In Articles, Core Event Tasks, Finances, Food & Beverage, Resources

Mandatory Service Charges: Where Does The Money Go?

By Christy Lamagna, CMP, CMM, CTSM

If you’ve planned an event at a hotel that includes a meal function, you have likely seen the little “++” symbols that appear at the bottom of each menu page. Those plus signs don’t mean you’ll receive extra food, service or attention. They represent the fees for taxes and service charges that will be added to the published prices.

If you’ve planned an event at a hotel that includes a meal function, you have likely seen the little “++” symbols that appear at the bottom of each menu page. Those plus signs don’t mean you’ll receive extra food, service or attention. Mandatory Service Charges: Where Does The Money Go?The exact numbers vary by state, city and county, but the average is 28.75 percent for food, room rental and A/V. Paying $100 for a gallon of coffee is painful enough. With the extra fees, the pain is 30 percent greater.

So what is that money for and where does it go? The 7 percent to 9 percent sales tax part is somewhat self-explanatory. It’s the 22 percent service charge that makes us wonder how it’s used and why we’re obligated to pay it. With budgets tighter than ever, it’s important to know the answer.

Who among us hasn’t wondered whether the dollars allocated to a service charge actually make it into the hands of the staff?

The truth? Hotel corporate service managers and salespeople say the charge really is for those who make sure our events happen. It’s for the servers, the housemen, the chef, the CSM and everyone, seen or unseen, who worked on our program.

The average amount that goes to the staff is 95 percent, with the remaining 5 percent covering hotel expenses and overages. For instance, if you negotiated to have the hotel comp dessert at your awards banquet because the cake was dry, the money is put toward that unbillable expense. It also supports the food offered at pre-conference events and the “little extras” you may receive along the way. Although it was free — as in not billed to your event’s master account — the money must come from somewhere.

The money often is distributed according to a weighted calculation based on a person’s title or position, so the maîtres d’ managing your evening event likely will get a larger percentage than a houseman. Should you wish to add a tip, you are welcome (even encouraged) to do so, but know that the staff is being compensated through that 22 percent fee.

Sometimes things are not what they seem. In the instance of what hotel service fees are for, the answer is in the question.

 

Tags: Mandatory Service Charges Where Does The Money Go?, Service Charges, Planning, Event Planning, Event Planners, Strategic Planners, Corporate Meetings, Corporate Events, Strategic Events, Plan Your Meetings

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