Twenty-Four Percent, Plus Tax, Plus Whatever We Are Calling It Now

The father of the bride had a legal pad, a pen, and the face of a man who had just done arithmetic he didn't care for.

He had taken my menu home, multiplied the dinner price by his guest count, and arrived at a number he had made peace with. Then he'd gotten the contract, where that number appears at the top and then keeps going. He wanted to know, very politely, why he was being charged sales tax on a gratuity. It is a reasonable question and I have answered it several thousand times, so I gave him the true answer, which is that the hotel pays tax on the service charge, and so the hotel passes the tax along to you. That is the whole of it. There's no better version waiting behind it.

What the Service Charge Used to Be

When I started in 1980, the service charge was about 17 percent, and every penny of it was gratuity. It went to the operations team on the floor. Servers, bartenders, the people who set the room and the people who broke it down. That was the deal, and the deal was clean enough to explain in one sentence.

Then somewhere in the early nineties, hotels looked at that line item and realized there was money sitting in it that nobody was taking. Service charges went up, and up briskly. Today it's 24 percent, and the number is more or less dictated by the county you're standing in. Twenty-four is LA County.

The part that surprises people is that the hotel gets to decide, within limits, how much of that 24 percent is actually gratuity. At a union property the limits are real and written down. Where I am, of that 24 percent, 71.5 percent is distributed to the staff working your event and 28.5 percent is retained by the hotel. I know the decimal by heart the way other people know their own phone number.

And none of it is optional. It is not a tip jar. Clients ask whether they can decide the amount, and whether all of it goes to the servers, and the answers are no and no. The only lever anyone has is the price of the food itself. So what I say, and what I believe, is that the bulk of it goes to the people supporting your event and the balance goes to the maintenance and general upkeep of the hotel. Which is true, and which is also a sentence I can say without my eyebrows moving.

The Event Fee

In the last five years or so, hotels have added something on top. It is called an event fee, it runs 5 to 10 percent, and it sits between the service charge and the tax like a cousin nobody invited.

So the stack is now this. Your menu price. Then 24 percent. Then say another 5. Then roughly 10 percent tax on the subtotal. The number at the bottom of the page is about 40 percent higher than the number you fell in love with in the brochure, and you fell in love with the brochure number because that is what brochures are for.

The official explanation for the event fee is that it offsets the operational and administrative costs associated with producing your event. I have said that sentence out loud. It does not improve with repetition. Between you and me, I waive the event fee a great deal of the time, because I have not yet figured out how to fix my face while delivering it.

The Other Envelope

Now, on top of all of that, there is tipping, which is a separate animal and always has been.

In the eighties, when corporations had money and spent it in ways that would get someone fired today, a banquet captain could count on a couple hundred dollars cash at the end of a conference. That has largely dried up on the corporate side. The high-end social events, though, still do it, and they do it well. The captain is first in line, and that's correct. The captain is the face of the evening. She is the one standing next to the mother of the bride when the band runs long, when the toasts multiply, when somebody decides at 9:40 that the cake should be cut at 9:45. She is glued to that family's side for six hours. She gets the envelope, and it is almost always cash.

Catering managers get gifts, which is a different currency. I have been handed designer handbags, perfumes I would never have bought myself, bottles of liquor with dust on them in a good way, glassware, china, and enough cookies and candy to found a small confectionery. One bride's family gave me a Lalique crystal heart, three inches by four. I did what I always do with a gift like that, which is look it up in private afterward, and it was $550. I have also been handed as much as $2,500 in cash after an event, which is a moment that requires you to keep your voice completely level.

I take gifts during the planning. Gift baskets, a nice bottle, that's fine, that's somebody being kind in March about an event in September. I have never taken cash before the event. Something about it sits wrong, and I've never needed to examine why.

The Math Nobody Shows You

Here is where the service charge actually goes, on a real Saturday.

Take a $100,000 wedding for 200 guests. Roughly $20,000 of that goes into the tip pool for that event. Now count the bodies. The ratio is one server per 25 guests, so 200 people gets you eight servers. Two hundred people gets two bars, so two bartenders, plus a bar back running ice and glassware for them. Add the captain. That's twelve. Then at least two housemen doing the setup and the breakdown, and they're in the pool too, as they should be.

Fourteen people. Twenty thousand dollars. That's $1,428 apiece, for one night.

Now run a perfectly ordinary corporate lunch. Two hundred people, $50 a head, $10,000. No bars, so no bartenders and no bar back. Call it ten people in the pool. A thousand dollars each. Same room, same guest count, wildly different envelope.

And all of it is pre-tax. That money goes through payroll as wages. Nobody is walking out the service door with a fistful of anything.

The highest I've ever seen go directly to a hotel for a single wedding was about $150,000, and I'll note that when a party is that size we tend to throw extra staff at it to make sure nothing goes sideways, which spreads the same money across more people. So that $1,428 is about the ceiling. What changes the picture is frequency. At the Biltmore in heavy wedding season, a good server might work one or two of those a week.

I had banquet servers come to me at the Biltmore in April having made four times what I made that month. They'd tell me, too. Not to rub it in. They'd tell me because they were happy.

The same people go very quiet in July and August, when the galas are over and the building fills up with seminars that order coffee and nothing else. The ones who've been doing it twenty years know exactly what's coming and bank the December holiday parties against it. Their pay has climbed to something close to livable over the last decade, particularly at union houses, but the summer is still the summer.

The father of the bride listened to all of it, did not love it, and signed. The captain on that wedding went home with an envelope and I went home with a box of butter cookies the size of a car battery. She said thank you a lot, that captain. They all did.