In March 2025 a couple paid you £3,000 to hold the last Saturday in August 2026. You banked it, spent it on a boiler, and forgot about it. Eighteen months later they get married in your function room, spend £24,000 on the day, fill thirty one bedrooms, and their guests spend another four thousand at the bar. For that one Saturday the hotel earned more than a normal week.
Events business behaves unlike anything else in a hotel, and the difference is almost entirely about time.
Contracted business a year out is a different kind of revenue
Rooms revenue is forecast. Events revenue is contracted. The distinction matters more than it sounds.
A hotel with a healthy events diary knows in January roughly what a large part of its year will be, because signed contracts sit against specific dates with minimum spends attached. That changes what your bank thinks of you, what you can commit to on refurbishment, and how much you need to panic about a soft month.
It also changes your cash position, because deposits arrive long before costs are incurred. A staged deposit schedule, typically something on signature, a further instalment at six months and the balance shortly before the date, funds the business through the winter. Be clear with your accountant about the tax treatment: receiving a deposit generally creates a tax point for VAT, so the VAT is due in the period you received the money rather than the period the wedding happens. Hotels that spend the gross deposit and then meet the VAT return are a recurring story.
The related point catches people out at the other end. HMRC's published position on retained deposits and cancellation charges changed in 2020, and such payments are now generally treated as consideration for a supply and subject to VAT rather than sitting outside the scope. If your contracts were written before that, they are worth a read.
Minimum spend is the mechanism, not the price list
The naive way to sell a function is a price per head. The way experienced venues sell it is a minimum spend for the date, with the menu chosen afterwards.
The reason is that you are not selling food. You are selling a Saturday, and you can only sell it once. A minimum spend prices the date at what the date is worth, and lets the client decide how to reach it: more guests, a better wine, a longer bar, a drinks reception in the garden. Everyone understands it, and it removes the negotiation where a client tries to reduce the number of guests to reduce the bill while still occupying the whole building.
Set minimum spends by date, the same way you set room rates by date. A Saturday in June is not a Thursday in November. A bank holiday weekend is not a wet February. Publish two or three tiers and hold them, because the venue that discounts its peak Saturdays trains the market to ask.
For conferences the equivalent is a day delegate rate and a twenty four hour rate, with a stated minimum number of delegates. The minimum numbers clause is the one that does the work, because conference organisers consistently book optimistically.
The bedroom block is where the money quietly leaks
For a wedding the function is the headline and the bedrooms are the annuity. Thirty rooms on a Saturday night at a decent rate, plus breakfast, plus the bar, is frequently worth as much as the wedding breakfast itself.
The leak is in how the block is handled. Three clauses decide it.
- The release date, after which unsold rooms return to general inventory
- The attrition clause, stating what proportion of the block the client must pay for if it is not taken up
- The rate, and whether it is the rate you would have charged anyway or a discount you have quietly given away
A block held at a discounted rate until two weeks before a peak Saturday is a real cost. You have taken thirty rooms off sale during exactly the period leisure guests would have booked them, then released them too late to sell properly. A release date at six or eight weeks, with the client told clearly and reminded twice, is standard, fair and worth a great deal of money over a year.
Attrition is the clause nobody enjoys enforcing and everybody should write. Conference organisers in particular will book a hundred rooms and fill sixty. Without an attrition clause that is forty room nights you could have sold.
Cancellation terms should reflect what you lose, not what you feel
Events cancel. Weddings are called off, companies cut budgets, dates move. Your contract needs a sliding scale of cancellation charges rising as the date approaches, because your ability to resell the date falls as the date approaches.
Two legal points shape what you can write. For a consumer, which a wedding couple is, terms must be fair under the Consumer Rights Act 2015. A cancellation charge that bears no relation to your actual loss risks being unenforceable as an unfair term, and the Competition and Markets Authority has published guidance on exactly this. A graduated scale tied to how much notice you have received is defensible. A clause keeping everything whatever the circumstances is not.
The second is mitigation. If a Saturday cancels twelve months out and you resell it, keeping the full cancellation charge as well as the new revenue is difficult to justify. Write the contract so the charge reduces if the date is resold. It is fairer, it is more enforceable, and it makes the conversation with a distressed client survivable.
Corporate contracts are business to business and can be tougher, but the same logic applies commercially: an organiser who has been treated reasonably comes back.
The building has to be able to do it
Two practical constraints get forgotten in the enthusiasm of selling.
If you want to host civil ceremonies as well as receptions, the premises need approval under the Marriages and Civil Partnerships (Approved Premises) Regulations 2005, granted by the local authority and reviewed periodically. It is not automatic, it takes time, and the room has to meet the requirements including being seemly and dignified and open to the public for the ceremony.
And the licensing. Your premises licence sets the hours for licensable activities including the sale of alcohol and, where it applies, regulated entertainment. A wedding running until one in the morning needs either a licence that permits it or a temporary event notice, and there is a limit on how many notices can be used at a premises in a year. A function room with a late licence and good sound insulation is a genuinely valuable asset. A function room with neither is a source of noise complaints and eventually a licence review.
Where this shows up in the game
Hotels, wedding venues and events companies arrive in Business Baron with the Hotels & Leisure Track, an add-on to the full game. The game keeps the profit and loss account and the bank balance on separate screens, and a deposit banked eighteen months out is the clearest example of why. Spend it on a boiler and the Saturday still has to be delivered.