A few weeks after Technomic’s report that overall consumer spending at hotel food-and-beverage outlets increased 4.9 percent in 2017, STR has released a report that shows U.S. hotel food-and-beverage revenue per occupied room increased 1.6 percent during the year.
F&B RevPOR reached $105.56, up from $103.93 in 2016, according to STR. This growth reflected increases across all hotel classes and contributions from both food and beverage revenue sources, according to total-year data from the company.
Among F&B department revenue centers, hotel venue operations experienced the most significant percent change from 2016 with a 4.7-percent increase in revenue per available seat.
Technomic also noted this trend, reporting that banquets and catering are the primary drivers for hotel programs, accounting for nearly 40 cents out of every dollar spent at hotels. Banquets and catering account for an even larger part of the overall revenue at upscale and luxury properties that cater to both personal and business events, according to Technomic.
“Innovation and concept changes had a positive impact on hotel F&B results in 2017, particularly with creative use of space for venue operations,” said Veronica Andrews, STR’s director of digital data solutions. “We know that as catering-and-banquets performance goes, so goes the F&B department. With an industry average of 25,000 square feet of meeting space per property reporting to STR, that 0.8-percent increase represents substantial revenues from hosted events in hotels and resorts across the country.”
According to STR, in-room dining RevPOR was down 3 percent, but Andrews noted that the decrease does not indicate a shift in focus away from this operation.
“In-room dining results reflect a myriad of changes in deliverables and brand standards,” she said. “We don’t assume that managers have walked away from that revenue opportunity. The focus is on improving profitability and guest satisfaction in this area. In some cases, non-discretionary service charges give way to ‘grab-and-go’ or marketplace operations or other alternative in-room dining options. We also should keep in mind that in-room dining, as a revenue center, is the smallest revenue-generating operation in the F&B department.”
Market Trends
Among major markets, F&B performance decreases were common as group business in the combined luxury and upper-upscale hotel segments declined. Of note, the Atlanta, Chicago and Miami markets experienced a decrease in all group segment key performance indicators—roomnight demand, rooms revenue and catering-and-banquets RevPAS.
Bucking the national trend, Washington, D.C., posted a 0.8-percent increase in catering-and-banquets RevPAS on top of a 6.1-percent rise in group room revenue. Additionally, Dallas group room revenue and catering-and-banquets spend was up from the previous year even while group roomnight demand fell.
Long-Term View
According to recent research from CBRE, total food-and-beverage department revenue increased at a compound annual growth rate of 4.5 percent from 2010 to 2016. This is less than the 5.6 percent CAGR in rooms revenue, and 5.2 percent CAGR for total hotel operating revenue during the same period.
In 2016, six of the eight food-and-beverage revenue categories tracked by CBRE were greater than the nominal dollars achieved in 2010. The two sources of revenue that still lag are in-room dining and minibar. The decline in revenue from in-room sources (in-room dining and minibar) is consistent with the emphasis hotel brands have placed on new food, beverage, workspace, and socializing concepts in the lobby area, according to Robert Mandelbaum, director of research information services for CBRE Hotels’ Americas Research.
Of the four property types tracked by CBRE that offer restaurants, lounges and catering, the greatest gains in food-and-beverage revenue have occurred at resort and convention hotels.
According to Technomic, overall consumer spending for hotel F&B has shown a robust 5.5 percent annual growth since 2011. Total spending by consumers within hotels, which includes all restaurants, bars and lounges, banquets and catering, roomservice, in-room minibars and other areas, totaled $48.7 billion in 2017. For 2018, Technomic is forecasting continued growth of 5 percent in consumer spending, as demand remains strong.