The fourth installment of Profit Talks, a series of conversations about hotel profitability in the COVID era sponsored by HotStats and Hotel Management sister site Hospitality Insights, examined how food and beverage structures are changing in hotels, and how hoteliers can turn a profit despite lower occupancies, reduced operations and fewer team members on hand.
The session began with an update from Michael Grove, COO and managing director, Europe, Middle East and Africa at HotStats. “Things are certainly moving in the right direction—some parts of the world more than others,” he said. In the Asia-Pacific region, the Middle East and the U.S., things are “starting to certainly ramp up from a top line point of view.” Profitability is likewise variable, with some countries “very much” hovering around the breakeven point and others remaining in the red.
While rooms revenue is improving, Grove said other departments are not growing at “anywhere near” the same level. Hoteliers looking to maximize the amount of revenue they can get from each customer have found success with room service, he noted.
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“Food and beverage was really a differentiation point between the full-service space and the select-service space,” said Lisa Carlson, SVP of operations at Chesapeake Hospitality. “During the depths of the pandemic, that point of differentiation really went away.” As Chesapeake primarily operates full-service hotels, she said, the company is finding ways to pivot and adapt to the demand that's there in a profitable manner, “given the current landscape,” she said.
Meeting New Demands
“Pre-pandemic, a lot was taken for granted in the F&B space,” said Devin Burns, VP of rooms, F&B at Omni Hotels & Resorts. At full-service hotels in urban areas, guests would expect a range of food and beverage options, from bars to restaurants to 24-hour room service. Hotels in those markets had occupancies that made those operations profitable, Burns said, and could both control product inventories and manage labor based on forecasts. Now, his team is analyzing where offerings can be condensed and focused to just what guests want, adjusting for lower occupancies and reduced staffing. In some hotels, the bar might serve coffee in the mornings, he said—but in other properties that are seeing stronger business, it makes sense to operate like they did in 2019.
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Janine Williams, CEO and founder of Denver-based Impulsify, a company that supports grab-and-go markets in approximately 1,000 properties, has seen increased focus on these stations in hotels, especially as restaurants maintain limited staff and limited occupancy. Boxed mac and cheese made in a microwave will no longer suffice, she said: “They expect that engagement from the kitchen at a full service hotel to prepare quality offerings.” By putting a restaurant’s branding on to-go meals, she said, guests feel that they are getting the same quality in their food that they would find in the restaurant itself.
The grab-and-go markets have helped boost revenue during the downturn, Williams said, with full-service properties making between $6 and $10 in profit per room. “It's not replacing the restaurant revenue, but it is substantial,” she said. “We have full-service hotels running $35,000 to $50,000 a month in sales out of there at about a 60 percent profit, and our select-service [hotels] are running anywhere from $4,000 to $10,000 a month.”
The pandemic has made people “rethink” their food choices “from a health standpoint,” said Ron Loman, SVP of operations at Real Hospitality Group, with people looking for ways to stay as healthy as possible. Plant-based meals are increasingly popular, he noted, and are “readily available” in all of the menus in its portfolios.
Outdoor dining can also help guests feel safer and healthier, Carlson said. “We all had to rush into that space, whether we were in it before or not.” The new demand has driven creativity, with hotel spaces “like the edges of parking lots” being used to let guests socialize al fresco.
Labor Losses
The ongoing labor crisis has affected hotel and restaurant operations, and employers are searching for ways to make do with fewer workers. Carlson said the Chesapeake team has been doing “a ton” of corporate training and cross-utilizing workers in various departments, from the front desk to housekeeping to food and beverage. “We've had to consolidate operations,” she said. “Everything food- and beverage-related is coming out of one outlet now as opposed to maybe two or three, and we're utilizing the bar on an all-day basis and doing that with one or two bartenders who serve as the bartender, the server and the grab-and-go or to-go expediter. And we're able to do that efficiently.”
Hoteliers are also finding ways to attract and keep talent. Burns said his team used the summer vacation period to create a mentorship program with a curriculum that will add to the education of potential hospitality leaders. At the same time, he added, hoteliers will need to analyze pay rates and find a balance between salary increases and profit margins.
Loman advised using benefits to keep team members interested and engaged. “Are we really exercising all the benefits we currently have? Are we getting the most mileage out of them so the associates really know [about them], but do they understand how they work and how they can benefit them?”
The Oct. 5 edition of Profit Talks will look at channeling business.