Dear Hospitality Professionals,

As a former hotelier and now a keen observer of the industry, I wish to address an area that remains underdeveloped yet critically important: the pricing structure for venue bookings. Unlike the structured and transparent mechanisms for room pricing, venue booking pricing appears inconsistent and often opaque. This discrepancy poses challenges not only for clients but also for hotel teams striving to deliver excellence.

The Contrast: Room Booking vs. Venue Booking

Consider the process of booking a room. A prospective guest visits your website, selects their desired dates, and is presented with a clear and concise rate—the result of sophisticated revenue management systems. The experience is seamless and transparent.

Now, compare this to the experience of a client looking to book a venue for an event. The process is often complex and unclear, involving multiple variables such as guest counts, food and beverage options, audiovisual requirements, and additional surcharges. The lack of a standardized pricing approach can lead to confusion and dissatisfaction for clients, as well as inefficiencies for sales teams. Venues have graduated to minimum revenue in a few cases and there is still scope for negotiations

The Evolution of Room Pricing: From ARR to Profit Per Room

In the realm of room bookings, the industry has undergone significant evolution. The traditional focus on Average Room Rate (ARR) has shifted towards a more comprehensive metric: REVAR to PROFIT PER ROOM. This transition has enabled hoteliers to better understand the true financial contribution of each room by considering not just revenue, but also operational costs and ancillary income.

This shift was driven by the adoption of advanced data analytics and dynamic pricing tools, allowing hotels to optimize occupancy and profitability with precision. The result is a structured and transparent approach that benefits both the business and the guest.

Venue Pricing: An Untapped Opportunity

Unfortunately, the same level of sophistication has not been applied to venue pricing. Despite being one of a hotel’s most valuable assets, venues often suffer from inconsistent and opaque pricing methods. This not only creates challenges for clients but also hampers the ability of sales teams to effectively communicate value and secure bookings.

Introducing a structured pricing mechanism for venues, akin to REVPAR or PROFIT PER ROOM, could revolutionize this segment. By incorporating metrics such as REV/SQFT, ancillary revenue, and operational costs, hotels could:

1. Simplify client decision-making: Clear, upfront pricing would enhance the booking experience. Just like how hotels have moved to BAR rates, same could be looked at for venues at least for smaller meetings, instead of several rounds of negotiations

2. Streamline internal processes: Sales teams could focus on building relationships rather than justifying prices.

3. Maximize profitability: Dynamic pricing models could help optimize revenue during peak and off-peak periods.

Embracing Transparency and Innovation

A key obstacle to structured venue pricing is the perceived need for flexibility to accommodate the unique requirements of each event. However, transparency does not necessitate rigidity. It involves setting clear expectations and providing clients with a framework that is both logical and fair.

By leveraging technology and data analytics, the industry has an opportunity to bring venue pricing into alignment with the advancements seen in room revenue management. Doing so would not only enhance client trust but also unlock the full potential of this underutilized asset.

A Call to Action

To my colleagues in the hospitality industry, I encourage you to consider the benefits of a more structured and transparent approach to venue pricing. The lessons learned from room revenue management can serve as a valuable guide in this endeavor. By adopting a forward-thinking mindset, we can address the inefficiencies and inconsistencies that currently hinder this vital area of our business.

Let us work together to modernize venue pricing, fostering both client satisfaction and operational excellence. Should you wish to discuss this topic further or explore strategies for implementation, I am more than happy to assist.

Best regards,

Sarosh