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Unexpected service charges or event fees for event F&B have some planners at PCMA’s Catalyst Forum scratching their heads.
PCMA’s Catalyst community offers members a platform to ask each other questions, share ideas, or, as the website says, “communicate and collaborate.” Each month Convene features some of the most popular topics in the forum. Here’s a sampling from a recent Catalyst discussion.
Event Fees
“I wanted to see if anyone else has [encountered] this at other properties,” Eli Gorin, CMP, CMM, managing director for FHTglobal, wrote to the PCMA Catalyst community. “We are setting up options for a client one-day conference and in our searches one of the hotels is now quoting us the following:
- Service charge (24 percent)
- Tax on service charge (7 percent)
- F&B tax (9 percent)
- Event fee on F&B (8 percent)
- Event fee tax (7 percent)
[It’s the] first time I have come across a “quadruple plus!” When asked what the “event fee” is for, they said, ‘The event fee is allocated to the upkeep of the event space.’ And on top of this, they charge a room rental fee! Is it just me or is this a bit, um, insane? This takes the cost of a lunch buffet of $55 to $79! This is 44 percent in taxes, service charges, and fees. Is this just the hotel trying to pass off as much of their operating costs as possible to the clients? Would be curious to know if anyone else has seen this — this is in Miami, and I have not really seen before.”
I have not seen an “event fee” as the hotel described it, but I have seen service charges on meeting room rental rates, in addition to a service charge on the F&B consumed in that meeting room, as well as F&B gratuity. It is clear that some venues are adding new fees to increase their revenues.
Bottom line is that you are right to ask what the fees are for, and you deserve an explanation to your satisfaction. You should consider rejecting any fees that you don’t feel are warranted — other than taxes, obviously.
Also, with respect to taxes, I suggest that you verify that all taxes listed are actually mandatory. While the vast majority of venues are correct in the taxes they charge, it is not [unheard of] for an optional “surcharge” or “assessment” to be listed as a tax.
— Joshua Grimes, attorney at law, Grimes Law Offices, LLC
I have a property in New York charging an administrative fee for F&B and for room rental. Along with all the New York taxes — yikes!
— Carla Battle, director, Conferences and Events, Corporate Council of Africa
I recently encountered an 8-percent “event fee” in addition to typical service charge (24 percent) and tax (8.5 percent) from a hotel in Tampa. Fortunately, it was outlined in the contract draft as reduced to 5 percent. When I questioned it, I got the following explanation: “In regards to the event fee — unfortunately, I am not allowed to waive the fee but I am allowed to reduce it. The event fee is to offset the cost associated with the set-up/clean-up of functions. It also provides a dedicated conference service manager, tables, chairs, linens, water, pads, pens, candy, complimentary storage of materials, etc. …”
I was, like you, shocked by this and it was the first time I had encountered something like [it]. I was 100-percent unwilling to agree to it and would have moved the meeting.
Fortunately, because this was for a small meeting at a hotel I will later be using as a headquarters for a citywide, I explained that this new policy would simply cause me to move all of our larger meeting’s F&B functions out of the headquarter hotel and into the convention center and/or other venues. At that point, the event fee was waived for my smaller meeting.
In my opinion, this is simply another ridiculous exploitation of the current seller’s market that will also be one of the first things to go as the market turns. In the meantime, I simply will not consider properties that are imposing such fees.
I agree that it’s incumbent upon us, as professional planners, to shine a light on inappropriate practices and drive smart business decisions for our organizations as much as possible in the current market conditions. That said, it will also be incumbent upon us to not overly exploit market conditions when the pendulum swings back, as it always does.
Angie Silberhorn, conference director, Warehousing Education and Research Council
Sounds like a new form of resort fee. I haven’t seen it yet but will keep my eyes open!
— Barry Schieferstein, CMP, senior manager, Conferences, American Society for Nondestructive Testing
Interestingly, a related topic came up recently in regard to bringing business to a venue which charges commission on F&B over and above their venue rental fees, taxes, and other conditions. And that’s a commission the preferred vendor has to pay the venue!
They’re already getting revenue from the rental of the space which should factor in all operational and overhead costs as well as make profit. Instead, it makes it hard for the vendor to provide their services to a client as they need to hike prices to not lose out on their own profit or give up the client.
— Ethan Carter, Sales and Business Development, Paramount Events Chicago