Strategies for Managing Rising AV and F&B Costs in Events

Introduction:

Sean Whalin (Co-founder and CEO of HopSkip), sits down with seasoned hospitality attorneys Barbara Dunn (Partner at Barnes & Thornburg LLP representing groups), and Lisa Sommer Devlin (Devlin Law Firm, P.C. representing hotels) to discuss strategies for managing and reducing meeting and event costs in a landscape where prices for audiovisual services, food, and beverage are on the rise.

HopSkip and Legalease With the Ladies is dedicated to offering valuable insights drawn from years of industry expertise to assist planners and hoteliers in successfully navigating these challenges. Barbara and Lisa bring forth their knowledge on effective negotiation strategies, key contract considerations, and innovative solutions to not only manage rising costs but also elevate the overall experience of sourcing meetings and events at hotels.

The information provided in this video does not, and is not meant to, constitute legal advice; all information, content, and materials available on this site are for general informational purposes only. This video's information may differ from the most up-to-date legal or other information. Please know that readers of this website should contact their attorney for advice about any particular legal matter.

Strategies to navigate increasing costs of AV and F&B:

Transcript:

Sean Whalin:

What strategies can we use to navigate and mitigate the increasing costs of audio, visual and food and beverage? 

Barbara Dunn:

When we were looking at your questions ahead of the webinar today, this is one that resonated with me as well. Obviously, these are costs that are increasing. As groups look at how they protect their meetings and make them more effective and efficient, these are identified costs.

Food and beverage costs are extremely volatile. It's really difficult, but there are some strategies that I think I found to work with clients. One strategy with food and beverage is to benchmark pricing, for example, by attaching current year menus even without necessarily putting in a price increase cap. Benchmarking pricing can help a lot. It gives a stepping off point.

Benchmarking menu offerings and options can be another important aspect because food and beverage pricing can change, but the menu offerings have limitations. If I had to put a graphic on our t-shirts today, it would be a chicken breast, because years ago, when Lisa and I were presenting on saving on food and beverage costs, one strategy was to make the chicken breast a little smaller. Instead of it becoming just a strategy, it became a what?

Lisa Sommer Devlin:

This is happening.

Barbara Dunn:

The benchmarking is crucial, Lisa, because it provides some protection in terms of what the group is getting. Similarly, on AV, negotiating as to exclusivity or the right to bring in a vendor and also trying to benchmark pricing is essential.

Lisa Sommer Devlin:

The food and beverage aspect is significant. Often, customers ask the hotel to commit to a discount on stated food and beverage pricing. Barbara and I were explaining that if you negotiate a 10% discount, the chef has to figure out how to meet those costs, which might mean giving you a smaller chicken breast than if you had full pricing. When we talked about that, someone thought they were going to get half a chicken breast and were very confused. But food costs are real, and the hotel isn't just marking this up; they've got to cover their costs.

The key is to know what you're going to need at the time you sign the contract, so you can agree on realistic minimums and maximums. If you're signing a contract now for two years out, the more you know what you'll need now, the better you can lock those things in. Also, as you're getting ready for the event, work with the hotel to maximize your opportunities to save. For example, if the hotel has several groups in house at the same time and they all have the same menu, you may be able to get some savings. Work with the chef to see how you can really negotiate this. What specialized menus can you use? Consider options like plant-based menus, which may save money.

Lisa Sommer Devlin:

The question on what's labor and what is food and beverage cost? That depends on where you're having your event. If you're in New York and every hotel is a union hotel, the labor costs are extremely high, and people always complain about the cost of a gallon of coffee being $300, which is largely driven by labor costs. Site selection can have a big impact on that.

Barbara Dunn:

Yeah, in that way, I've certainly seen negotiating concessions, like pricing for coffee and some of the basic staples, as one strategy. It's driven by the marketplace in which the meeting is held, and knowing what the rates are going to be is important for the group going into it.

Obviously, if you're going to a market like New York, you're going there for a reason, and you have to consider those higher costs being offset by potentially more folks attending the event.

Lisa Sommer Devlin:

Someone raised the question about hotels not wanting to include menus in their contracts. That's because in today's world, menus have to change based on things like seasonality and market trends. If you're signing a contract now for two years out, the hotel doesn't want to guarantee that it will have the same menus. Costs may change what the menu offerings are.

Barbara Dunn:

Even if that were the case, Lisa, putting in some basic parameters around lunch, like a certain amount of protein versus a starch, at least gives some benchmark which can be helpful to groups by way of budgeting. If you aren't able to get menus, even with a caveat that the menu offerings might change, the quantities, pricing, etc., for those meals should remain the same.

Conclusion:

We hope you've learned some actionable strategies that can be implemented to insights into managing increasing costs negotiate better terms and optimize resources.

As we continue to face fluctuating prices and market conditions, HopSkip remains committed to providing these invaluable resources and tools, ensuring that our users are well-equipped to host successful, cost-efficient events in any market condition.