The Ballroom Trap
Let's talk about the ballroom.
Every hotel that has one is simultaneously proud of it and quietly stressed about it. And for good reason.
The ballroom is expensive real estate. Every square meter of it needs to justify itself - a concept I first explored in How RGI Is Killing Your Business when talking about rooms, and one that applies just as powerfully here. In most hotels, it simply doesn't.
Does your hotel even need a ballroom?
Not enough people ask this question.
If you're a resort of around 200 rooms with a massive convention center - rent it out. You don't have the rooms capacity to support large groups consistently, and weddings don't happen every day. You cannot justify a full banquet and kitchen team on the hope of occasional events. The math doesn't work.
If you're a larger resort - MICE on weekdays, weddings and social events on weekends. Clean model, good revenue mix, works well when executed properly.
If you're a city hotel of medium to large size - a ballroom is almost always a plus. But this is exactly where the trap begins.
The Trap.
A catering enquiry comes in. Corporate lunch, gala dinner, product launch. No sleeping rooms attached. Pure catering business.
And the sales team hesitates.
"Let's hold the space. Maybe we'll get a group lead with rooms."
So they wait. The catering business goes elsewhere. And the group lead (more often than not) either doesn't materialise, arrives too late, or comes in with rates so heavily negotiated that the net revenue barely justifies the effort.
Meanwhile the ballroom sat empty.
This happens everywhere. Every week. In hotels of every size.
And here's the uncomfortable question nobody asks out loud: does the owner know? Not in a general sense, but specifically. How many days did the ballroom sit empty last quarter while the sales team waited for a group that never came? How much catering revenue walked out the door during that time?
Most owners couldn't answer that question right now. And that's not just a sales team problem. That's a governance problem.
The Uncomfortable Truth About Groups.
The right group at the right time is still gold. A conference that fills your rooms AND your ballroom at a solid rate during a slow period? Smart selling. No argument there.
The problem isn't groups. It's over-reliance on groups as a primary strategy rather than a tactical tool.
Because look at what a group actually costs. Rates heavily discounted off BAR. Complimentary rooms. Loyalty points. Intermediary commissions. Free upgrades. Added value stacked on added value until the margin is barely recognisable.
And groups leave gaps. Occupancy gaps that are genuinely hard to fill - gaps you end up discounting into oblivion. Your RGI at month end tells the whole story (and if you want to understand why RGI itself is also a deeply flawed measure, this post will make you uncomfortable in the best possible way).
Meanwhile, Catering Is Quietly One of Your Highest Margin Businesses.
Yes, catering may have its own commissions and loyalty costs. But the food cost relative to what clients pay is remarkably low. Catering is priced at a premium, and clients accept that premium. The margin between production cost and invoice price is where catering quietly outperforms almost every other hotel revenue stream. Your GOP feels it. (Or should.)
Every empty ballroom hour isn't just lost revenue. It's lost high margin revenue.
Take a 500 square meter ballroom sitting empty 200 days a year. Even at a conservative daily catering rate, do the math. Then ask yourself honestly whether your group strategy is actually outperforming that number on an annual basis. Not in a good month. On a full year. The answer might reshape your entire commercial calendar.
And it's not just the ballroom. Boardrooms, breakout rooms, pre-function space - all of it sits empty for large portions of the year in most hotels. The same argument applies to every square meter of meeting space you own. All of it is real estate. All of it needs to justify itself.
Here's What Nobody Is Measuring Properly.
This is the part that should concern every owner and asset manager reading this.
There is currently no widely used tool or industry dashboard that properly tracks and benchmarks ballroom occupancy and revenue per square meter of meeting space across hotels.
Think about that.
We have STR for rooms. We have comp sets for RevPAR. We benchmark, we analyse, we obsess over every available room night.
But the ballroom? That enormous, expensive, high-potential piece of real estate sitting in the middle of your hotel? We measure it loosely at best. A catering revenue total here. An event count there. Nobody is systematically asking:
What is my ballroom occupancy percentage this year? What is my revenue per square meter of meeting space, and how does it compare to my competitors? How many hours did this space sit empty while we waited for a group that never came? What did those empty hours actually cost us in lost catering margin?
If you ran these numbers honestly (and compared them against even two or three competitor properties), the results would reshape your entire commercial strategy.
The hotels that start measuring this properly will have an immediate and significant advantage over those still guarding their ballroom space on instinct and hope.
Build the Base. Free the Ballroom.
The long term solution is a transient demand base strong enough that rooms sell themselves, freeing the ballroom to take any catering enquiry that walks through the door without the anxiety of "but what about groups?"
This is a commercial strategy, not an operational one. It requires someone who understands the full picture - direct booking channels, corporate account development, digital marketing, revenue management, distribution strategy - and can connect all of it into a coherent plan that reduces group dependency over time. It's the kind of thinking that rarely comes from one department alone. And it's exactly the conversation that should be happening between commercial leaders, GMs and owners far more often than it does.
Is this easy? No. It takes years of investment and consistent execution. It's not a quick fix.
But it's the right direction. And the hotels moving that way are the ones whose ballroom revenue per square meter actually makes sense at year end.
Until then - at the very minimum - start measuring. Build your own dashboard. Track your ballroom occupancy. Calculate your revenue per square meter of meeting space. Compare it year on year.
Because right now, most hotels don't even know what they're losing.
And what you don't measure, you can't fix.
The culture that allows this to go unmeasured and unchallenged is the same one I wrote about in One "No." Millions Lost: nobody owning it, everyone pointing up, and the business quietly suffering as a result.
xoxo, Bored Hotelier 😉
Frequently Asked Questions
How do hotels increase ballroom and meeting space utilization? Stop treating the ballroom as a room you protect and start treating it as a room you sell. The single biggest driver of low ballroom utilization is holding space for groups that never materialise. A catering-first approach — taking non-residential business aggressively while building a transient rooms base strong enough to reduce group dependency — consistently outperforms the traditional "hold for groups" strategy when measured honestly across a full year.
Is residential or non-residential business better for hotel meeting space? Both have merit but they serve different purposes. Residential business — groups that also book sleeping rooms — looks attractive on paper because it fills two revenue streams simultaneously. The reality is that residential groups come heavily discounted, laden with complimentary rooms, intermediary commissions and added value that erodes the margin significantly. Non-residential catering business — a corporate lunch, a product launch, a gala dinner — arrives at full catering rates with food cost as the primary variable. The margin on a well-run non-residential event often outperforms a discounted residential group. Most hotels don't know this because nobody has run the comparison honestly.
When should a hotel consider leasing its ballroom or meeting rooms? When the space is consistently underperforming and the honest answer is that you can't fix it — not with the current team, budget or commercial strategy in the foreseeable future. A ballroom sitting empty 200 days a year generating nothing is not an asset. It's a liability with good lighting. Leasing to the right tenant — a corporate office needing flexible event space, a co-working operator, a restaurant concept — can generate predictable income while reducing the overhead of maintaining a full banquet operation. Hotels don't have to be great at everything. Sometimes the smartest commercial decision is knowing what to hand to someone who is.
How do you calculate the true cost of an empty ballroom? Take your total meeting space in square meters. Estimate a conservative daily catering rate for your market. Multiply by the number of days the space sat empty or underutilised last year. That number — which most hotels have never calculated — is your opportunity cost. Now compare it to what your group strategy actually delivered net of discounts, commissions, complimentary rooms and added value. The gap between those two numbers is the conversation every owner should be having with their commercial team.