The hotel industry has long talked about how to drive revenue in underutilized space. But meeting space has often been left out of those discussions simply because the industry doesn’t look at it is unused space. The truth is that there is so much more opportunity in meeting and event space than hoteliers may realize.
As the hotel industry continues to shift due to the fallout from the COVID pandemic, all eyes should be on meetings and how hoteliers can make the most of these spaces that in the past have almost always been considered secondary to room revenue.
The U.S. meetings industry generates approximately $30 billion, or more than $1 in $5 of total hotel rooms revenue, according to Kalibri Labs. Another $110 billion of revenue comes from ancillary spend such as food and beverage, equipment rental, ground transportation, audiovisual, and other services.
As the industry begins to recover, there’s plenty of untapped potential lying in your meeting and event space. But it’s time for a change in the way we think about how we drive revenue in these venues. The good news is that change can happen when the industry starts applying room revenue management principles to meeting and events spaces.
Meeting spaces hold more value than you think
Hoteliers often don’t think about the standalone value of meeting space. For example, smaller day meetings at hotels are more popular now that many companies have gotten rid of their office space and may need space for their employees to meet occasionally. What if you sold your space for a day meeting of 40 people and used smaller rooms? How much revenue would that drive? What’s the value of that space now?
Optimizing meeting space doesn’t mean just filling the space on as many days as possible. You can do things like divide rooms up to get more attendees on property at the same time, and coordinate meeting schedules based on who is expected to spend the most. Part of this equation is also taking into account food and beverage data. You need to know (if F&B is pre-ordered) or predict (if it’s not pre-ordered) around how much a group is going to spend on F&B so that you can make better calculations.
Diving into new KPIs
It’s certainly not an easy task. Meeting space is complex. There’s churn, and it’s difficult to measure conversion. You’re also dealing with different types and sizes of space, from breakout rooms to ballrooms that can be divided. Then, you have to add in the value of the catering spend.
There are really no key performance indicators for measuring meeting space occupancy. If asked, revenue managers can tell you their daily occupancy and average daily rate off the top of their head. Rarely can they tell you how many attendees are on property for meetings on a given day, let alone what their individual value is.
With that complexity at hand, how do you gauge success when it comes to revenue from meetings and events? The traditional KPI for meeting space is revenue per square foot—but is it the best measurement?
Instead, some have considered a new KPI called “delegate density.” That translates to occupancy for your meeting space, measuring number of delegates versus capacity. You sell by the number of people and price per person.
Often you have a meeting room for 40 people and you’d let 12 people take that space. In a downtime, that’s a fine strategy. However, if you could get another three people in that meeting and you’re charging per-person, you've just earned another 25% in revenue.
Owning the strategy
But all the strategizing doesn’t mean anything if there isn’t someone to own it. One of the biggest reasons meeting space is not valued or understood as it should be is that there aren’t senior people who are held accountable for optimizing the space.
Of course, that’s a heavy lift for one person alone. Tools have been available to manage rooms revenue for some time now. The industry needs a similar tool for meeting space. The trend for tech companies disrupting the meetings and events space today is all focused on the meeting planner and driving registrations, and very little is focused on making it easier for hoteliers to create a revenue strategy for the meeting space.
A good automated decision-making tool, not just about pricing but about how to best use the meeting space, is what’s really needed.
It’s time to start thinking about the standalone value of meeting space if you want to really maximize revenue to its full potential. Hoteliers have made huge strides in rooms revenue management, but now we need to go the extra mile for meetings and events. Think about who can own the strategy so that one day the most important KPIs for your hotel include an optimized meeting space.