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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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.