Negotiating Food & Beverage Minimums for Your Company Meetings

The Food & Beverage minimum is typically viewed as a liability because it sits in the hotel contract. Most planners work hard to negotiate it down (or try to remove it completely), even if the actual catering budget of the meeting will clearly exceed the minimum stipulated in the contract. Try viewing the hotel’s food and beverage minimum differently. Instead of a liability, try seeing it as a benefit that, by meeting or exceeding the food and beverage minimum, you can use to drive better value from your hotel partner.

Tip 1: Add a second F&B minimum to unlock extra value

Sounds crazy, right? Not really. If you happen to be spending more than what the hotel requires, you’re leaving money on the table. Think of it this way: The first F&B minimum is for the hotel…the second minimum amount is for your company.

Here’s a real-world example. Say you’re booking a sales manager retreat, with 50 people for three nights. That’s three breakfasts, three lunches, three dinners, and probably at least one cocktail reception. You do your homework and come up with your budget for the event.

• Your estimated food & beverage budget: $16,000
• The hotel’s minimum F&B: $12,000
• Difference: $4,000 -- in your favor

This additional spend of $4,000 means you have real leverage to add some value to your overall meeting. So tell your hotel salesperson, “I agree to the F&B minimum…and I want another number put into the contract. For instance, if we spend at least $16,000 on F&B, you’ll give us these additional concessions.”

Then ask for some things that will create real value for your group. Need more suite upgrades? How about IT help? Whatever you might be missing from your bag of goodies can be leveraged with a second F&B maximum clause.

Tip 2: Miss your F&B minimum? Remember ‘PPAPP’

Sometimes, despite your best efforts, you miss your F&B minimum. Not to worry, as long as you’ve planned ahead. Hotels have wiggle room with F&B minimums, because “Penalty Payments Are Pure Profit” (PPAPP). Here’s the rationale: For every $1,000 a patron spends on F&B, the hotel pays approximately $300 in hard costs (the actual food and beverages consumed). If you miss your F&B minimum, the hotel isn’t incurring the costs of those un-scarfed meals and un-quaffed drinks. Knowing this, you can put a provision like this in your contract:

“In the event that the F&B minimum is not met, Customer will pay 70% of the difference between the F&B minimum and the actual spend.”

With some clever preparation, you can turn the F&B minimum to your advantage. Feeding hotels the right information, and offering to step up certain commitments within your control, will keep their tummies full and your budget in control.