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Turn the Tables on the F&B Minimum

Salmon morsel.

One of the main reasons that people love to attend face-to-face events is for the opportunity to network with likeminded professionals. While most meetings have dedicated times for attendees to network, one of the most commonly used times to network is over the catered lunches and dinners at events. This is the time when attendees can take a break, relax and form relationships.

It is also where a fair portion of your meeting’s budget is spent and where hotels will make a nice profit. In order to protect this revenue stream, most hotels include a minimum food and beverage spend in their contracts. This is simply the minimum amount of catered food and beverage that you’re required to spend during your meeting. Sitting in your hotel contact, you probably see it as a liability and try to negotiate it down. When in reality, it is clear that the size of your meeting will hit the minimum, if not exceed it. That means, when your meeting arrives and you actually do spend more than the food and beverage minimum, you’re not getting credit for the difference. Sure, you’ve lowered your liability, but at what cost to the organization?

What if instead of viewing your F&B minimum as a liability, you see it as a benefit to drive value to your hotel partner? Follow our tips below to start seeing your F&B minimum as a benefit!

1. Add a second F&B minimum to unlock extra value
Yes, you read that correctly let’s add a second minimum. Think of it this way, the first is for the hotel and the second is for your company.
Here’s a real-world example. Say you’re having a sales manager retreat, with 50 people for three nights. That’s three breakfasts, three lunches, three dinners, and at least one cocktail reception. You do your homework and come up with your budget for the event.

• Your estimated food & beverage budget: $16,000
• The hotel’s minimum F&B: $12,000
• Difference: $4,000 — in your favor

This additional spend of $4,000 means you could have real leverage to add some value to your overall meeting. Need additional suite upgrades? How about IT help? Whatever you might be missing from your bag of goodies can be leveraged now that you’ve committed to spending beyond the hotel’s minimum.
Tell your hotel salesperson: “I agree to the F&B minimum and I want another number put into the contract. If we spend at least $16,000 on F&B, we’ll unlock these additional concessions.”

2. Miss your minimum? Remember ‘PPAPP’
Hey, it happens sometimes but as long as you plan ahead you will be okay. Hotels have wiggle room with F&B minimums, because “Penalty Payments Are Pure Profit” (PPAPP). Here’s the rationale: For every $1,000 a patron spends on F&B, the hotel pays approximately $300 in hard costs (the actual food and beverages consumed). If you miss your F&B minimum, the hotel isn’t incurring the costs of those extra meals and drinks.
Put in your contact: “In the event that the F&B minimum is not met, the customer will pay 70% of the difference between the F&B minimum and the actual spend.”

3. Ask the hotel up-front what their F&B minimum is for your dates
Most hotels have a minimum amount of F&B spend that they need to earn per room-night. Usually, this varies depending on what time of the year it is.
If you’re planning an event that has a lot of food & beverage spend, ask the hotels to quote you their per-day F&B minimum. It’s a great number to have before you start negotiating. Knowing this number also lets you gauge the likelihood that the hotel is the right fit for you and your budget. It will also help you understand if you have leverage with the hotel already built into your budget.

Ultimately, you have a lot of ways to build strong value for your meeting. Once you know what information to feed the hotels and what you can set up within your own control, you are on your way to having an F&B budget that will keep tummies full and your budget in control!

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