The event industry has seen great growth in the last decade and is projected to more than double in value by 2028. This growth hasn’t gone unnoticed, and many promising entrepreneurs have seen the benefits of starting their own event venue business.
If that’s you, then congratulations!
However, while optimism is great for any industry, realism should take the helm. To succeed in the events venue industry, whether you’re hosting wedding venues or corporate events, you need to understand operating costs and capital needs.
So, how much do event venues make? How profitable are they? What affects this profitability? And how can you increase your revenue and chance of success? Let’s take a look.
How Much Do Event Venues Make?
The event venue industry has a high entry barrier, mostly because of capital. Startup capital for an event venue can vary widely, between $50,000 and $150,000. Procuring an event space in a desirable location is also a big challenge.
But, it’s a challenge that can pay off beautifully. Your earning potential can vary based on the type of events your space is likely to host. You might be interested in knowing how much wedding venues can make per year.
There is also no real cap on what you can earn, especially if your business model and location are good. The average venue owner makes 10% to 20% profit from revenue. High-in-demand spaces can make as high as 60%.
To put that in perspective, let’s take a look at wedding venue profit margins.
Wedding venues are one of the most profitable event venue business types. The average wedding party will comfortably pay over $10,000 for a wedding venue. In fact, in 2021, the average wedding venue cost $11,200.
Let’s do the math. If wedding venue owners charge the average cost mentioned above, and host 20 weddings in a year with a 20% profit margin, they can expect to bring in $44,800 in profit that year.
Common Types Of Event Venues
As we’ve established, event venues and the event venue industry are highly profitable. However, not all venues bring in the same amount of revenue.
The event space is extremely versatile and the venue type will depend on your local market and target market.
To make the most of your location, let’s first take a look at different venue types in the event venue industry.
Wedding venue owners are some of the richest venue owners in the events industry. A big reason the industry is so profitable is that wedding parties are willing to pay a lot for the perfect venue.
The average wedding costs $30,000, with venues averaging $11,200. That means clients are spending more than half their wedding budget on the venue alone.
The wedding market is also projected to continue this growth, with wedding parties willing to pay more and more for the perfect wedding day.
On the flip side, the startup costs and initial work to get wedding venues ready to host events can be daunting.
Business venues are also very versatile event spaces. Common iterations of business venues include meeting rooms, product or industry conferences, and networking events.
While you won’t make as much with business venues as you would wedding venues, upfront costs are much lower. Business venues are mostly event spaces for hire, with the venue owner providing little to no event planning or services. Flexible office spaces, for example, can be a powerful business tool in this day and age.
At most, you’ll need money to fund event staff to carry in and arrange tables and chairs. A bar or drinks area with staff to manage it. Video and audio tech to streamline event communication.
Beyond this, most businesses manage the event planning themselves. While not as immediately profitable, business venues are a good way to utilize empty event venue space with little investment costs.
Live Entertainment or Festival Venues
Live entertainment and festival venues don’t make as much profit from venue hire or ticket sales as it does from secondary sales like drinks, food, and other services. Start-up costs can also be quite expensive, especially if your event space is empty.
Kitting the whole venue with lighting, seating, bars, staff, etc., quickly adds up.
Lastly, contracts for live talent can also be expensive. If you’re only starting in the industry, working with local talent who need more exposure and less money could be a great option.
Large festivals, which are highly profitable, are only possible for big event spaces – preferably outdoor venues.
Live entertainment also includes event venues like casinos. Casinos have very high start-up costs However, once they are operating, ROI potential is extremely high. Working with a well-known casino chain could streamline the process and encourage franchise fans to visit the event venue when it’s still relatively unknown.
Event Venue Business Startup Costs & Management Expenses
To get a feel for how much you can make, it’s important to first determine how much you’ll need to spend. Here are the most common event venue management and startup costs.
Event Venue Space
Owning an event venue is a massive barrier for most hopeful venue owners. Buying a building or a piece of land is already expensive. Converting it into a wedding venue or some other type of event venue business adds to the startup total. But, if you have the capital, this shouldn’t be an issue.
If you don’t have the capital, you can suggest a profit share with an existing venue that is underperforming.
Create a business plan and pitch your idea to the venue owner. If they like what you have to say and you make money, you can put that money and experience toward procuring your own event space in the future.
Event venues, especially wedding venues, need a lot of event equipment. It includes all the items you, your clients, and your staff need to make the venue fully operational.
Equipment expenses include items like kitchen appliances, tables and chairs, audio and visual equipment, lights, venue management software, etc.
Venue staff are essential. There are two main types: back of house (BOH) and front of house (FOH). BOH staff manage the behind-the-scenes operations, like the kitchens. FOH staff are the customer-facing staff, like wait staff.
The bigger the venue and the bigger the event, the more staff you’ll need.
Event Venue Licensing
Event venues come with a lot of paperwork, especially if you are hosting events with alcohol. The licenses you need depend on your state and county requirements, so browse your state government website for information on business licenses, alcohol permits, and so forth.
Event Venue Utilities
Utilities, which are often overlooked or forgotten during the planning phase, can be quite an expense.
Utility items to consider when setting up your business plan include:
- Waste removal
- Phone service, especially for remote venues
Management and Maintenance
Whether it be replacing a broken light or bringing in cleaners after an event, event venue management is essential.
The most consistent fee is cleaning. Before and after any event, you’ll need to hire professionals to clean your event space.
Fixing maintenance issues to ensure safe and smooth venue operations is also a must.
How To Increase Profitability
We’ve established that event venues make a lot of money, especially if they’re managed right. Keep these tips in mind to increase your event venue's profitability.
- An Honest Business Plan: The first step is an honest business plan. Jot down all expenses, even miscellaneous ones, and slightly overestimate them. Do thorough market research to ensure you meet local market needs. And create realistic but challenging business goals.
- Right Target Audience: Know the local market and target the right audience. If your local market needs wedding venues but is saturated in business venues, don’t create another business venue. Instead, go where there is a need and fulfill that need. So, learn about the local demographic, pinpoint needs, and establish a clearly defined target audience.
- Sought After Location and Facilities: The location and facilities can increase the event venue's profitability. Scenic venues, of course, are sought after. Good parking and transport access are also very profitable. Lastly, having a unique theme or gimmick can also attract attention.
- Marketing Ability: Prioritize effective event marketing, especially social media marketing and referral marketing. Invest in a marketing team to find clients, build good relationships with them, and grow your network.
- Good Reputation: The customer experience is essential in venue management. If the customer experience is good, you’ll retain customers. They’re also more likely to recommend your venue to friends and family, which will enhance your brand reputation among prospective clients.
Bonus Event Venue Business FAQs
How Do I Price Events?
What you charge depends on the average spend in your location, venue niche, venue’s selling points, and what you offer. Do market research to determine local averages and how profitable your venue packages are. This guide will also show you how to price your event's menu.
How Do I Manage My Events?
To ensure high-profit margins, you need to effectively manage your events. Hire an effective management team that can optimize marketing and finances and utilize strategic event management.
The event venue industry is booming and is projected to grow into the next decade. If you’re considering joining the industry, you’ll want to know how much event venues make.
On average, event venues take home between 10% and 20% of the revenue. Profit margins are bigger for more sought-after event spaces, with some reaching profit margins as high as 60%. Wedding venues are especially profitable.
If you’re ready to join the events venue industry, do it the smart way. Utilize Perfect Venue event management software to manage your events calendar, increase sales, and optimize your time. Start your 14-day free trial today!