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