Avendra study uncovers trends supporting F&B growth

Local restaurant concepts (managed internally) are likely to gain additional placement. Getty Images/Relentless_one

A new food-and-beverage trends report gauges demand for hotel F&B over the next two to three years. The report from Avendra, “Lodging Food & Beverage Outlook,” reveals current F&B and occupancy performance, identifies hoteliers’ investment plans and details new food formats for the future. 

"Today's restaurants face multiple pressures based on shifting consumer behaviors," said Chip McIntyre, senior VP of strategic sourcing for Avendra. "We worked with an independent third party to help identify those behaviors to ensure that the restaurants and food operations our hotel customers own and operate can remain relevant in an increasingly diverse and competitive environment."

The researcher received approximately 900 unique responses, with about 90 percent coming from hotel GMs and directors of F&B, and roughly 10 percent coming from either hotel management companies or brand-level/corporate entities spanning luxury to economy and independent segments.

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“In the United States, the lodging industry represents approximately $200 billion in annual revenues, and it’s growing by 1.5 percent to 2 percent each year,” McIntyre said. “Food and beverage tends to represent 25 percent of that total expenditure, or around $50 billion, and it’s growing at about 2 percent to 3 percent each year. 

“Through this study, we uncovered three notable trends supporting F&B growth,” he said. “First, groups frequenting full-service hotels are spending more and they’re moving up to higher-tier proteins or beverage options. We are also seeing a shift toward local restaurant concepts accompanied by an upscale bar. Second, limited-service hotels are seeing outsized volume growth coming from grab-n-go type occasions. This lodging segment is seeing a larger share of the 2 percent industry supply growth. Third, 75 percent of group demand is already booked (driven by conferences and events), we can see group business is pacing up 2 percent to 3 percent for 2018. This is the biggest, most important driver of F&B demand.”

Here are a few findings from the "Lodging Food & Beverage Outlook:"

  • Food and beverage is expected to be a growing area of the hotel business. About 60 percent of participants in this study expect the contribution of F&B (as percentage of revenues) to grow over the next three to five years (versus the ~30 percent contribution today). A similar number of respondents also expect revenue/onsite bar revenues to increase in the years ahead. This is likely to come primarily from beverage sales in restaurants, bars, and other venues rather than in-room minibars—this format seems to be going out of favor.
  • One of the structural growth drivers for F&B revenue is likely that hotel owners and GMs are allocating a growing amount of square footage for F&B within new hotel builds and remodels. In general, this held true across all types of properties. This trend was most prominent in the luxury sector, where 40 percent of hotel owners and 33 percent of independents said they plan to increase F&B square footage. 
  • The biggest area of F&B investment is event catering, with 61 percent of respondents planning net growth in this area. Convenience/market concepts are also expected to proliferate, with a growing emphasis on fresh. 
  • Local restaurant concepts (managed internally) are likely to gain additional placement, while hotels are moving away from outsourcing that space to a local independent concept (to be managed externally). 
  • In-room minibars and chain restaurant concepts will be less prominent formats in hotels the next three to five years.
  • When it comes to roomservice, only 10 percent of respondents in the luxury segment said they plan to increase investments in this area. 
  • A net +5 percent of midscale properties were investing in limited-service restaurants.  All other segments were moving away from this concept, particularly luxury/upper upscale (-10 percent).
  • Luxury, upscale and independent segments are devoting resources to local restaurant concepts.  
  • While all chain scales looked to be working to grow the buffet format, independent hoteliers were least likely to invest in this format (+3 percent compared to +23 percent for the entire sample).
  • Just over half of the sample of hotel industry participants are selling fresh/refrigerated foods in convenience or a market format today. We expect this segment to see further growth as about one-third of those who do not offer fresh foods in a market concept are planning to do so within the next year. On average, about 45 percent of hotel sites that offer fresh foods within on-site convenience stores are seeing better-than-expected revenue growth.
  • More than 40 percent of properties will add fresh food convenience options in the upper-upscale, upscale, upper-midscale and economy segments. That would imply almost 25-percent growth in the number of points of distribution during the next 12 months.
  • About 95 percent of luxury and independent hotel operators provide food benefits to employees today, and 35 percent to 40 percent of these properties are looking to expand that budget in the future.

Avendra provides procurement and supply chain management services for food-and-beverage and other areas of hotel operations. In addition, Avendra F&B experts analyze various offerings within a hotel’s foodservice outlets to help operators enhance revenue, reduce overall costs and provide exceptional guest service.