While revenue from hotel foodservice is projected to grow this year, it is not expected to return to pre-COVID-19 levels until after 2023. Business travel is the main culprit. While consumer travel has returned in full force, many larger conventions have not yet returned, according to Ann Golladay, associate director at foodservice research firm Datassential.
“Business travel is going to lag and makes up a significant and outsized portion of revenue for the industry,” Golladay said. “Large events have been coming back (especially some weddings), but large conferences will be slower to return and many may keep some virtual component that will limit foodservice sales.”
Business travelers often pay much higher rates and are more likely to use on-site foodservice offerings, Golladay added.
As a result, Datassential is predicting a 5.6 percent real growth in lodging foodservice in 2022, compared to 2021. However, the firm forecasts a larger jump in 2023, with 11.9 percent real growth.
Lodging is expected to grow faster than foodservice overall, but that is primarily due to the fact that it was hit so hard in 2020, Golladay said: “What that means is that although the dollar growth from year to year is significant, it is on a much smaller base and so we aren’t getting back to pre-COVID sales levels until after 2023.”
Hotel Forecasts
Thomas Gregory, corporate director of food and beverage at Pacifica Hotels, a boutique hotel chain in Aliso Viejo, Calif., also doesn’t foresee business travel ramping up in 2022 “as much as we would like.”
However, Pacifica executives believe group catering and local catering will gain traction this year. “Weddings, reunions, bar mitzvahs, et. al., are back and back strong and will continue to be strong all year while we ramp into the end of 2022 and start of 2023 with group travel and convention and events,” Gregory said.
Ritz-Carlton Orlando Grande Lakes executives expect to see the property’s leisure business stay similar to prepandemic levels, but they don’t expect 2019 group levels to return until the second half of 2022, according to Jon McGavin, area GM.
While its group business has not returned to prepandemic levels, the groups that have conducted meetings and events spent more than originally estimated, McGavin said.
“Guests seem to be spending more time on property and with that, our restaurants have seen a large spike in spend per guestroom compared to pre-COVID-19,” he said. “Both our higher-priced restaurants along with our more casual restaurants are seeing similar lifts.”
Ongoing Challenges
Supply chain, labor issues and increasing inflation also will continue to hamper foodservice industry growth this year.
“Margins are being squeezed throughout the industry due to labor and supply chain challenges, which are increasing costs. It is safe to say that profits will be growing at a slower rate than revenue,” Golladay said.
“The ability to locate and hire good talent is a huge issue and then being able to afford the costs of labor are a paramount concern,” Gregory said. “We have unprecedented cost increases on all costs of goods sold, from beverage to food. Supply chain issues are a total mess, and we see 2022 as tumultuous as we have ever seen before.”
Other factors hampering foodservice growth include “major shifts in offerings within lodging foodservice that are likely to be long-standing,” Golladay said. These include the removal of breakfast buffets (sometimes replaced with grab-and-go items) along with the reduction or elimination of roomservice.
“Due to COVID, we’ve seen consumers across the industry get more accustomed to restaurant delivery and off-premises eating as access improved; many more restaurants offer delivery than did pre-COVID?” Golladay added. “Why not order from the local restaurant rather than from your hotel roomservice?”
However, Gregory believes that Datassential’s 5.6 percent growth number is considerably low. “We see double-digit growth coming in 2022 as F&B operators are some of the best on the planet to pivot, reimagine and execute,” he said. “I strongly believe our industry will find new and innovative ways to continue to drive revenues [and] guest experiences.”
Manuel Rodriguez, food and beverage director at the Spring Hill Suites Marriott in Panama City Beach, Fla., offered a similar positive outlook.
“Our growth for 2022 in foodservice will be greater than 5.6 percent. The industry will see a greater than 5.6 percent increase not only due to higher prices caused mainly by the shortages, but also because there is less competition,” Rodriguez said.