The Butt-Saver
One key budget-saving tip, according to Susan Losurdo, CMP, of Global Meeting & Event Management, is to "always build in a line item that I call 'contingency,'" says the Greenville, N.C.-based planner and budget expert. "It's simply a bank of money that sits there should you have the need for emergency funds. I've used as little as $500 and upward of a few thousand -- the more unknowns you have, the larger the number. I sometimes refer to it as the 'butt-saver' line item."
For Greg Jenkins of Bravo Productions, a contingency fund of at least 10 percent is logical whenever he's working with a budget that his client put together. "For example," he says, "it just rained here in Southern California -- in August! That never happens. But you might have to secure a tent at the last minute, or hire additional staff to clean up the venue. That 10 percent would cover whatever last-minute adjustments you have to make to account for the unknown."
Even a carefully crafted budget can balloon out of control, as seasoned meeting professionals can attest. M&C asked planners and suppliers to share the common mistakes they've made or witnessed, along with strategies for avoiding similar snafus.
FOOD AND BEVERAGE
Rash pricing. "Too many times a planner will take the estimated food-and-beverage cost presented at the proposal stage and build the registration fees from it," says Katie Allen, director of catering and event management at both the Sheraton and Westin Kansas City (Mo.) at Crown Center. "They don't give an allowance for additional F&B, such as coffee breaks, that they might have failed to build into the RFP process."
Overselling and underspending. The error here is in the way F&B might be marketed to attendees. For example, says Allen, "putting 'breakfast' on an agenda but ordering a finite amount of just coffee and Danish will almost always lead to unhappy attendees who came hungry with the expectation of getting something more substantial."
Dinnerless cocktails at dinnertime. "Planners frequently don't anticipate heavier consumption at receptions between 6 and 7 p.m. that aren't followed by a dinner," points out Gary Collins, director of association sales at Silverado Resort & Spa in Napa, Calif. "This is their dinner."
Suzanne Halperin, senior director of operations, catering division, for San Francisco-based Kimpton Hotels & Restaurants, adds, "You might cut your allocated costs a bit, thinking it's 'just' a cocktail party and not a three- or four-course dinner. But these receptions can cost more because you'll need to have a variety of choices, and enough stations and substantial food, to ensure that people leave satisfied. The last thing I want is to have someone leave an event and have to go out to McDonald's. Plus, attendees tend to get more intoxicated when there isn't enough to eat."
Old-fashioned pricing. F&B budgets frequently are developed based on pricing from old menus, points out Gary Collins, or without adding at least 5 percent per year for future events.
Underestimating drink consumption. "It is hard to budget accurately based on consumption," says Halperin. "You might assume, 'Oh, this isn't going to be a big drinking crowd,' but think about it: Every time someone sets a drink down because it's getting a little watered down, they'll likely order a new drink a few minutes later. Sometimes it's better to get the bar package; that way you'll know ahead of time what you are paying."
Per-piece purchasing. Greg Jenkins, a co-founder and partner of Bravo Productions in Long Beach, Calif., had one client who decided to serve jumbo shrimp as an appetizer at an opening reception for 3,000 people. The shrimp cost $5 per piece. "The guests ate them like they were M&M's," recalls Jenkins. "In the first hour, they had gone through all of them. We asked the client if they wanted to order more shrimp -- which they did. But in the end, they saw the bill and said, 'We should have just killed the shrimp.' For the following year's event, they moved away from per-piece pricing, and there was no shrimp. There were a lot more cheese platters."
Short staffing. "A hotel or restaurant is going to have its own staffing guidelines," says Suzanne Halperin. "But it's important that you really think about your guests and what you're trying to accomplish. If it's going to be a big cocktail party and you know this is a really big drinking crowd, communicate that information so the venue has additional bartenders or staff." Likewise, share anything you know about your group's preferences. Halperin has seen far too many planners fail to provide fair warning for labor-intensive drink preparations. "Especially with the mixology trends," she notes, "an all-mixed-drink crowd will require more labor than primarily beer and wine drinkers."
Budget Illustration: ©iStockphoto.com/plumbeer
The 'No Surprises' Clause
"One of the things that I always add to a hotel contract," says Debi Scholar, a corporate meetings director and strategic meetings management adviser in Scotch Plains, N.J., "is a clause that says 'costs for products and services must be transparent and itemized, to reduce hidden fees, and submitted to the meeting planner in a reasonable amount of time after the hotel receives the meeting specifications.' Thus, if there's an extra cost for an extension cord, it has to be itemized so that we know what it is up front." Hotel partners generally comply with such a clause, says Scholar, significantly reducing the unexpected budget overruns due to extras required on-site.
Laura Bell Way, global meetings manager at Autodesk in San Rafael, Calif., avoids surprise costs associated with credit cards by adding an addendum that says her company will not pay any surcharges or fees due to the method of payment. "Otherwise, you might be charged a 3 to 5 percent administrative fee for using a card," she notes. "I just saved Autodesk $20,000 by having that payment clause in the contract. The hotel tried to charge the fee, and I pointed them to our addendum."
HOTEL AND VENUE
Ignoring room types. "Make sure you are being quoted room rates for the room types attendees will want," notes the Silverado Resort's Gary Collins. "Get inventory also to make sure there are additional rooms in a certain type, just in case your block fills up and you need to request more."
Losing count. When planners don't keep a close watch on the running attendee count -- and exactly what's riding on such thresholds -- they could find themselves scrambling to make up for lost perks and privileges. "That hit us twice in the last two months," says Laura Bell Way, global meetings manager at San Rafael, Calif.-based Auto-desk. "In one case, we were moved out of our preferred meeting room at the last minute; in the second instance, we were not given the meeting package price we had budgeted on and had to pay for meeting space rental and A/V that was not in the budget. I negotiated it mostly away eventually, but it was a good lesson learned."
TECHNOLOGY
Budgeting for luxury when practical will do. "Is having a live feed to two screens in a meeting room for 300 people truly worth the additional expense?" muses Katie Allen of the Sheraton and Westin Kansas City at Crown Center hotels. It's the kind of question planners need to ask themselves, and then understand which tier of technology is necessary for achieving conference objectives. "You need to really know when you need the Cadillac vs. the Camry," Allen explains. "In most cases you can accomplish the same objectives."
Skimping on the broadband. "Budget a little more for high-speed Internet," advises Kimpton's Suzanne Halperin. "People tend to underestimate the amount of bandwidth they are going to require for effective presentations."
Before negotiating with the provider, be armed with numbers, adds Katie Allen. "Obtain as much history of your data use as possible so you can take that to the table: how many users, how many devices, streaming video or checking email, and so on."
Line Items Often Forgotten
A number of important line items frequently are left out of initial budgets, notes Susan Losurdo, CMP, LES, of Global Meeting & Event Management, including the following.
• Taxes and gratuity/surcharges on hotel rooms and F&B. "That's a fairly obvious one," admits Losurdo, "but the trick is to know when an item is subject to taxes and gratuity. Also, VAT taxes can be credited, depending on what country and vendor you work with."
• Resort fees
• Porterage (Some hotels charge a mandatory porterage fee.)
• On-site office equipment rentals and supplies (printers, copiers, radios, paper, office supplies, etc.)
• Electrical power/large power drops (not all A/V rentals include power, as some equipment requires a larger draw)
• Security fees (to guard expensive equipment in meeting rooms, escort high-profile speakers, etc.)
• Document disposal (shred bins, etc.)
• Transportation staffing (Planners often budget for the vehicles and drivers but neglect transport staff that load buses, manage multiple locations, etc. A line item for a dedicated transportation manager is key for a large conference with multiple locations and lots of movement.)
• Gratuities for hotel staff
• Gifts (for honorees, speakers, etc.)
• Postage
• Shipping and handling charged by the hotel to receive, log, store and deliver packages/boxes
• In-room delivery fees (Having something slid under a guest room door might cost less than if the bellman needed to •enter the room.)
• Photography/videography
• Registration website design and site maintenance
• Site-inspection fees (travel, hotel, tastings, etc.)
TRANSPORTATION
No accounting for slowpokes. "I have seen many social groups that end up overspending on transportation because they didn't provide enough coaches at the outset to allow some to leave half-full to make timely trips from the hotel to the destination and back," says Katie Allen. "Your transportation company will prepare a quote based on the number of passengers and the route; be candid about the group's timeliness, so the company can quote a buffer hour should you require it. Additional runs after contracted hours can add up quickly."
Renting too big a bus. "Reserving a motor coach larger than needed can eat up a budget," warns Gary Collins, "so always require those needing transportation to get the details to you well in advance with no cancellation. And remember to budget for downtime charges if you request a drop-off and pick-up that is separated by about two hours."
ENTERTAINMENT, EDUCATION AND SPEAKERS
Overspending on big names. Before springing for a celebrity expert to present educational content at an event, advises Katie Allen, "ask yourself if there is anyone already within the sponsoring organization who can present the same material in a similar engaging manner. This often has as much impact as a celebrity speaker, and ultimately it can save you precious dollars."
Underestimating production. "For entertainment, make sure you have accounted for all of the requirements of the group in advance of contracting," notes Collins. "The add-ons alone can eat you up -- things such as staging vs. risers, additional electrical needs beyond the normal wall-outlet wattage and so on. Similarly, be sure to plan for the set-up and tear-down times when booking and budgeting, as you may have to pay an additional fee for access to the venue."
Letting the rider ride. Factoring in performer requests is essential. "Always get a rider in advance of confirming a speaker or entertainment," urges Katie Allen, "as they often contain additional needs that are a cost back to the hiring organization -- elements such as airport transfers, hospitality, travel companion expenses, and so on."