Banquet Operations as a Profit Center

The food and beverage operation in a typical hotel includes a gem whose profit potential makes a food and beverage professional's eyes gleam. It is the banquet operation. The operation which makes money through the offer of meeting spaces, food and beverage service is an integral part of any hotel facility boasting a food and beverage operation.

What makes the banquet such an attractive profit center? To begin with, the banquet operation espouses the beneficial principles of volume. The principle of volume largely lays down that once volume of business drives revenues to cover fixed costs, additional volume achieved would enhance profit by only carrying variable costs. This is the principle underpinning the contribution margin theory too.

This is further complemented by the fact that the hotel banquet operation is one that operates and thrives in volume whether it be standard meetings of 10 to 15 guests or huge conventions sometimes with participants upwards of 1000.

The Banquet-Rooms Partnership

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Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.