PAMANTASAN NG LUNGSOD NG MAYNILA

PLM Business School

Department of Hospitality Management ITM 3109-1 INTRODUCTION TO MEETINGS, INCENTIVES, CONFERENCES AND EVENTS MANAGEMENT (LECTURE)

Module 7: WORKING ON EVENT BUDGETS AND TIMELINES

MODULE OBJECTIVES This chapter will help students:

1. Identify variable and fixed event costs, and how to budget them.
2. Estimate event revenues and expenses.
3. Develop a system to monitor the event budget.
4. Draft an event timeline, and monitor accomplishments.

INTRODUCTION An event manager works with two very important resources: money and time. Both seem scarce, no
matter how one attempts to stretch them. This chapter discusses how to set financial budgets for
events and how to budget the time available for planning the event.
I. The Event Budget Budgets are plans in numeric form that put the event plans into action. A very creative event plan is
reduced to scratch paper without a budget to bring it to life. This chapter teaches the event manager
how to put the event budget together by understanding the various budgetary items and how
revenues, expenses, and profits are accounted for. A checklist for budget monitoring is also
recommended.

Discussion of the event budget started in Chapter 4 was part of the WWWWWHow questions. With the
event plan already having taken flesh and a clear vision of the event has been made, it is now time to
revisit the preliminary budget and make the necessary adjustments to it.

Budgets stem from funds that have been earmarked for the event or simply how much the host (or
client) intends to spend for this event. Look back on the event objectives and see how these impacts
the budget. It is also possible to have separate financial objectives for the event. There are events that
expect achievement of a sales target or require a return on investment (ROI) for either its financiers or
the attendees. As you were putting together the event vision, the budget would have been based on
either one of these: how much was spent on previous or similar events; marketing projections and
estimates; the general economic forecast; the expected return on investment; or the type of financing
used for the event (borrowed funds, prepayment, existing funds) and expected financial recovery. But
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 at this point wherein the event vision, event concept and contingency plans are already known, a more
realistic event budget must be drawn up.

Budgets are made up of three basic parts: revenues, expenses, and profits. The basic formula to
remember is:

Revenue minus Expenses = Profits

The importance of each element in this equation depends on what the event's financial objective is. For
hosted events, the event manager's objective is to maximize the budget to cover all expenses and
achieve event objectives. For break-even events, aim to recover all expenses thru revenues generated.
Lastly, for profit-oriented events (commercially- produced concerts, fund-raisers), the object is to
increase revenues to levels much higher than expenses.

II. Understanding Event Expenses Going through the event plan, identify expenses in each element of the plan. Lists and estimate all
probable expenses. Classify the expenses you have listed either as a fixed cost or a variable cost.

Fixed costs — are expenses incurred in the staging and management of an event that are not likely to
change as the number of attendees change.

Variable costs – expenses that vary depending on how many people attend the event. This may be
computed on a per capita basis, i.e., variable cost per participant.

It is important to understand fixed vs. variable costs so that event managers can draw up a workable
budget. The total cost of producing the event is computed by applying this formula:

(Variable Cost per participant x the number of participants) + Fixed Costs = Total Cost of Production

III. Sources of Revenues Events intended for profit or break-even may consider these sources of revenues:

 Ticket Sales or Admission Fees

 Registration Fees
 Donations and Grants
 Gift in Kind
 Sponsorship and Advertising fees
 Exhibit or Exposition Booth Rental Fees
 Concession Sales
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  Merchandise Sales
 Supplier Discounts

Setting Ticket Prices Admission or Registration Fees

There are different ways by which ticket prices are set. Most common of these is to compute for all
costs related to staging the event. A formula for this is:

variable cost per attendee

Ticket Price, Admission or + the cost for event promotion per attendee
Registration Fee = + share of fixed cost per attendee
+ a targeted profit percentage from the ticket price
+ applicable sales taxes

In the Philippines, aside from the mandatory 12% value-added tax, there may be other sales taxes
applicable as required by local government ordinances.

Another way to set the price is for the event organizers to set a variable cost percentage applicable to
the event.

Variable Cost Percentage = Total Variable Cost

Total Revenues

Perhaps, the questions to ask are: "Of the ticket price, what percentage will actual variable costs
account for?" and "What percentage will cover fixed costs?" The answers depend on how much profit
the organizers mean to earn. If the ticket price accounts for 100%, what are the percentage allocations
for variable costs, fixed costs, and the desired profit? Keep this illustration in mind:

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Another approach is to research and price the tickets on a par with the going rate for similar events.
This is preferred when competition is tight, and the target market is likely to "shop" around.

Smart event organizers will also research the target audience's value perception for the event. How
much would the audience want to spend to be able to attend the event? How much would they be
willing to pay to be part of the event?

Whatever the pricing approach, it is important that the organizers consider the return on the
audience's investment. The experience that the event, as well as the value of other tangible and
intangible benefits that the audience will get, must be greater than the amount they give to be at the
event. To ensure delivery of good value for money, exceed the audience's expectations and leave them
with a memorable, possibly a unique, event experience.

Sponsorship and Advertising Revenues

Sponsors and event partners provide incremental revenues. Sponsors are an additional source of funds
in exchange for promotional mileage or advertising exposure. These companies can help raise funds to
cover event expenses or can also be the main source of revenues (in the case of fund-raising activities).
Before sending out letters requesting for sponsorship, decide on these:

1. How much must be raised thru sponsorships? This will dictate the extent of solicitation efforts
necessary.
2. Identify possible sponsors.
 Select sponsors whose product or brand image match that of the event.
 Check your connection network among the people you know, who could help you?
3. What benefits can the event organizers give the sponsors?
 Media mileage — airtime or exposure on TV, radio, print, publicity, outdoor
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 advertisements
 Inclusion in event merchandising materials like posters, tickets, banners
 Website ads — this could be banner ads, links, or mentions; know the number of hits
expected for the site and communicate this to the prospective sponsor
 On-premises merchandising during the event—banners, flyers, sampling, display booth,
games or interactive activities, and video presentations before or during the event
 Promotional activities within the event
 Product/brand mentions or acknowledgements within the event or by the event hosts
 Access to participants' information — this could be attractive to some companies that
actively do direct mail efforts.
 Competitive lock-out — meaning, direct competitors of the company will not be taken
in as sponsors for the event; this could be a desirable benefit particularly if the targeted
event audience is hotly contested among the competing companies.

4. Determine "values" for the benefits lined up.

 Radio or TV airtime — determine how many spots will include the sponsor and in what
manner they will be included; quantify how much the exposure offered would cost in
terms of airtime, reach and frequency.
 Print ad space — determine space that will be allocated for each sponsor or sponsor
type; quantify how much the exposure would cost in terms of column centimeters and
number of print ads.
 Poster space — identify space to be allocated for sponsors (this could be above the
title, below the title, or at the bottom of the poster text), and determine the value of
this exposure times the number of posters to be released.
 On-site merchandising — quantify the exposure versus other means of advertising or
equivalent costs if the sponsoring company were to do the activity on their own. For
example, compare values vs. leafleting fees or booth rental rates charged by the venue.

5. Define sponsorship packages and rank sponsor categories — keep packages simple and easy to
understand. Try to limit the number of sponsors to a manageable number so all can enjoy the
benefits that are available.
 Presentor enjoys access to all sponsor benefits, and has the most expensive
sponsorship package; billed above the event title with the clause "brings you" or
"brought to you by" ; limit this class to a maximum of two sponsors only.
 Major sponsor — this class is given secondary line billing; usually almost same benefits
as accorded to presentor except top billing and some merchandising benefits; package
cost is around half that of the presentor.
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  Minor sponsor — gets tertiary billing and the least benefits; package cost is around half
the cost of a major sponsor.
6. Match the targets with the sponsorship offers. Approach companies that reach out to the same
target audience as those expected to the event, and those who are likely to meet the budget
for sponsorship.
7. Send letters.
As in any business correspondence, get the name and designation of addressees right. Never
send a "To Whom It May Concern" or blank letter when asking for sponsorship support. The
body of the letter opens with a mention of the event organizer (the host). After that, introduce
the event and its objectives. State how participation in the event will help the prospect achieve
its business objectives. For the reader to better appreciate the event, include audience
demographics from the previous year's event. Then proceed to present the sponsorship
packages, as well as other opportunities that the prospect can participate in such as breakout
sessions, booths, exhibits, etc. In closing, mention date of follow-up, and names of contact
persons should the prospect inquires or makes clarifications.

Consider producing a prospectus or brochure or flyer for the event or ask for a face-to-face
presentation. A prospectus is a comprehensive description of the event, including details of the
program speakers, venue, expected audience profile, companion activities, pocket events, and
description of the locale or city where the event will be held.

Send out letters well in advance. For big conventions, sponsorship letters are sent out as early
as 12 months before the event. A minimum lead time of two months are customary.

After getting the sponsors to agree, have the sponsorship contract signed and make a timetable
for deliverables. Make sure to deliver on all your promises. Treat sponsors the way valued
clients are treated and establish long-term relationships with them. They now have the same
stake in the event as the event organizers, the event team, and other financers.

Donations and Grants

For fund-raising events consider soliciting donations from individual and non-corporate givers. Identify
individuals and parties who have close affinity or a deep interest in the event and its target audience or
the beneficiaries. Unlike corporate sponsors, these donors do not usually need much advertising and
merchandising mileage but find a way to acknowledge them during the event.
Gifts in Kind
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 Particularly during tough economic times, some event expenses may be covered thru sponsorships or
gifts in kind. Among these expenses are:

 Food for preparatory meetings, rehearsals, and during the event

 Costumes for performers or uniforms for event security
 Accommodations for event staff, performers, and guests
 Transportation of equipment, staff, and participants
 Printing of event collateral
 Awards and trophies for competitions, or to commend event volunteers
 Giveaways which will help enhance the event experience
 Advertising placements in radio, television, print or out-of-home media

Other Sources of Revenues

 Exhibit or booth rental fees — Exhibits, booth displays, and interactive activity booths add to
the event experience and also allow more companies access to the event audience. Determine
competitive rental rates. These booths may be offered as part of a sponsorship package or as
an independent offer.
 Concession fees — As event organizer, identify opportunities for concessionaires who could sell
food, souvenirs, and services which complement the event activities and appeal to the event
participants. Straight rental fees may be charged, or organizers can collect sales commissions.
 Merchandise sales - Souvenir items or mementos to the event may be produced and offered for
sale. Study what would appeal to the audience and develop these items to bear the logo of the
event or those of its proponents. Merchandise helps sustain the memory of the event
experience and is a potential source of substantial revenues.
 Supplier discounts — Negotiate well with suppliers to get the best value for their goods and
services. Discounts translate to lower costs, and the potential for higher profits.

IV. The Revenue Forecast After working on the potential sources of revenues, project how much revenues the event will generate
considering all revenue streams. With the ticket price in mind, forecast how many participants are
expected to attend the event, particularly if ticket sales or registration fees are the main source of
revenues. The maximum of this forecast will be the number of participants that can be accommodated
at the event venue, given the intended layout for the event. Clarify with the venue management what
seating capacities are. Do not pre-sell more tickets than the number of seats available.

If historical data on previous or similar events are available, check if these can be used as sound bases
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 for a forecast. Other factors to consider in making your forecast include the market response to
promotional efforts, other events happening on the same day, consumer purchasing power and buying
behavior, and even the weather outlook.
V. Drafting the Event Budget Determine the budget for your event, keeping in mind its financial objectives:
 Hosted: revenues < expenses
 Revenue-generating: revenues > expenses
 Break-even: revenues = expenses

For hosted events, available funds must cover the estimated total cost of production, that is:

Event Budget = Total Cost of Production

(Variable Cost per participant x the number
of participants) + Total Fixed Costs

For revenue-generating events, proceeds from ticket sales or registration fees and other revenues
earned should be able to cover all variable costs, plus all fixed costs, and a substantial surplus for
profits. Thus, the applicable formula for revenue-generating events is:

Revenues = Total Cost of Production + Targeted Profit

(No. of tickets sold x Ticket price) + = [(Variable cost per ticket x No. of Tickets) +
Other Revenue Total Fixed Costs] + Targeted Profit

For break-even events, revenues generated from ticket sales or other sources must cover the total
production cost, thus the formula is:

Revenues = Total Cost of Production

(No. of tickets sold x Ticket price) + = (Variable cost per ticket x No. of Tickets
Other Revenue Sold) + Total Fixed Costs

For an event manager, it is interesting to know at what level of sales will the event be at break-even. To
compute for the break-even point, the formula is:

= Total Fixed Costs

(1 – Variable Cost percentage)
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 Break-even
or Total Fixed Costs
(1 – Total Variable Cost)
Total Revenues

The next move is to put all information together and draft the event budget. Itemize sources of
revenues. Carefully go over the event plan and identify both variable and fixed expenses. Provide the
best estimates available. There might be a need to scout for other suppliers, or to change the
requirement into something more affordable and practical.

Make preliminary computations before finalizing the budget. Contingency costs are those that will be
incurred only if the contingency plan is put into action. There is a high probability that these costs will
not be incurred, except for set-up costs, such as purchase of first-aid kits.

From the event budget drafted, determine whether the event's financial objectives are being met. If so,
then pat yourself on the back for you have done well. If not, then review the plan and the budget again.
Oftentimes, event planners get disappointed when the event concept could not be executed as planned
because of budget constraints. A savvy event manager rises to the challenge, draws out the event plan,
goes over all the elements, and examines each by asking these important questions:

 How much does it cost?

 How much can we afford?
 Is it worth it? If yes, then what must be done to be able to afford it?

An event manager gets event objectives done through the effective and efficient use of resources.
Seemingly, resources will never be enough. It takes a frugal but creative event manager to balance
revenues, costs, and profits.

In the course of preparations for the event, expenses are incurred, and revenues start coming in.
Monitor the budget and the event's finances continuously using actual costs and revenues generated.
Print a report on anticipated and actual revenues and expenses for each month (or week, depending on
your timetable) to keep track of the financial situation. Take corrective action wherever and whenever
necessary. If there are changes that have to be made on the original budget, seek approval first before
initiating the changes—there might be policies that have to be considered for such action.
VI. THE EVENT TIMELINE Time is one other resource that the event team has to make optimum use of. Always be conscious of
how much time you have to organize and implement your plan before the day of the event. Determine

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the activities that must be completed before the actual event, the chronological sequence of these
activities, and how much time is needed to complete each task (consider supplier lead times, too). The
next step is to organize and allocate time for the work involved, keeping in mind the time available to
plan the event. The timeline identifies what activities must be completed by a certain date. Use this to
check on the team's progress in putting the event together.

The list of tasks to be done will vary depending on the type of event, resources, and manpower
available. But typical activities done in preparing for an event will include the list drawn in the following
tool.

As in a Gantt chart, list the activities or tasks in the event planning process on the first column, identify
the person/s responsible for each, and then fill in the number of days (or the inclusive dates) needed to
complete the task.

Tasks or Activities Person Responsible Day 1 Day 2 Day n

Define the event objectives and

format; seek approval for these.

Scout for and decide on the

venue.

Plan for the event experience.

Prepare contingency plans.

Draft the budget and have this

approved.

Book speakers and/or

entertainers.

Prepare a marketing plan and

have this approved.

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 Send requests for quotation and
evaluate supplier offers.

Choose suppliers and finalize

contracts with them.

Send out invitations.

Finalize catering arrangements.

Process pre-registrants.

Conduct a production meeting

with all entities involved.

Final briefing.

Day of the event.

After the event, prepare the

post-event report, make follow-
up calls, or send thank you cards.

REFERENCES 1. Eloisa Altez-Romero. EVENTS MANAGEMENT (OBE ALIGNED). Rex Book Store, 2019.

2. Zenaida Lansangan-Cruz. INTRO. TO MEETINGS, INCENTIVES, CONFERENCES AND EVENTS

MANAGEMENT, Rex Book Store. 2020.

3. Germaine Angelica Salvador. EVENT MANAGEMENT – ENVISION. EXECUTE. EVALUATE. C and E

Publishing, Inc. 2019.

4. Philippine M.I.C.E. Academy, PROFESSIONAL EVENT MANAGEMENT: A GUIDE TO MEETINGS,

INCENTIVES, CONVENTIONS, EXHIBITIONS AND EVENTS, C & E Publishing, Inc., 2019.

5. C. A. Preston, Leonard H. Hoyle, EVENT MARKETING: HOW TO SUCCESSFULLY PROMOTE EVENTS,

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FESTIVALS, CONVENTIONS, AND EXPOSITIONS, John Wiley & Sons, 2012

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