Wednesday, August 12, 2009

Budget Busters 101: Open Bars

Those are two words that can make your meeting planner cringe – especially if you have a limited budget for your event. Legal issues aside, having an open bar means that you have relinquished control of your budget and placed it the hands of your guests. They will decide how much money you are going to spend, not you, and they (typically) care the least about the final bill.

But, you say, my folks won’t order many drinks, so I can easily cover them. Perhaps, but many people will get more of something when it is free (to them) than if they have to pay for it. I have seen a lot of people who would normally buy just one drink have four or five drinks when someone else is picking up the tab. Get a large enough group of those people together and say good-bye to your budget…

The easiest way to control this is to simply have a “no-host” or “cash” bar instead of an open bar. With this method, your attendees pay for their own drinks. At most, you may have to pay a bartender fee (if your group orders very few drinks). And, if they do drink more than you expect, that may even result in the bartender fee being waived.

Now, I know what some of you are going to say, that you want to make your reception guests feel particularly welcome and that you do not want them to have to pay for their drinks. There is a way to accomplish this, too, without giving up control of the purse strings: tickets. This is a hybrid approach in some respects. What you do is give each attendee one or two tickets. They then use those tickets to “purchase” drinks at your event. Sometimes, the price of a soda or bottled water is one ticket, while alcoholic drinks are two tickets. Other times, one ticket buys you any drink of your choice. If an attendee wants to have more drinks, they can either purchase them from the bar or go to a ticket station to purchase more tickets. Exactly how this is set this up is not the key – that you set it up is the key.

We typically recommend to clients who want to have alcohol at a reception that they go with a cash bar as this has the least financial impact on their budget. But when we have clients who do want to have an open bar, we encourage them to use tickets instead. It allows them to still be a “good host”, providing a drink or two to each of their guests, while still keeping the event budget under control. They go into their event knowing the maximum number of drinks they will be paying for and, since we negotiate for it ahead of time, how much each drink will cost them.

- Karl Baur, CMP, Project Director