A SCIENCE

To bring catering operations to a science, Arviso put the F&B department under a microscope. “We took a unique and simplistic approach,” says Arviso, “to place a value on our real estate. We took an owner’s perspective and calculated our expectations by square footage.”

Simply put, he determined a group’s “spendexpectation” through a formula that puts a price on the space and time the group uses Sofitel’s facilities. That means the price for meeting space is no longer static and can float appropriately seasonally and weekly. In addition, Arviso looked at profit margins on menu items offered.

“Steak may be our most popular order, says Arviso, “but if our profit margins are not good, why sell it? Is chicken our lowest margin? Why not take it off the menu on big nights?” He urged Jalbert and his staff to analyze the nuanced business implications of menus and costs in the way many independent restaurants are embracing.

To drive the profitability of the catering vision, Jalbert and Arviso brought systems of revenue management into play that put catering sales under the close scrutiny routinely placed on guestroom bookings. To conform to that more rigid paradigm, they put measures in place to maximize the sales performance potential. Their provisions included an overarching sales scheme tool to guide salespeople and managers, a dynamic pricing program to optimize use of banquet space, and an independent evaluation of sales methods (see ShopTalk 2000 above).

The first step was to comb through sales history to determine fluctuations in volume and check averages. From those figures they pinpointed areas of great potential—times of peaks and lulls—that an aggressive booking system could bring to their advantage. They then devised a sales plan that managers and catering salespeople can reliably utilize—simply by plugging in certain criteria including dates, number of guests, lead time, duration of stay and the like—to maximize usage of banquet space and meeting rooms and spread it across the calendar as much as possible.

ENTICING PRICING PROGRAM

A key instrument in that plan is a dynamic pricing program that entices clients into less-utilized time periods by giving them a bargain on services but also raising and fulfilling expectations for the extra expenditure to book busy time frames. Jalbert and Arviso found that midweek conference bookings effectively limit sales by excluding or restricting the possibility of any other large group in the same week.

To increase the opportunity for additional bookings, salespeople offer an attractive lesser rate to group organizers to schedule conferences beginning on Sunday or Wednesday instead of occupying midweek, thereby doubling the potential for catering revenues in a single week. The same method applies in leading clients toward the “cooler zones” in the yearly calendar, where room blocks and catering service rates can stretch budgets and group bookings can fill out F&B revenues.

Likewise, prices for special events such as weddings, benefits, and parties hosted in banquet facilities on the weekends are scaled to attract guests to all three weekend nights. Demand for the ballroom at Sofitel San Francisco Bay (Redwood City) is immense and consistent, with all Saturdays in 2007 and half of 2008 already booked. Jalbert uses dynamic pricing to persuade Bay Area guests who want the desirable setting and high-quality service to consider Friday night or Sunday functions. While a Saturday wedding might carry a pricetag of $35,000, a Friday night reception could cost a tempting $30,000, with a Sunday booking perhaps even less.

Jalbert’s reduced minimum-per-person pricing on Fridays and Sundays has proved appealing to customers at all Sofitel properties and minimized vacant service periods. Arviso stresses it is not merely a matter of “discounting” certain days, but that they ensure value for the customer with a price performance guideline: “We create expectations on days that are busy, and we create value on days we’d like filled.”

REQUIRED COMMITMENTS

In addition to increasing volume through the dynamic pricing program, Jalbert and Arviso have added specific catering commitments for guests making use of meeting space. For groups booking more than one night, Sofitel requires they have at least one meal within the hotel.

“We were losing valuable revenues because groups took lunch and dinner elsewhere,” says Jalbert. “Now, we calculate a minimum dollar per person to rent our space, which includes one lunch or dinner or more.” Arviso points out that getting a commitment from planners at the time of contracting is important, thereby eliminating the intervening three months or so in which they might make other plans. He cites Sofitel Miami’s themed banquet “Havana Nights,” with menus designed to compete with local restaurants’ favorites, as a great success with guests. “And,” he says, “there is nowhere they can go to get that experience at the price we offer.”

Jalbert says he has met with “no resistance whatsoever” to the one-meal requirement, and, in fact, has found clients welcome the idea and become even more pleased when they recognize the quality of the meals provided. “We’ve become more flexible with menus. If a group says, ‘We’d like to have a steakhouse experience,’ we give it to them and make sure they have a fabulous time.”

SPILLOVER

The resulting greater volume provided by higher catering quality standards and the dynamic pricing initiative has not only bolstered F&B operations but has spilled over into the entire hotel as increased revenues. The demand for catering services, as well as the quality and prestige of those services, has reversed some of the traditional hotel business relationships and become directly translatable to increased guest nights.

Arviso is so impressed by the results of tighter business management in F&B that he recommends a permanent position of “F&B revenue manager” for Sofitel and for every F&B department. He acknowledges the challenges of moving the artistry of food production toward a position of profit, and he believes F&B operations could benefit from a dedicated manager—or “scientist” as he might put it—to let artists stick to their creative strengths. In the eternal struggle between art and commerce, costing-out recipes and sourcing ingredients often get the back burner to actual cooking, although they can be just as important to the success of the business. “Food and beverage works on such a slim profit margin,” says Arviso, “I’m sure the ROI would exceed the cost of creating the new position.”

While meeting goals of higher quality standards and heightened professionalism in regard to client relations are worthy objectives in themselves, revenues are what ultimately indicate if the investments have paid off. In Sofitel’s case, revitalization of operations has yielded an overall 25 percent increase in catering revenues, with the first two, historically “soft,” months in 2007 showing 10 percent gains. That gain represents a rise in both volume and check average. Catering typically accounts for 60 to 65 percent of Sofitel’s F&B revenues, and Jalbert claims the intensified concentration on catering has been the tide to raise all boats, adding to in-house restaurant business and the overall hotel net as well.

WISH LIST

Accor has an aggressive plan for Sofitel’s future, anticipating the opening of 10 more “great properties in key locations” by 2010. Boston, San Diego, and Atlanta are on their wish list, and Sofitel has a fondness for partnering with great chefs and restaurateurs to add sparkle to F&B programs. Wherever their new properties open, it’s certain that catering and revenue management will be a primary focus of the F&B operation.