Few within the MICE industry are aware of the operating expenses incurred within the average MICE venue – especially those with no accommodation attached to offset the high costs.
Without venturing into the capital required to construct or rent a suitable building structure, the most obvious costs of experienced personnel, maintenance, running expenses to things such as cleaning, electricity, insurance, sales, advertising etc, the list is lengthy and there still remain a number of expenses that are almost uncontrollable.
At this time of several differing types of economic challenges – the one major item on which profit margins have been more than satisfactory is…food, glorious food!
The majority of MICE venues will determine their per person charge structures a good six months if not a year in advance and then the various costs are advertised to the market and placed in promotional material.
The unknown element that occurs without warning is the sudden increases on a wide range of food products such as meats, vegetables, fruits, breads, refreshments and the like. Things like a petrol price increase will automatically knock on to groceries, and the implementation of “sin taxes” has pushed costs on beverages and alcohol sky high.
With prices already pegged for the potential client, the venues cannot now at the last minute, up their charges on the same basis, or change the prices they have advertised.
Which means, in turn, that the profit margins for MICE venues are becoming thinner as the downturn bites during 2016. The positive side of the situation is that astute venues will innovate in order to attract the generally fickle client – and hence competitive and improved opportunities for the event client as venues compete for keeping the bookings schedule on the profitable side.
