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Are you Neglecting your Sales & Catering System?

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March 26, 2018
Ron Strecker

©2018 Hospitality Upgrade
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If you work in a convention hotel, or any hotel that has more than 50 percent of its business in the group segment, then listen up. If your role is in finance or technology (the likely readers of this magazine), then please make sure you share this article with your sales team.
Your group sales is likely using some form of software for contact management, contract development, group room blocks and public space holds. Convention services may be using the same software to assist the setup team with meeting room layout and equipment needs. The data being collected is a key source when prospecting for new or repeat business.
If the previous paragraph describes the general view held by the hotel leadership of the sales and catering system, then you are overlooking a very valuable financial management tool. It is as useful daily as it is on a monthly basis.
Most conversations about hotel revenue systems will focus on PMS, POS, spa and even call accounting systems. These common systems are where most of sales transactions take place. Configuring these systems so that each transaction ends up on the right revenue line of the financial statement takes a considerable investment of time up front.  
Why aren’t we as diligent about the configuration and reliance of data coming from the sales and catering system? If it’s reliable enough to develop binding contracts then why not rely on it to provide reliable financial information.
Think about this. Sales managers use the application to develop the terms of a contract for guestrooms, meeting space and banquet events. After the terms have been negotiated the parties sign a legally enforceable contract. As the event gets closer, the catering and convention services team will work with the meeting planner to review all the finer details of the event. This includes final menus, audio visual needs, special considerations and the prices for each of these.
Room blocks and rates are passed to the PMS through an interface. This, in turn, configures the PMS to begin accepting reservations for the group block. Negotiated changes to the group block made in the sales and catering system will then update the same information in the PMS.  
The PMS becomes the system of record for consumed room nights and revenue. Most sales and catering systems have a two-way interface that allows the actual reservations made and subsequent rooms occupied information to flow back from the PMS to update the total performance for that group.
What about all the other group-related revenue that we will generate? How do we make sure all the details that were agreed to get posted to a master account for payment?  
Most of the sales and catering systems available today have mastered the process of tracking the details and generating a summarized banquet event order (BEO) and a printed banquet check. What happens next can vary by property, but it is rarely an optimum solution.
Here are a few areas to think about when it comes to fine tuning your sales and catering system. Don’t be surprised if you come across a few internal processes that need to be tweaked.
Room Blocks
Whenever possible, group room blocks should be established as run of house, not by specific room types defined in the PMS. When the sales and catering system sends block by room type to the PMS it can create undue adjusting to keep sufficient inventory by room type available to match the inbound reservation demand.
A further complication comes when a reservation is made in a room type not defined in the sales and catering system. When this happens, the reservation information for that room type has nowhere to go in the sales and catering system. Setting up group blocks as run of house, or some smaller set of room types, can minimize an out of balance situation.
Daily Revenue Controls
BEOs are one of the most important tools in the daily operation of a convention hotel. This single document carries every detail about an event scheduled to take place in a specific location on a specific date. It describes the expected attendance, menu, room layout, AV needs, special staging, etc. along with the agreed pricing.
The banquet check is merely the BEO details turned into a printable guest check that can be easily understood by the planner. Many places have the banquets department post these checks into the POS as open food, open beverage and miscellaneous, which is not very useful since it will have to go through further breakdown during the night audit process to further itemize the miscellaneous revenue.
If you are already relying on the sales and catering system to produce an accurate banquet check, why waste a step posting it in POS only to have it manipulated again? Maybe the banquet check should be posted directly in the PMS using all the transaction codes needed right on the master folio. Maybe some smart sales and catering system vendor will team up with a smart PMS vendor and build this integration for us.
The totals for the checks posted can be easily compared to the daily BEO summary report from the sales and catering system as a control point. The only checks likely to be exceptions on this report would be host and cash bars that get billed based on consumption, or last-minute additions. Those can be added back into the sales and catering system for tracking total group-related income.
Now imagine a series of reports that might be available from the sales and catering system that help measure the group revenues. The PMS already produces a daily rate variance report that compares each room rate charged compared to the rack rate for that room.
What if you saw a report that showed the published menu price for a banquet event against the actual price charged? Very few places I have worked charge a customer the published banquet menu price, but do we ever evaluate the actual spread?
What if the actual menu cost for the banquet menus were included in the sales and catering system? Then the same price variance report could also generate a potential food cost. You could even use this approach to build an incentive program based on profit contribution as opposed to revenue generated.
There are many more areas where you can leverage the sales and catering system to provide more than just a pace report. Likewise, there are many details that can cause the actual revenue in the sales and catering system to not line up with the financial system. Handling comp rooms and rebates is just one area that could fill up another article.
Ron Strecker is the Chief Financial Officer for the Al J. Schneider Company.

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