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Profit and Revenue Thresholds

Thresholds are predetermined amounts that indicate how much profit needs to be made by the hospitality property to complete the booking. Some hospitality companies only accept function space business if a predetermined profit threshold amount is met for a property event. This mechanism is used to qualify event opportunities at a property based on the event's revenue and profit potential.

The Revenue Manager can override the threshold and approve a quote even if it does not meet the threshold or has a negative threshold profit variance.

Thresholds are defined by revenue managers for function space by days and day parts. For more information, see Function Space Pricing Administration.

When thresholds are calculated, the following rules are applied:

• Any time a function touches a day part, even for a few minutes, the function space category threshold value for the day part is applicable.
• The functions for threshold calculation are considered along with established turntimes.

Example of a Threshold Calculation with Applied Rules

This example explains the threshold calculation that occurs when three functions take place in the same function space called FSC 1. Table 67 shows the functions and time intervals.

To calculate the required threshold for each function, the system determines the number of day parts the function covers. The day part is included even if the function only uses a few minutes of the day part.

The system then determines the threshold associated with each of the day parts listed for the function. Table 68 shows how day parts are set up for the property.

Table 69 shows the thresholds that are in effect. The assumption is that function space category (FSC) 1 and 2 have the same threshold amount.

Table 70 shows how the required threshold calculation occurs, assuming the turntimes are zero.

As can be seem from Table 70, the thresholds are calculated as follows:

• Threshold Sum for Function = Sum of the Thresholds for Function Day Parts
• Required Threshold = Sum of the Threshold Sum for Function

The following exceptions may be applied when the required threshold is calculated:

• If two functions (from the same quote) exist within the same day part for the same function space, then the day part is only counted once.
• If a customer requests that two functions be booked within the same day part for different specific spaces, then the threshold is counted for each separate room.
• If two functions belong to different categories, and both categories share the same component indivisible space as well as a day part, then only the threshold of the larger category is counted.