Why is hotel food so expensive?

Lately, there has been a lot of chatter in the blogosphere about government excess and the $16 muffins and $8 cups of coffee that the Department of Justice had at a couple of their events (Here is the article that touched it off). Mind you, the article leaves out a lot of details behind the numbers and, instead, focuses on the particular items that are sure to fire people up. After all, they need an attention-grabbing piece to sell the news and including the details explaining how those figures came to be would have turned off most readers. The Meeting Professionals International (MPI) blog posted a response to it here, so I won’t go into that particular issue.

However, I have heard complaints for many years – from conference attendees and funders, mostly – about how expensive hotel food is. It certainly seems that way. $8/person for a coffee break, $22/person for a lunch, $34/person for dinner – you can certainly eat quite well as an individual at those prices, especially when you find out that these prices are “plus-plus”. Let’s examine each of these examples one by one. I’ll start with dinner, since that is the one most often referenced in conversations on this topic.

Dinner, at a hotel, typically includes a soup and/or salad, bread, the entrée (with sides), dessert, and coffee service. All of that is included in the $34/person. Now it isn’t fair to compare this to a fast food joint, like McDonald’s or Carl’s Jr. The two types of meal service aren’t even close. Meals served at conferences are more like eating at a restaurant – and a moderately nice one at that. If I were to get the same menu items at a middle-of-the-road restaurant in the same city as my conference, the prices (before tax and tip) might break down like this:

• Soup (or Salad): $5
• Bread: usually included for free
• Chicken Entrée: $16
• Dessert: $7
• Coffee or Tea: $3

Add that all up and you have…$31. Suddenly, the hotel’s pricing does not seem so out of line as it did before, does it? Yes, it is still a bit higher, but it is not shockingly so, which is what most people react to.

Lunch is very similar to dinner. For a restaurant lunch comparable to what a hotel might serve, you’re looking at prices something along these lines:

• Soup (or Salad): $4
• Bread: usually included for free
• Sandwich Entrée: $10
• Dessert: $5
• Coffee or Tea: $2

The total for a similar lunch at a restaurant is…$21? Yep, we’ve saved an entire dollar compared to the hotel’s pricing. Not much of a difference there…

Finally, let’s look at the $8 coffee. Yes, I know I said I wasn’t going to into it here but this is the one that seems to generate the most ire from certain folks and it is one area where your local coffee shop is way below the prices charged by hotels. Let’s look at in more detail…at $8/person for coffee service, what do you get? You get coffee service for a fixed amount of time (usually 1/2 hour), during which your attendees can pretty much drink as much coffee or tea as they want. How many of them do you think have just one cup?

When I order “in bulk” for coffee (to save money), I know that one gallon will give me 16-20 cups, depending on the size of the cups used by the hotel (see this post for more details). Will I order one gallon, then, for a group of 20 people? Probably not. I will want to have some extra available in case they drink more than I anticipated, even if this results in leftover coffee that no one drinks.

When ordering a break package, such as coffee service billed “per person” instead of by the gallon, the same principle is at work. The hotel does not want to run out of coffee (it makes them look bad), so they need to prepare more than they think people will drink. Plus, coffee service includes tea and decaf. The hotel needs to make sure that there is enough for people with those preferences as well. Your corner coffee shop (even Starbucks) can make coffee one gallon at a time and still promptly serve their customers. A hotel, trying to serve coffee to several hundred people all at the same time, must make much larger batches.

The upshot of all of this is that there is the potential for considerable leftovers (aka “waste”) with coffee service. Since the hotel must, at least, cover costs for providing it, they must take that into account – which results in higher prices. Even your corner coffee shop does this; their level of “lost product” is simply much smaller. In fact, every business that serves food must take wastage into account with their pricing or they will quickly be out of business. That’s basic economics.

So, does this mean that hotel food in not expensive? No, it’s still pricy – and I still think it’s expensive when I compare it to preparing a meal at home. However, when I compare it to eating out, I find that the prices are not too far off from what I would pay in a restaurant. Restaurants and hotel both need to cover not just the cost of the food, but also the costs of rent, equipment, staff wages, maintenance, and a myriad of other expenses that go into providing a service to the public – which means that it will always be more expensive than what it costs me to make the same dishes at home (assuming I even know how to make and have the time to make said dishes…).

So, the next time you hear a complaint about how expensive hotel food is, look at similar options before joining the chorus. You might find that the claims are right on track – or a bit overblown…

~ Karl Baur, CMP • Project Director, RDL enterprises

Negotiating Hotel Contracts

It is often said that everything is negotiable in hotel contracts. While that is not 100% true, there is still quite a lot that can be negotiated beyond the guest room rates, rental rates, and food and beverage prices. So how do you go about getting what you want and/or need for your event? Negotiation, of course, and that’s where knowing what you can reasonably negotiate in your contracts can make a difference. Let’s take a look at some common approaches…

There are some that believe that, if you want the moon (so to speak), you should ask for the sun and the moon – knowing that your request will be rejected and a counter offer will be put forth. The idea here is that, by asking for more than you need, you will get what you need as well as, possibly, something extra on top of that.

Others take the position that you should only ask for what you really need when putting out an RFP to hotels. This allows you to easily weed out those who cannot provide your basic needs while still giving you some choices among respondents. Anything they offer above and beyond the basics are considered a bonus.

I, and many others, tend to take a middle road of sorts. I outline the absolute minimum requirements for the event in the RFP. [Read this post for an outline of what that should include…] Once those are listed, I then will often add another layer or two of special requests. The first layer consists of the items that are desirable to get as part of the package. By themselves, none of these items are deal-breakers, but they can help make a bid more attractive to my client by providing certain perks that are of value to them. The second layer is made up of the client’s “wish list” items. These are things that will really take a proposal “over the top” but that we really don’t expect to get. This way, I ensure the event’s basic needs are met, without the hotels having to guess what those items are, and gain a few additional extras in the process that I know the client would like to have, without having the hotels offer items that are worthless to the client (and thinking those are deal-clinching incentives).

So, what do I ask for? What do I negotiate on? Well, that depends on the client and, if there are items that I absolutely must have, I am sure to include them in the RFP. Knowing what to ask for means that you, as the group’s planner, need to really know what the group requires, what would be of value to them, and what their ideal, pie in the sky, response would include. The better you can picture those three lists, the more productive your negotiations can be. Although there are those who view negotiations as “how much can I get from the hotel”, I prefer to view the process as one in which I am searching for the intersection of desires that maximizes what my client wants with what the hotel wants (yes, they want something, too – and it’s not always money!). If I can identify what the hotel wants, and can give it to them, then I can get more of what my client wants in return.

Every property is different and that will shape my approach. One may be able to negotiate on room rates but not on space rental, while another may be able to waive rental fees but cannot alter their food prices or guest room rates. As the planner negotiating on behalf of my group, it is up to me to find those areas that the hotel can negotiate on and work with them. Remember, if you cannot find an acceptable intersection of needs, you can always walk away – as can the hotel.

How do I know where the hotel can bargain? Some of it comes down to experience but, ultimately, if you don’t know where they have room to negotiate, ask them. Their goal is to book your business, which means they have an incentive to find a workable middle ground, too, and many sales reps understand that an informed opposite in negotiations can help them make it work for both parties.

While “everything” may be negotiable, I have found that being realistic about what I ask for and expect to receive in return for what I have to offer at the bargaining table is an excellent way to begin – and leads to a successful contract/partnership more often than not… And, a final thought here, if I can make the negotiations work for both sides (my client and the hotel), they are each happier with the results and my value to both of them goes up, too.

~ Karl Baur, CMP • Project Director, RDL enterprises

Choosing the Right Venue

When working with various clients to plan a meeting, conference, or event of any kind, one of the big pieces is the site selection. Site selection is a process with a purpose. The site has to have the correct parameters for the event that will be held there.

The size of the plenary session needs to be adequate to comfortably fit all the attendees in a comfortable setting and one that makes sense for the topic and attendee participation, if any is expected. The meeting planner also needs to take into consideration if any large screens are going to be used, what media will be used, will the attendees be able to see easily, and what room set-up is preferred.

Meeting “flow” is another area that is important for each event. The number of meeting rooms and the size and arrangement of the meeting space to be utilized can have a large impact here. How large is the General Session room? How many breakouts are needed? Where are they located? Are they on the same level as the rest of the event? Can attendees access them easily? Can the rooms easily accommodate the audio-visual equipment needed?

And, how far away is the food? Yes, that is always an important question for everyone! RDL staff never likes to use the same rooms for meals that meetings are being held in when they can avoid it but we do want it close by. (Having meals in a separate space gives people a chance to get up, stretch, and move a bit. Plus, the change of scenery can be good for a mental break as well.) And attendees don’t like to be too far away from the food either. Considering all the flow and potential uses of space before selecting a site is incredibly important.

Another important thing to consider when selecting a venue for a client is the location of the event. Is it convenient? Is it located close to public transportation? For those flying to the event, where is the airport in relation to the venue? How about the subway/train? And, for those driving in, what parking options exist? Take into consideration ADA access & limitations, such as the location of elevators in relationship to sleeping rooms & meeting space. Where are the restaurants and the recreational facilities and how easy is it to access them?

One of the final, but vitally important, considerations for many clients is the price. What will it cost to hold the event there? How much are the sleeping rooms? What is the cost of the food & beverage? Is there a cost for the meetings space? Is the venue willing to work with us to meet budget limits? Can the client afford it?

All of these items are important and will help guide the client towards selecting the most appropriate venue for their event. Keep these suggestions in mind and enjoy your next event!

~ Cyndy Hutchinson • Executive Director, RDL enterprises

11 Hotel Terms Every Planner Should Know

In the world of conference planning, there are hundreds, if not thousands, of terms that we need to become familiar with. In a previous post, I shared definitions of 10 of the most common acronyms in the meetings industry. This time, I’d like to get a little more specific and look at some terms that you would encounter primarily when dealing with a hotel…

RevPAR: Revenue Per Available Room. The hotel’s financial department tracks how much money the property is bringing in each night. RevPAR calculations take into account the total number of rooms available for sale, how many rooms were sold, and at what rate those rooms were sold. This term is one that many planners have had to learn in recent years as hotels have tried to become leaner in their business operations. A hotel may decline to bid on a particular piece of business because the projected RevPAR on those dates is too low for them to be able to offer the rate that the group desires or needs.

Room Block: The rooms that are held for your attendees at your negotiated rate for specific dates. They are not typically available to the general public. Usually, your Room Block is expressed as the number of rooms set aside on each date and at what rate(s), as well as the total number of rooms contractually committed.

Peak Nights: The night or nights on which your guest room commitment is highest.

Shoulder Dates: These are the dates in your room block that are at the start and end of your Room Block. Typically, the numbers of rooms held on shoulder dates are lower than your Peak Night(s).

Cut-Off Date: This is the last date (and time) that the hotel is obligated to sell rooms to your group at the contracted rate. Once the Cut-Off Date passes, the rooms are released from your block and made available to the general public. A typical Cut-Off Date is four weeks prior to the first night held in the room block.

ROH: Run of House. This term in a guest rooms contract indicates that, when your attendees make reservations, they will be given any room that is available at the time they check-in. In practice, this means that most of your guests will likely be given the basic room type as the hotel attempts to keep upgraded rooms available for sale at a higher price than your contracted rate.

RTI: Room, Tax, & Incidentals. These are the three types of charges for any guest room. RTI is a shorthand notation that helps the Front Desk, as well as the Accounting Department, to know who is paying for guest room charges – the individual or the group. Room is the base room rate, Tax covers all taxes and surcharges on that base rate, and Incidentals covers pretty much everything else.

TOT: Transient Occupancy Tax. Think of this as being a “sales tax” on the price of a room for the night. Convention and Visitors Bureaus typically receive a portion of their funding from the TOT.

Slippage: This term refers to the difference between the number of rooms you have contracted for and the actual number of rooms that are sold for your group (when the actual number is less than the contracted number). Most of the time, slippage is tracked daily. Most contracts will allow for some slippage in reservations, but most will penalize you in some fashion (usually financially) if you have too few actual rooms sold in comparison to your contracted numbers.

Wash: This is the difference in the number of rooms reserved as of the cut-off date and the final number of rooms actually used at the conclusion of your event. Usually expressed as a number (positive or negative), it can be given as a percentage instead.

Walk: This term describes the practice of a hotel relocating guests to another property. You have a confirmed reservation for the hotel, but they put you into another hotel instead because they do not have rooms available. Hotels really don't like doing this – for a whole host of reasons…

~ Karl Baur, CMP • Project Director, RDL enterprises

How can a hotel deliver great service to a meeting planner?

This is a common question I get from hotel sales managers, CSMs, GMs, and others – both before I book a group and while that group in in-house. In fact, the question comes up so often during pre-cons that I actually have a script I use just for those meetings. So, what is my usual response? Here it is, in a much shorter – and slightly altered form…

The key to delivering great service to a professional meeting planner is to deliver great service to the event participants.

Why is that?

The tendency for many hotel staff is to treat the meeting planner (and any designated VIPs) very well, which makes some sense for a couple of reasons. First, the meeting planner is often a single individual, which makes it easy to single them out for great service. Even when you add in the planner’s staff and event VIPs, you’re still talking about a relatively small group for hotel staff to identify. Second, the planner and VIPs are seen as being the decision-makers for where events go in the future so, as the thinking goes, treat them well and they will return. Both of those reasons are sound enough by themselves but I feel that they leave out the most important component – the attendees. An event’s attendees are, in my view, a main reason the event exists; if they don’t come, there is no event.

Remember, too, not all VIPs are labeled as such. You never know who is attending the meeting. Someone who is attending one event may be a decision-maker for another event that is sponsored by his own agency or company (I have had people like this at some of my functions). Provide great service to that person – especially when they are just a “regular” attendee – and you just gave yourself a leg up to get their business down the road, too.

If a hotel can win over the meeting participants with their service, the chances of getting that group to return to the property in the future go up considerably. I have actually had properties take such good care of my folks that I’ve practically been ordered to use that hotel again, even though my own experience with them was less than stellar.

On the flip side, a planner who takes unhappy participants back to the same venue risks losing attendees – which can have a huge impact on the event’s bottom line, especially if people pay a fee to attend. If they do take that group back to the same property, the planner had better seriously address the issues that made it unpleasant for the attendees – and make that known to the group.

I know the hotel will take good care of me (and my VIPs) – that’s easy – but I want them to take good care of my attendees, too. That is as important to me, if not more so, than just looking out for me and my VIPs.

~ Karl Baur, CMP • Project Director, RDL enterprises