By Kristi White, VP Product Management with Knowland
To start, I’m going to ask each of you a rather provocative question. It’s designed to challenge what you know about your hotel(s). How many days a year do you fill every meeting room in your hotel? Can you answer that off the top of your head?
Now I’m going to change that question and ask this one. How many days a year do you sell out your guest rooms? I bet that answer came relatively easily. However, shouldn’t both of those answers be part of the historical knowledge of your hotel? I mean, after all, someone, somewhere, made the decision to build your hotel and add all of those meeting rooms. Surely, the intent was to sell those meeting rooms as efficiently as you sell your guest rooms.
Alas, meeting space has often been relegated to amenity status within some hotels. It’s used to attract group rooms and beyond that, often ignored as a distinct revenue center to be managed for maximum profit. Bigger hotels might spend more time and dedicate more resource to selling meeting space in the absence of guest rooms and try to better understand how to optimize their use, but often the processes used to manage those are antiquated.
Most of this stems from the fact that there is no easy way to understand the usage of meeting space. Today, even the most advanced Sales and Catering systems don’t do an especially efficient job of tracking this. Which means hotels, often, have to monitor it manually. And, there never seems to be enough time in the day to do that.
But what would happen if we applied the same level of time to managing and understanding meeting room usage? Would we make different decisions if we knew during January for the past three years our ballroom stood empty on Tuesdays? Could we build better strategies for our group sales and our catering teams if this information were easily available?
The answer is an unqualified yes. And it all starts with understanding how often your meeting space is used. In fact, a fairly basic spreadsheet can do this for you. It might take your staff an hour total to create the spreadsheet and then a few minutes per day can help you understand the usage for your meeting space.
So, let’s start there, creating a mechanism to track your meeting room usage. Realistically, most Sales and Catering systems have a report that does a version of this. But those are typically limited to the design of that system. So, your ability to analyze that data (short of exporting and dropping it into a spreadsheet of your own design) is probably limited.
There are two ways to calculate occupancy relative to meeting space. The first method is in line with how we calculate guest room occupancy – how many rooms sold divided by available rooms and this is simple to do.
- List all of the meeting space in the hotel.
- Determine which spaces should be counted. This step is very important because not all space might be counted and you don’t want to double dip on meeting space.
- Determine the value of each space.
In the example below, we listed each space at a sample hotel (including each combination). Then in Meeting Room Count we assigned a simple yes/no metric on whether or not that specific room configuration should count towards the denominator of total available rooms.
In Count As, we assigned a numeric value for each room or room combination. To further explain, Madison Ballroom is not counted in Meeting Room Count because the components are counted. You can’t sell Madison Ballroom and, at the same time, sell the components separately. So, it doesn’t count towards the denominator to avoid double counting space. However, it does need to be measured so it is given a Count As measure of three (3) because it is comprised of Madison A, B, & C.
Additionally, we have three spaces – the Atrium, Dining Room, and Pool – available for rental but we don’t want to count towards occupancy. This will be an individual decision by each hotel. Typically, we don’t recommend counting these towards occupancy because they are spaces traditionally used for overflow space or more social events and are not reliable space. In this example, that’s how we are treating them but you can make that decision for your hotel. Our hotel, has seven (7) rooms available on any given day.
The next thing to do is create the metrics for when space was used. In the example below, we used simple Yes/No for availability and then built into our occupancy formula (a nested if function). You could also simply enter the Count As metric into days space is used.
The second way to calculate occupancy is by using the square footage of your meeting space. The process is much the same except you use the square footage. Below is an example of the table using square footage.
Once again, notice there are rooms where we are not counting the square footage towards the total square footage available. In the case of Madison Ballroom, Madison A & B, and Madison B & C, it is to prevent double counting space. And in the case of Atrium, Dining Room, and the Pool, it’s because the space is overflow space versus true meeting rooms. For this type of space, you should use the same logic for both models.
There is a vital reason you should calculate occupancy both ways and not look at only one metric. The best way to understand this is by looking at the two metrics side by side. Below are the two calculations stacked together.
The first row shows the same rental metrics when calculated by number of rooms. The second row shows the metric by square footage. Over most days, the square footage metric is higher, especially on those days where the hotel sold their larger spaces. However, that doesn’t tell the whole story. To truly understand the efficiency of your staff in renting your space, you need to understand both.
Friday, as an example, the square footage occupancy is 64.1%. However, the ballroom is the only room rented. The remaining four rooms stood empty on that night. Now, one might suppose there was limited demand for the other space on a Friday but if you aren’t measuring it, how do you know?
Ultimately, understanding the metric both ways will help you truly begin to understand the usage of your space. Then you can begin to focus on how you optimize it. But you have to start by measuring it.
Once you’ve built the spreadsheets, it’s a simple matter of completing the day by day occupancy by room. We recommend a minimum of three years of historical data but larger hotels might want to go even further into their history.
After you’ve entered all of the history you want the real fun begins. You have the ability to build pivot tables, macros, more complex formulas to allow you to understand the historical patterns of your hotel.
A few examples of what they can do:
- Determine the seasonality of usage by meeting room
- Analyze which meeting rooms get the most usage
- Tighten free sell policies to make the most of space
- Amplify the efficiency of your sales team in maximizing space
Really, the possibilities are endless. And it all starts with a few hours building a spreadsheet. That seems like a minor investment to optimize revenue that, at the moment, is probably relatively unmanaged. Every hotel can afford that. Plus imagine how happy your revenue manager will be when you come to him or her with statistics about meeting space in your next Daily Business Review.
Even more fun, you could very easily get the answer to the question asked at the beginning of the article. How many days a year do you fill every meeting room in your hotel?