The decorations are perfect, the DJ is lining up a long list of crowd-pleasers and the invitees are ready to have a great time.
As the kids say, the vibes are immaculate.
So much so that we just have to ask, “What’s holding you back from joining the meeting and events (M&E) revenue management party?”
The hospitality industry has known for a long time now that pursuing a “rooms only” revenue management approach—while certainly a good start—is a partial measure that fails to capture a property’s total revenue potential. Sheryl E. Kimes, emeritus professor at the Cornell School of Hotel Administration, conducted studies in 2010 and 2017 that identified total hotel revenue management as “the future,” and function space optimization is the top opportunity.
Despite this being known for years, most hotels have not taken the first logical step toward this future: optimizing their function space.
That’s right—there’s an open invite to the M&E optimization party, yet we see so many opt to go the wallflower route and refuse to dance.
You can change that. To help set the stage for this party, we’ve gathered and explored some of the most common reasons we’ve heard for not pursuing an M&E revenue management strategy.
Meetings and events revenue management: 8 Common excuses for sitting out
Sure, you run the risk of stepping on a toe or two while trying something new, but are you really going to let that possibility hold you back from getting in on the fun? Let’s dive into the reasons we often hear for not taking part.
“I don’t need to track my M&E business.”
Counterpoint: Your current approach to M&E business might seem to serve you well enough. But without measurement how do you know if you’re reaching your potential? If you want to grow revenue through your event space strategies, you’ll need a baseline of data—and the sooner you have it, the better.
Tracking metrics is essential for any business endeavor because it helps you understand performance, make data-driven decisions and identify areas for improvement. Without establishing metrics and tracking this information, you may miss opportunities for growth and risk making costly mistakes.
“We don’t have enough meeting space to justify investing in a tool for this.
Counterpoint: You don’t need to have a sprawling array of event spaces and conference rooms to build a successful function space revenue management strategy. In fact, IDeaS has clients who are finding success maximizing revenue for spaces as small as 3,000 square feet.
With the right tools and strategies in place, your spaces may have more revenue generating potential than you think.
“This spreadsheet I’ve set up combined with my own experience is working well enough
Counterpoint: We get it. A well-designed spreadsheet is a thing of beauty in some circles. But even an immaculately crafted and functional spreadsheet will still have weaknesses. For instance, what happens when a new teammate inadvertently breaks a formula? Or if the data in this critical spreadsheet goes out the window due to improper back-ups or saving procedures? At best it’s a headache—at worst it’s a nightmare.
Maintaining these spreadsheets can also be a massive time sink that gets in the way of your ability to react and adapt to market changes.
Katharine Hurved, group revenue manager at Thwaites, saw the frustration with spreadsheets firsthand before adopting IDeaS SmartSpace for their properties.
“We collected function space data on a spreadsheet but never really used it to make decisions because it required so much maintenance,” Hurved says. “The team spent more time entering the data than actually doing anything with it.”
Additionally, while experience and a solid “gut-feeling” read on the M&E market for your property is a great asset, it shouldn’t be the sole input guiding your revenue strategies. Biases and the confounding variables that come with revenue optimization efforts will inevitably lead to missed opportunities that add up over time.
“Revenue management only works well for rooms.”
Counterpoint: Revenue management strategies can apply to any business selling a perishable, fixed inventory. Just because rooms were the first, most obvious starting point application for this approach in hotels doesn’t mean that you don’t stand to benefit by applying similar strategies.
While there are certainly operational differences to consider, applying revenue management principles to your meeting space is largely similar—you’re selling the right room, to the right group, for the right price, at the right time.
With meetings and events producing up to 60% of revenue for some hotels, you may be severely limiting your property’s revenue potential by taking a narrow view of how revenue management can be applied.
“IDeaS SmartSpace brings analytical RM thinking to our event space. We are optimizing our work processes, work more purposefully and define the key figures by which we measure the hotels and observe their progress towards sales goals. With a better view of demand, we can further expand our offerings, adapt them more ideally to our customers’ needs, and overall, sell the event area and our rooms more efficiently and increase sales.
Remember, like with guest rooms, “full” doesn’t necessarily mean “optimized” in terms of revenue generation. By taking in event business without regard for the true demand conditions of the market, you may be leaving money on the table and potentially straining your property’s staff for lower-reward opportunities.
“Making annual M&E rate changes works for us.”
Counterpoint: Be honest, would you say the same thing about your guest rooms? Annual or irregular pricing changes may “work” in that your events business is steady and it’s off the staff’s to-do list. But if the goal is to grow revenue and improve performance, there’s little disagreement about the effectiveness of implementing demand-based dynamic pricing changes on a much more regular cadence.
“There’s no way for us to track which space is busiest and when.”
Counterpoint: It’s true these are both critical data points for guiding function space optimization efforts. If you don’t currently have a viable way of gathering and tracking this information, it’s understandable if you have doubts about the viability of function space revenue management tools. But you may have more options for this than you’re aware of. IDeaS’ meeting and events solutions can integrate with existing sales and catering software tools to provide immediate insight into key metrics like attendance, utilization and revenue per square foot.
“I don’t have the budget.”
Counterpoint: Your budget might be locked in for the near term, but now’s also the time to start thinking about future budget plans and how a lift in function space revenue can easily provide a strong return on investment. For instance, Loews Hotels’ investment in Function Space Revenue Management helped them achieve the highest catering revenues in company history—amounting to a 26.5% increase from 2019 to 2022.
Just think, what would a substantial uplift in catering or events revenue like this mean for you and your organization’s next budget season?
It may take some consensus-building to get everyone on board but consider how much easier these budget planning conversations will be when your meeting and events revenue is looking better than ever.
Put on your rev shoes and dance the blues away
You have an open invite to the meeting & event revenue optimization party—so why not put on your dancing shoes and start mixing it up? We’ll be on the dance floor, ready to help you get in on the fun.
To learn more about how IDeaS can help you optimize your event space, visit the Meeting and Events Strategy page.