Weddings - the Cash Cow of the Banquet Operation
Are you leveraging the marketing muscle of this profitability machine?
By S. Lakshmi Narasimhan Founder, Ignite Insight LLC | December 01, 2019
The Most Profitable of Food and Beverage Operations
The food and beverage operation in a hotel is diverse. It provides a degree of variety seldom found in a source of revenue in the hospitality industry. It has a multitude of outlets each boasting a bewildering variety of permutations, combinations of food and beverage fares. A restaurant outlet can be an All-Day dining outlet, a bar, a fine dining outlet, a snack outlet, a lounge, a deli or gourmet shop, a patisserie, to name some types.
It is thus apparent that diversity is indeed the strong suit of the food and beverage operation. The types of outlets listed above are diverse not just in their nature but right from the kind of fare they serve, through to being food or beverage oriented or both, right down to customer profile and price points. They differ in virtually every facet of their respective operations.
However, these are purely from the dining outlet operation category. A major part of the food and beverage division is the catering or banquet operation, quite different from the dining outlet types. The banquet (as we will call it going forward) operation in a hotel is dependent on the number and type of function rooms that are available. It can range all the way from a pillar less ballroom accommodating more than a couple of thousand guests down to a small meeting room accommodating less than ten participants. A little-known fact is that the banquet operation is the most profitable among all food and beverage offerings in a hotel. What is the secret of this phenomenon?
High Volume Revenue Game
The business model of a banquet operation is based on a high-volume driven revenue strategy. You may well ask how volume can drive profitability. In the hotel business, fixed and variable costs and their behavior are at play as much as in any other industry. So how does that work?