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THE COST OF DOING BUSINESS
GOALS OF TODAY’S WORKSHOP
To demonstrate the factors that determine how a government meeting is planned
To explain the perspectives of both meeting planners and suppliers
To introduce you to resources offered by SGMP
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Supply versus Demand
In today’s environment the cost of an event is influenced by many factors
Scope and size
Potential cost
Potential profit
Cut backs
Budgets
Other?
MOST GOVERNMENT MEETING PLANNERS…
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Wear many hats – planning events are usually part of “additional duties as assigned.”
Plan most events with a bottom line, break-even objective. + -
Have limited on the job training in meeting and event planning.
WHILE MOST SUPPLIERS…
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Are “green” when it comes to the government market.
Do not know how to find a government meeting planner.
Receive limited training in event planning.
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Cover
costs
Make mone
y
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Current per diems
Meeting history ROOM BLOCK
Sponsors, grant money, registration fees
Estimates from printers, vendors
Hotel sales kit samples (F&B, AV, meeting room charges, taxes, gratuity)
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Show how registration costs are determined
Keep notes of how potential costs are calculated
Organize all expenses under cost centers CHART OF ACCOUNTS
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Remember guarantee counts are paid for even if they do not attend!
Use meeting history if available
Know your audience
Determine any potential conflicts (holidays, transportation)
Be realistic
BREAK-EVEN FORECASTING
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Meeting Room Rental
A/V expenses
FIXED COSTS
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Food and Beverage
Parking
BREAK-EVEN FORECASTING
VARIABLE COSTS
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Registration Fee – Variable Costs
BREAK-EVEN FORECASTING
CONTRIBUTIONMARGIN
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Total Fixed Costs Contribution Margin
(Registration Fee – Variable Costs)
BREAK-EVEN FORECASTING
BREAKEVENATTENDANCE
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Your registration fee is $20. Your supplier charges you $1,000 for room rental, $100 for audio visual, and you pay $500 for a speaker. You are charged $10.00 per person for food and beverage service.
How many attendees do you need to cover your costs?
BREAK-EVEN FORECASTING
Break Even Attendance = Total Fixed Cost / (Registration fee – Variable Costs)
Break Even Attendance = ($1000 + $100 + $500) / ($20 - $10)
Break even Attendance = $1600 / $10Break Even Attendance
= 160
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Federal
State
Local
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R F P
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Number of Rooms
Rooms to Space Ratio
Date and Pattern
Catering Revenue
Potential Meeting Room Rental
Audio Visual Revenue
Other Revenue Centers
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Labor 31.6%
Food 19%
Benefits 8.2%
Cost of Sales 4.5%
Management fees 5%
Security 2%
• Admin and Accounting 3%• Laundry 2.6%• HR and Engineering 1.5%• China Glass Linen 3.6%• Uniforms 1%
82% of total costs come from:
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Banquets 35%-38%
Beverages 18%-21%
Guest rooms 70% to 75%
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Give accurate information
Be flexible with dates
Work with Suppliers that understand your business (like
SGMP members!)
Keep histories of your past events
Don’t let the lowest price for your RFP be the deciding
factor. Remember value also should be considered in
your decision
Know the difference between your needs and your wants
Be realistic when making your budget
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Understand the RFP process
Know your hotel’s profit margins and how to evaluate the business
Be willing to work with per diem rates and menus
Be able to offer value added incentives to help planners keep costs down
Be proactive and create government meeting package based on planners budget
Be flexible and offer more than one option on dates
Be creative with per diem priced menus
