Friday, the ACSAC conference ended for 2015. This year (and next year), the conference was in Los Angeles at the beautiful Universal City/Los Angeles Hilton; this meant that on top of my usual Training Chair hat, I was Local Arrangements Chair. That means I was the coordinator for the event: assigning the rooms, picking the dinner entertainment (more on that in the next post), and selecting all the menus. When I first saw the hotel menus, I was shocked at the prices: lunch prices between $40 and $50; and dinner prices even higher. In fact, when I got the end of day survey for the first day at the hotel, I had trouble answering the question: was this a good value for the price? How can you judge, when gallons of coffee are so expensive.
But as the week went on, I grew to understand the prices are so high. In many ways, this is the same reason that the prices are so high in well established and fancy restaurants. And, no, the reason is not “because they can”. The reason is service.
When you go to almost any restaurant, the bulk of the cost of your meal is not the food costs. Food costs, right now, are relatively low. Delivery costs to your location are higher, but even those aren’t the bulk of the cost due to the volume being shipped. The most significant factor in the cost of a meal out is the labor. In fact, the labor is so expensive they increase the size of the portion so you don’t feel guilty paying that price. [And, of course, we’ve all be taught to clear our plates and not waste food, and so you have one reason behind the growth in obesity. In fact, there might be an interesting statistical study in the correlation between the cost of labor, portion size, and obesity in society.]
In a hotel — especially in a hotel that focuses on service such as a ★★★★ hotel — that cost is magnified more so. Everywhere I turned around at the HUC (Hilton Universal City) there was someone from Banquets making sure that all our needs were met, someone from IT making sure the A/V was right, someone from … you get the idea. Who pays for that service? It isn’t room rental — often room rental is gratis if you make a particular number of room nights and a minimum food and beverage. In fact, the answer is in that sentence: it is in the room rates, and the food and beverage costs. A certain amount of labor can be absorbed by the room rates, but the hotel also must be competitive. The bulk of the labor is captured in the F&B costs.
So, let’s go back to the question: is it a good value? We had only compliments on the quality of the food, and the quantity was almost too much (must remember that for next year). Most importantly, there were no complaints about service or the meeting rooms. The hotel staff was there whenever we needed them, often going above and beyond (with no additional charges). So, looking back in retrospect, I think it was a reasonably good value.
(Of course, that still didn’t mean I didn’t wince a little signing the final event orders. Who wouldn’t? But I also now better understood why I was paying what I was paying).
By the way, this is something that the great unwashed public — and even Congress — doesn’t understand. We’ve all read of the DOD acquiring toilet seats that cost $200 each, when they are $10 at the hardware store. We get incensed about the price, without knowing that they have unique manufacturing requirements that prohibit volume manufacturing, that they have documentation and maintenance requirements for their lifetime, and that they have the overhead of the administrative employees at the corporation that manufactures them, which has much lower volume to spread that overhead across when compared to a bulk manufacturer. Similarly, we hear stories of conferences with the $15 muffin or the $45 rubber chicken, and think the government is wasting money. It isn’t: that money goes to all the people employed by the hotel, providing all the service, and spending that money in the community. Yes, there are some conferences with boondoggles, but most food costs are not the boondoggles. Now you understand.
