Party at Harrah’s, on Your F&B Budget
Heidi Genoist -- Tradeshow Week, 2/15/2008 11:17:00 AM
Harrah’s Entertainment last week unveiled a new way of calculating groups’ food and beverage spend.
According to the new system, whatever meeting planners chalk up in F&B expenses at any of the dining venues at Harrah’s seven properties will count toward their F&B minimum. Here’s the kicker: It includes restaurants, nightclubs and other non-banquet, group-dining situations.
Michael Massari, vice president of meeting sales and operations for Las Vegas Meetings by Harrah’s Entertainment, said: “Over the years, we’ve gotten good at convincing customers not to have any of their meal functions at our restaurants, because it’s significantly more profitable to have them do it in our banquet rooms. We don’t get complaints about it, because we’ve just beaten customers down so much over the years that they’ve gotten used to the idea that it’s the only way they’re allowed to do things.”
Now, if American Assn. X, who’s booking Harrah’s for its convention, wants to have its luncheon in a Bally’s Las Vegas ballroom, its board of directors meeting at Mon Ami Gaby restaurant (at Paris Las Vegas) and its VIP party at Pure nightclub (at Caesars Palace), a percentage of all those menus will contribute to the association’s projected F&B spend.
“There is a lot of calculus involved,” Massari admitted. Here’s how it works: Every venue will have a designated percentage, either 10, 25 or 50 cents on the dollar for non-catered events, that goes to the bottom line. Catered events will continue to count dollar-for-dollar.
Massari said the percentage assigned to a specific venue will not depend on the costliness of its menu, but rather on the profitability of the place in question.
So, how does Harrah’s determine a group’s F&B minimum? “It depends on the customer’s budget, what they’ve told us they expect when we booked them,” Massari said. “We try to have an F&B minimum that’s less than what they expect to spend. It’s about making sure that if they say they’re going to spend $100,000, they spend somewhere close to that.”
A quick check with executives from Boyd Gaming and MGM Mirage confirmed that Harrah’s was indeed the first company to do this for meeting planners.
Massari said he came up with the idea while pumping gas. A promotion being played over a speaker encouraged him to sign up for a credit card that would give him a certain amount of rewards points for using the card at that station. Then he thought to himself that he got more credits for using the same card in other situations.
“That was when it occurred to me,” he said. “The reason we hadn’t been giving customers credit for (non-catered events) was because we didn’t want to give them full credit. But I realized we didn’t have to. We could give them partial credit, and they’d understand.
He added that, so far, the reaction of meeting planners has been, “Are you serious?”
Finally, Harrah’s hopes that the new system will encourage both its meetings division and clients to more closely track what they spend in these nontraditional venues. “Now we have an impetus to understand how much revenue is coming from that, whereas before we had no reason to track it,” Massari said.
