Tag Archives: UNCC MEP

You’re Charging How Much?!: The Case for Smarter F&B Budgeting

Originally published Meetings Focus.

You’re Charging How Much?!: The Case for Smarter F&B Budgeting

Food and beverage (F&B) can make or break a meeting or event. And certainly, the complete absence of F&B can set in motion kvetching like you haven’t heard since the last time you managed a meeting without it. Just try to have a meeting break with no coffee!

I’ve been in this industry a long time. Years before my own company, Eisenstodt Associates, celebrated its 38th anniversary on June 1 of 2019.

Planning meals has never been my favorite thing to do. In fact, I would place it among my least favorite things tied to the involved process of planning meetings and events.

Guessing what others would want to eat on a given day is a nightmare especially when we are planning months out and have no idea what will be fresh, what will be available, and what factors impact what a chef can best prepare.

Or what an audience will want to consume.

Key Considerations When Planning F&B

In planning events where food and beverage elements play a starring role or for when any sort of F&B is offered, we must consider, at least, the following key items:

  • Group demographics
  • Availability of food and beverage
  • Chefs’ abilities and specialties
  • Religious practices
  • Allergies and food and beverage sensitivities*
  • Accompanying meeting and event activities
  • Service provided
  • Meal and item costs
  • Service charges and taxes**

*Tracy Stuckrath is a prolific writer and speaker about allergies and sensitivities. You can learn more about her and read additional insights about F&B on her website.

**These are likely to change if we are booking six months or more from the planned event.

Not only must we consider the above items related to F&B, we must convey all this information in our RFPs for meetings and events.

And we must clearly state that in order for us to respond appropriately and then create a contract, we need full and complete information.

Déjà Vu All Over Again: Coffee’s Cost Per Gallon

In all my years in this profession, there is rarely a month—or even a week!—that goes by when the cost of a gallon of coffee is not discussed.

As in, “Why does a gallon of coffee cost x?” Lately and frequently again on social media, the cost per gallon discussion has reared its head.

(We used to look at the cost of “dry snacks”—potato chips, peanuts, pretzels—when those were considered the budgetary best for cocktail receptions without “real” food!).

The discussions have been accompanied with questions about the amounts billed for taxes, service, and ancillary fees, on top of per plate or per person costs for various F&B offerings.

Other popular topics of discussion related to F&B include:

  • the number of, and charge for, servers for buffets, continental breakfasts or breaks
  • bartender and, if cash bar, cashier charges and minimum numbers to serve and the minimum hours we must contract
  • the administrative fees now added to food and beverage (F&B) events

Nothing in the discussion seems to change.

Calculating the Cost of a Gallon of Coffee

I looked back at 2012 menus*** from a contract negotiated for a client’s 2016 meeting.

At that time, a major Las Vegas hotel at which the meeting was booked charged $70.00 per gallon of Kona coffee plus 21% service charge plus 8.1% tax on both the coffee and on the service charge.

If one calculates that, and assumes 20 cups per gallon, it’s about $4.57 per cup.

In emails with James Filtz, interviewed here, I asked about the cost of coffee.

He said “In 2014 coffee at The Venetian in Las Vegas was $86 per gallon. Today it is $100 per gallon. That’s about a 16% increase.”

I checked with the same unnamed Vegas hotel above for their current prices. The price of coffee at the major Las Vegas hotel previously contracted, came out to $95.00 per gallon, with a service charge of 23%, tax of 8.5%, and the service charge taxed slightly over 4%.

How does that compare to what a cup of made-at-home coffee using a Keurig costs, considering the purchasing and labor that goes into how a hotel provides coffee?

Is it cheaper for each guest to run back to their rooms, use the in-room coffee maker (if there is one and the condiments are to their liking), and the time it takes for them to return for valuable networking?

I found this about Keurig, where the cost per cup is measured on a 5-6 ounce cup.

***A Pro Tip Regarding Food & Beverage Menus

Most hotel menus are now electronic.

When you negotiate more than a year out with an escalation clause on food and beverage, the menus from which you are negotiating will no longer be live on the website.

I recommend printing them out—on post-consumer paper—and attaching to the final signed version of the contract and saved as a PDF in your files and saved with the printed contract and menus and other policy documents on paper.

Otherwise, you have nothing from which to gauge prices.

Hidden—and Not So Hidden—F&B Costs

Hotel owners and management companies want to make money. Now more than ever. We want hotels to be kept up—that is, furnishings to be clean and updated.

I hope all or most of us want people who work in hotels, especially those who provide service, to make “livable” wages—though I’m not sure even $15.00/hour in most markets is “livable.”

Or is it “not on my group” mentality among meeting and event planners that is the issue—you know, charge other groups what you need but negotiate my costs to what I want to pay?

My meeting and event clients have almost exclusively been not-for-profit groups for whom budgets are tight. Yet, as chef and humanitarian José Andrés says:

“I realized very early the power of food to evoke memory, to bring people together, to transport you to other places, and I wanted to be a part of that.”

If we skimp on food or beverage, it reflects badly on the hotel, caterer or our group.

The Power of F&B at Your Meeting or Event

Food makes memories. Food brings people together. Harrison Owen, back in 1985, knew the power of breaks on the overall experience of learning at meetings. We know the power of available food and beverage to make or break a meeting or event experience.

See what three planners interviewed had to say about what’s important to them and their questions about costs. When will we budget differently and realistically and think about what the two NACE officers have to say when we plan and negotiate meetings?

Oh, and don’t miss the “bonus section” of the August 2019 Friday With Joan newsletter: I had the pleasure of dining with Tom Sietsema, food critic for The Washington Post, at a José Andrés restaurant. Read more about how noodging can pay, the ethics of dining with a food critic and Sietsema’s “go-to” food when he’s not on-duty—one of my favorites too!

‘Ethical Negotiation’ – An Oxymoron?

Original published Meeting Today Blog 

'Ethical Negotiation' - An Oxymoron?

Psst… did you hear the one about the hotel salesperson and the customer who didn’t disclose their policies and history? OK, maybe that’s not a common setup for a punchline.

But everyone says it: there must be “hidden charges” that involve a financial risk to meetings that hotels never disclose, seemingly in order to protect themselves from major catastrophe. This causes meeting organizers to believe they’ve been “caught” by someone unscrupulous because if they were really our partners, wouldn’t all the information be disclosed at the start of the relationship?

Conversely, hoteliers and other vendors, working with a wide range of customers say they are frustrated that RFPs (Requests for Proposals)—whether written, electronically completed or phoned in—don’t describe an entire meeting, its needs or its history.

Those with many years of planning, sometimes for the same organization, where year-to-year meetings are pretty much the same; those with little experience; or the well-meaning person who, based on a social media group’s interest, wants to convene face-to-face gatherings, all sometimes take short cuts.

Without all the facts, hotels and other vendors may take for granted that what they get is enough and the person from whom it is received knows enough to ask the right questions. Neither party wants to lose money. In fact, the expectation for each side is that a profit be made, or for the group, at least a break-even financial outcome. Each party wants to believe the other is not withholding information.

I’ve written and taught about contracts*, ethics, and negotiations for years, most recently in the August 2016 edition of Friday With Joan and again in the article “7 Keys to Hotel Contract Success” and spoke on a webinar about contracts for Meetings Today, and for UNCC in a class (for which you can enroll for the spring semester). I’ve spoken at chapter programs for MPI, PCMA, SGMP and others. Yet, emails and calls tell me that disclosure and transparency are still not how we operate as an industry.

I speculated that it’s perhaps because:

  • Hospitality is still a “relationship industry” and with that is implied there is a belief in the honesty and integrity of those with who we partner on meetings and events.
  • It is also implied there is sufficient experience to be able to know the lingocontract terms and when to say “I don’t know” and then find out versus bluffing one’s way through a negotiation to a contract that may not make sense to you or that you may not even be able to defend if need be.
  • We want to believe in the honesty of the party with whom we are working and we don’t want to “play our hand”—that is, show what we may not know so, we believe, we can avoid being taken advantage of.
  • We don’t know what we don’t know.
  • We’re busy and don’t want to take time to ask questions or questions are discouraged, or when asked, a standard “it’s out corporate contract” (or addendum) is the response, without digging deeper.
  • Sellers put pressure on buyers to “sign now” or lose the deal, partly because many sellers and some third-parties are incented on the number of room nights booked by quarter or year-end and have quotas they must reach.

Just as I hear from colleagues, friends and strangers about ethics issues, I receive questions about contracts, often when there is a potential crisis. A recent incident led me to write this blog and to invite comments** from others in the industry.

One request for help was from a non-industry social media group moderator who, with the encouragement of the group, agreed to organize a multi-day, face-to-face meeting. Based on the expression of interest—not a much different experience than that of a corporate planner whose CEO says “Let’s put on a show,” or an association planner whose Board says, “There’s a great need for a new program on this great new idea”—the person or “meeting convener”—found and booked a hotel.

The meeting convener (not a planner, professionally) signed a hotel contract that, if you read or listened to any of the above linked information or that of others like Tyra Hilliard, was not favorable at all to the individual or group.

The convener, even though it appears the hotel may be sold out by transient and other rooms over the dates booked, may still be on the hook for upwards of $40,000. Even for an association or corporation, $40k is a huge hit!

For an individual, it could be devastating.

Here’s what I think could have been done to prevent or mitigate the outcomes and what can be done going forward by us all. Add your suggestions in the comments section of other ideas for those whose knowledge of the industry is less than yours, or for those who may have never planned an event. (If you prefer to have a comment posted anonymously, email me and I promise to keep what you say confidential and post the comment anonymously. Just please identify yourself to me).

By the hotel

  • Ask more questions about why the convener thought the number of room nights contracted was accurate.
  • Check history … though for this group there was none but still, what happened to the practice of checking, which I’ve found has gone out the window for expediency? … but I digress slightly…
  • Explain how hotels operate, how they make money, and what the financial risks were to the convener of the number of guest rooms and other provisions.
  • Provide a sliding scale of guest rooms, and based on reservations and registrations, increase as needed at a negotiated group rate.
  • Be transparent in all you say and do.
  • Negotiate an audit clause so that those who made reservations outside the group block, perhaps at a greater discounted rate, would be counted toward group pick up.

By the convener

  • Research to learn more about how meetings are held and how hotels operate, what contract provisions will be fair to both parties and what risks may be involved.
  • Charge a non-refundable pre-registration fee.
  • Explain to the group—once research has been conducted and the hotel had explained to the convener—the risks for the individual so that the burden would be shared.
  • Ask more questions to understand the clauses, financial obligations and the risk.
  • Be transparent in the information you provide and the negotiations you conduct.

I want to believe our industry is ethical and honorable. I’ve always said there are no hidden fees, just fees that we planners forget to ask about and cover contractually.

I also want to believe these points from the CMP Standards of Ethical Conduct Statement and Policy—“Maintain exemplary standards of professional conduct at all times,” and “Actively model and encourage the integration of ethics into all aspects of the performance of my duties.”—guide even those who are not CMPs, and that we all want to conduct business transparently.

Although I cannot provide exact language, I recommend negotiating something like “all terms and conditions that impact the financial and operational aspects of the event have been disclosed in the Agreement or they will not be in effect” into your contracts.

But don’t take my word—talk with an industry attorney, preferably a member of AHIA – the Academy of Hospitality Industry Attorneys.

I really do believe that ethical negotiation is not an oxymoron. Tell me I’m not delusional!

*As always, my disclaimer in reference to any contract issues: Although I am an expert witness in industry disputes, these materials are provided with the understanding that the author is not engaged in rendering legal, accounting or professional services through the distribution of the materials. If expert assistance is required, the services of a professional should be contracted.

**I’m grateful to those who were willing to respond—although I was surprised by some of the responses—and help further the conversation. I hope you’ll join in with your comments below.