I’m in the midst of a consulting project that is intended to unearth incremental food and beverage revenue for a group of hotels by the end of the year. Basically, the hotels are struggling in one area of revenue, so we are trying to make up for that shortfall in other areas.
As I visit the properties and review the numbers, I can tell that the hotels can’t see the forest for the trees. This is nothing new. Hotels have to operate 24 hours a day, 365 days a year, so of course they get bogged down in the details and don’t spend a lot of time looking at the big picture. Of course.
Now that I’m a consultant rather than an on-property leader, it’s easy for me to look at the big picture – the forest – and identify key areas of opportunity. I’m not emotionally caught up in the daily grind of whether this meeting planner got the decaf coffee she wanted or that family’s rooms were all blocked on the same floor. I don’t have to care about what the Director of F&B said at last week’s Ops meeting.
As such, here’s what I’m seeing:
The catering free sell policy at full-service hotels needs to be reviewed more frequently, and the catering leader needs to push for more dates. Because most catering and convention services staff are measured on consumption rather than future bookings, they don’t pay attention to anything further out than they next 30 days, and they are missing revenue opportunities as a result.
Here’s a formula for driving more catering revenue:
Identify your group ceiling. How many group rooms do you need to book in order to maximize the rate on your remaining transient rooms?
Identify your transient protected block, or how many transient rooms you want to hold for business and leisure guests. This is the same as the group ceiling. How many transient rooms do you want to hold back each night for non-discounted booking by individual travelers?
Once per quarter, audit the business on the books. Are all of your events booked? Are you holding more space than you need for a group? Do you have “all space holds” in place for a citywide? Book anything you need, and release the rest. (Hint: Once your space is released by the citywide planner, it’s yours, so don’t be shy about asking for space releases.)
Once per month, look through the next 12 months. Are there dates on which you’ve met your group ceiling and/or your transient block? If so, all of the remaining meeting space in the hotel should be released for sale. Period. Put those dates on a calendar (or use an indicator in your booking software) and distribute them to the catering sellers. These should be dates that can be sold by your catering managers as free sell.
Once per week, look at the next 60 days in much the same way. Since corporate catering/day meetings are usually short term, you want to spend more time combing through the books for short-term availability.
Despite what you may think or what business review processes you may have in place, your managers are human. They aren’t going to spend a lot of time on business that they don’t already know they are allowed to book. By proactively identifying free sell dates that fall outside the free sell policy at your hotel, you are eliminating that hurdle and opening up more opportunity for booking catering business.
Glossary: Hotel terms used in this post that may not make sense to normal people.
Free Sell: The free sell policy is the set of rules catering sales managers have to follow when booking business. Guest room bookings are usually more profitable for a hotel than events, so the meeting space is often reserved for business that includes both rooms and events. So that the space is protected for the most profitable business, hotels put a free sell policy in place that allows catering managers to book business into the space under certain conditions. Most commonly, they can book catering-only business (without guest rooms attached) within 30 days and on evenings and weekends. This varies according to business conditions in a particular hotel.
Group Ceiling: When you sign a contract and guarantee payment for a block of rooms, you get a sometimes sizable discount based on that volume. Because these rooms are discounted, most hotels don’t want to fill all of their rooms with group blocks, so they set a ceiling, or maximum, of the number of these discounted rooms they will accept on a given night. A business hotel might have a lower group ceiling on weekdays because they know that higher rated corporate travelers will fill the rooms. A leisure hotel might have a lower group ceiling on weekend nights because their leisure travelers will buy up the rooms at a higher rate.
Transient: Guests who are not part of discounted group blocks book the hotel’s best rate. These folks are collectively known as transient guests. Since the rate for these rooms is higher, the hotel benefits by protecting rooms for those guests.
Citywide: A citywide is a huge convention that takes up rooms all over the city, or city-wide. Get it? These are booked years in advance and often include “all space holds,” which means that participating hotels are required to give the citywide convention the right of first refusal for all meeting space. More often than not, unless your hotel is the headquarters for the event, that space goes unused, so it’s a good idea to ask early and often for it to be released. the planner may say no, but keep asking.