The two main factors to consider in determining investment in event management services are cost/logistics and usability/operability. Cost is a major factor, depending on a range of other influences. Constructing a dedicated event management facility from the bottom up will be more costly as it includes elements of planning and design, permissions and certifications, long-term construction, installation of basic services, interior design, and much more. This approach also includes the need to purchase land for construction, which can vary in cost based on location, these are known as capital costs. Finally, there is the concept of logistics, as a new venue, everything will have to be connected and brought in, and it will be independent of any other event-related services (i.e., catering, music, entertainment), that would have to be set up anew or sourced from other locations. Operational costs are significantly higher for a new venue as well (Mares, 2020).
Meanwhile, the other path of adding event spaces to existing restaurants or other venues is a more budgetary option. Any add-ons will be on already owned land and connected to the existing facilities, requiring a much smaller volume of work to establish. In terms of logistics, it is also more optimal. Existing venues are likely to have in place the necessary event-related services or could easily expand them, with already-established supply chains and the ability to support events.
The second factor to consider is the event venue’s usability and operability, meaning how likely it is to be used and its ability to function at various points in the business cycle, and eventual profitability to generate the return on investment. A dedicated event venue has the benefit of being stand-alone, it is not associated with any other location and provides a specifically designed space for a wide variety of events hosted by either the managing organization or rented out to others. This type of space is designed from the ground-up and also can integrate many features, design choices, and concepts specifically aimed at making event hosting more efficient and customer-oriented. At the same time, if the space is not booked for events, it has no other immediate use, while operational costs still have to be paid. Furthermore, it is a singular location, which means only one event at a time may be hosted.
At the same time, making expansions to several restaurant locations provides the possibility of creating several event spaces, booked to different vendors or organizations. However, it is unlikely that these add-on spaces would be able to host large events, but this approach has the benefit of hosting multiple events, especially during highly booked seasons. Furthermore, attached to existing restaurants the spaces can be utilized for other uses when not booked, such as expanding restaurant seating or large attending parties, further justifying the costs. The operational costs of running expansions are much lower while bringing in potentially much greater profitability. The fact that restaurants can cover a much greater range of locations, which is one of the most critical factors in event venue management, as it allows for much greater outreach and availability (Rewards Network, n.d.).
Overall, the advice to investors would be to pursue the path of expanding event spaces at multiple restaurants. From a cost-benefit analysis, it offers less risk, while almost a guaranteed return on investment with a much smaller capital and operational costs. The range of locations and associations with known restaurants is both a benefit from a marketing and logistics standpoint. The singular event venue space is only beneficial in the few cases when specific client demands need to be met or for large events, but on a year-to-year basis, these are less common due to COVID-19 and technology, have significantly greater competition, and do not offer stable profitability.
References
Mares, L.A. (2020). The ultimate guide to starting an event venue business. Web.
Rewards Network. (n.d.). Party on: Increase restaurant profits with private events. Web.