The Magic Number


As you’d expect, I keep my eye on numbers. All sorts of numbers from all sources. And there seem to be conflicting sets of numbers from 2 key sources:

  1. Operators.
  2. Investors.

For operators, the length & breadth of the country demand is strong. Many businesses (venues and hotels) are quoting numbers and forecasts above pre-pandemic levels. Forward bookings are picking up, and on the whole, the future (2023) looks very positive.

Contrast these operator numbers (predictions/forecasts) with the investor community, where demand & transactions are slowing, and the sentiment is dipping. They are nervous. They are waiting to see if consumer and business demand slows and if it does, when will it bottom out? 

The challenge the investors have is that the sector is still a relatively favourable investment long term, and the pile of cash they have to invest is big. Very big. It is not surprising that they just want to pay a reasonable price for their purchase, which seems to translate into waiting…..

Those numbers are all very well and good and macro. So what does that mean for you, day to day, and into 2023?

The other factor that needs consideration from the owners, operators and bosses is profit. “No s**t, Sherlock”, I hear you say but hear me out. This is where you, the operator, can play your part on the ground. And arguably, it’s another thing the pandemic has taught us. Profit is sanity (turnover is vanity).

This is more important than ever because of the overhead situation that most businesses find themselves in. When I say ‘overhead’, I mean staff shortage.

Here’s the thing (and looking at other macro data), there is also a trend in the market regarding price increases and customer satisfaction (sentiment).

We did a piece with our friends at BVA BDRC and mapped pricing with sentiment. And it seems that the 2 are not happy bedfellows. Prices are rising (because they have to), and the sentiment is falling. Now, between VP and BVA BDRC, we know why that is the case. Customers are taking the hit of the price increase, so they are expecting a proportionately improved service. Whether that is unrealistic or not is not the point. The point is that they are feeling it. So, if you’re interested, we’ll check back in on that tacker at the end of January and compare the same metrics again – a quarter later.

All this conflicting data I have referenced above does come to a pinch point. Profit.

Why flog yourself silly with reduced staffing, stressing everyone out (including the customer), and grabbing business to fill the order book so you can be “back to pre-pandemic levels” but not make a profit?

There is another way. Aim for a target. A profit target.

And how will you know what that profit target is?

RevMet™ = ‘Revenue per square Meter’.

Work out your RevMet™ number for the profit you want and aim for that.

You can then manage your yield (RevMet™) better and run a more efficient and profitable business. 

Hotels use RevPar as a way of measuring success.

M&E should use an equally simple and unilateral number. RevMet™.

Investors should ask, “what’s your RevMet™?”

Bosses should ask, “how are we doing against RevMet™?”

Salespeople should ask (themselves), “is this piece of business going to help my RevMet™ (or is it going to drag it down)?”.

RevMet™ is the M&E magic number. 

Mathematically, logically, operationally and profitability-wise, it just is.

So, what’s your RevMet™?

RevMet™ is your magic number

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