Many times banquets are planned and booked several months in advance. To quote a
selling price based on today’s costs for a function six months away could leave the
operator with little or no profit. To circumvent this problem, it is necessary to project
what the costs will be when the function is held. This is where long-range pricing comes in.
The person responsible for determining the selling price must ascertain how the commodity
futures market is and will behave. To estimate what the costs will be for the
period when the function takes place requires some speculation. Once these estimated
costs are determined, a selling price can be quoted to the client. Because we are dealing
with estimates on what is likely to happen in the future, these figures are not always
accurate; however, they do help the establishment to avoid a loss and greatly increase
the odds for a proper profit profit margin. Some hotels opt to avoid this problem by setting
menus with the client but do not quote a price until 30 days prior to the event.
Although this makes it easy for the hotel or catering company. It may jeopardize signing
the client who must have registration materials printed months in advance.
Remember who the buyer and the seller are.