For some planners, the answer is: absolutely not. But that price can sometimes be immovable, especially at hotels. “The biggest shock for me was in Chicago, when one hotel came to me and said, ‘It’s going to be $110 per gallon,’ and then other [Chicago] hotels began to follow,” said Yvonne McLean, coordinator of meetings, AV, and catering for the American Library Association (ALA). “I’m like, are you crazy? I hate it with a passion, but there’s nothing I can do about it.”
THE UNFILTERED TRUTH
The need for caffeine can seriously dent an F&B budget — a point that McLean recently made during a breakout session on meeting trends at MPI’s 2016 World Education Congress (WEC). When presenter Michael Dominguez, CHSE, senior vice president and chief sales officer for MGM Resorts International, discussed F&B costs, McLean asked him point-blank: “How did we get to the price of $100 per gallon of coffee?”
Dominguez pointed out that coffee prices have surged 130 percent in recent years, and that labor adds to the cost of coffee service. McLean politely disagreed. “I’m not asking for top-tier coffee,” she said later during an interview with Convene. “If that’s what hotels needs to charge, they need to make up their costs somewhere else.”
Is coffee really more expensive these days? That depends on how long of a time period you’re studying. Coffee costs rose 16 percent in the last year and nearly 300 percent since 2001, when coffee was at a 30-year low, according to market data. Yet in 1977, coffee cost more than twice as much as it does today.
Bottom line: Coffee and labor costs will always fluctuate. But with global coffee production lagging behind consumption, an increasing focus on the origins and sustainability of coffee beans — especially among younger attendees — and hotels’ insistence that they earn some of their already-slim F&B profits on coffee, price relief isn’t coming anytime soon.
COPING WITH COFFEE COSTS
As McLean has watched the price of coffee creep up during her nearly three decades with ALA, she has brewed up a few coping strategies. For instance, she’s noticed that attendees from the East Coast drink more coffee, while those from the West Coast drink more tea — which can help her fine-tune a meeting’s coffee service.
Another observation: Convention centers usually offer cheaper coffee than hotels, where the price seems to be on a perpetual upward tick. “I was talking to some of my colleagues, and we all agree: One of our biggest sticking points is how much hot water and coffee costs,” McLean said. “We understand that [food costs] are a little bit higher, but there is no justification, in any way they might talk about it, that you can charge that amount for 16 cups per gallon.” The number of cups in a gallon of coffee can range from 15 to 20 or so, but point taken: Attendees drink (and dump) a lot of coffee — nearly three-quarters of them will drink two to three cups a day.
During his WEC session, Dominguez said that planners should stop asking for their customary 10- to 20-percent discount on F&B — because with food-service margins so thin, a price break means that hotels will deliver lower-quality F&B, including coffee. “You’re getting nothing giving up a lot,” Dominguez said. “What you’re willing to pay is going to dictate what they buy.”
But for McLean, that discount is one of the ways she offsets things such as the price of coffee — and she doesn’t plan to stop asking for it. However, she and her colleagues are trying to take a multifaceted approach to the coffee dilemma. “All of my staff try to think of corrective ways to reduce and cut out coffee,” she said, “and there are little tricks.”
The first one is asking for smaller cups. The second? Encouraging attendees to drink less of the venue’s coffee, either by upping the ratio of other available beverages or giving out $5 gift cards to Starbucks during registration. After all, many venues already have a Starbucks in their lobby. “Even with a $5 gift card [per attendee],” McLean said, “it comes out cheaper.”
Will gift cards begin to shift profits from catering departments to third-party vendors, putting downward pressure on prices? Either way, coffee costs are predicted to keep rising through 2017 — and with more attendees considering themselves connoisseurs, the cold-brewed conflict is likely to continue.
Figure out how much coffee you’ll need at your next meeting with Social Tables’ Pocket Planner.
One more place that hotels turn profits? The cocktails served in their lobby bars and restaurants. However, The Ritz-Carlton, Philadelphia is playing with that formula in order to attract more local, drop-in clientele: They’ve cut the prices of some of their cocktails.
“We’re seeing a greater variety of people coming, because we’re competing with the local bars,” David Murphy, Ritz-Carlton’s vice president for food and beverage design and development, told Forbes.com. While some drinks at the hotel’s Aqimero restaurant approach $18, a margarita costs a comparatively reasonable $12 and a Paloma $13. “They’re not hotel prices,” Murphy said.