Hotels no longer ‘complacent” about F&B

(Tempo public space )

Hotels, once at the forefront of innovation, have seen themselves outpaced in recent years, left behind by the growth of restaurant brands and by a food culture which has left the consumer wanting more.

Guests are walking offsite to eat and drink, taking their wallets with them, leaving hotels to choose between revitalising their offering to try and hold onto revenue or give up on F&B altogether.

Emma Banks, VP F&B strategy & development, EMEA, Hilton, told us: “In the past, and before the high street and growth of the independent sector, the proliferation of being online as well as accessibility to quick delivery, customers used hotel F&B by default as they were locked into the property.

“Hotels were almost complacent in the area of F&B,  sometimes with service and quality not at the highest standard, or with food coming from one central production kitchen going into individual outlets. These are also often highly priced and taking advantage of competitive position.  Hotel properties historically have been over spaced; too many restaurants and oversized all day dining which is only utilised at breakfast.

“Hotel F&B has had to get a lot more competitive: before even visiting a property, guests can research the outlets, access online portals that include menus, and scour social media platforms for information and reviews – not just of the hotel but of the surrounding areas. Hotel companies are also ensuring that the F&B offering for the customer is also in line with the hotel brands and their categories. sine of the region that they are operating in, promoting local product.  

“F&B in hotels now is obviously having to reflect consumer trends, such as the rise in vegetarian, flexitarian, veganism, low sugar, and more. Customers are also more concerned about waste, so hotel properties are now looking at better ways of portioning and serving the traditional large buffet. F&B within meeting spaces has also changed. Hilton’s Meet with Purpose programme, for example, offers meetings professionals an easy way to reduce impact on the environment through mindful eating, re-examining event dining and minimising food waste, along with balanced choices, portion control, locally sourced cuisine and more.

“As we get more and more competitive, hotel space becomes more and more competitive, F&B is no longer seen as a necessary evil but a real profitability driver and an opportunity to drive footfall. We recognise that great F&B can be a window into a property and create an excellent halo effect not just on the property but the brand.  Guests wants to stay in the property because of a strong and compelling F&B proposition, so while the F&B is highly commercially profitable in its own right, it can also have a positive impact on room rate.”

Hotels have been coming to the realisation - with the help of Airbnb - that they need to be part of the wider community and, indeed, that the community might provide a handy source of revenue on top of those heads in beds. Hotel design has increasingly focused on this, with public areas having entrances on the road, bringing people into the bars and restaurants and creating a more dynamic atmosphere in the process.

Creating these concepts in a world where celebrity chefs have everyone reaching for the paring knife has left many hotels speculating on whether they should be buying brands in or doing it for themselves.

Banks said: “Creation of a perfect F&B concept involves a complex web of key elements.  Naturally, one of them is location –not only for guests within the hotel property but for visitors.  When creating an F&B concept, we are looking for easy access, and certainly if to the goal is to lease out or attract the high external guest capture rate, we need a good location, accessibility and visibility.  

“The right space for the concept shouldn’t be too big, so that there is not spending unnecessary capex.  Also important is the right element in terms of flow, receiving areas, back of house, and the right infrastructure so that we can provide the right services. Market and gap analyses are necessary to ensure we are meeting the needs of our hotel’s guests or the customers in the area. What we are looking for is a gap in the market and differentiation.  

“Also, when deciding on a concept, factors include a strong concept proposition, working with the right F&B designers, kitchen service consultants, branding, great talent, guest journey and more! Ultimately there is not one key deciding factor, but absolutely crucial is the right concept.  There is no point creating another specialised concept if the market is already oversaturated in that area or creating a concept that is not-future proof and won’t be on trend in a foreseeable future.”

Some brands have chosen to move away from a full F&B offering to drive rooms revenue, while still catering to what the consume wants - in that location. At citizenM, the company has made the decision that, because its sites are in big cities with lots of F&B alternatives, they offer good public areas with drinks, coffees and a grab - and - go breakfast instead.  The group’s real estate utilisation means that it had twice the number of rooms in a hotel of traditionally the same size, the guest still has a good experience and the company has lower operating costs because most of what has been done has either been outsourced or centralised or not fully implemented, such as F&B.

To go one step further, staffless, no F&B, all-suite hotels like Sonder, can compete in high-cost environments because they don’t have labour costs.

The performance of hotel F&B has been mixed across different locations in Europe, with Hotstats describing 2018 results as “disparate”. The company said that, across Europe, the year saw a 3.9%year-on-year increase in F&B profit. Since base year 2012, F&B profit was up 13.3% although other cost have risen, including payroll, climbing 16.3%. Over the period F&B expenses rose by 5.3%.

Barcelona saw F&B profit up 4.3% on the year and up 115.3% since 2012. In contrast Paris, where costs are higher, year-on-year profit growth turned negative in 2018 and was down 15.4% since 2012 F&B expenses since base year 2012 to 2018 had risen 20.5%.

Much as location is an influence, so is brand. For a group with a broad swathe of brands such as Hilton, the picture was very much horses for courses. She said: “In the space of our luxury and full service brands, having a very strong and compelling F&B proposition is a non-negotiable, However, we are also looking at a ‘less is more’ approach where we are reducing the amount of F&B on-property but having a much higher a la carte offering. Hotels also must invest in their F&B talent:  recruit the right talent, the right behaviours, the right quality of chefs, sommeliers, mixologists, baristas and more to drive a good F&B proposition. Guests know what they are looking for and they can compare very easily – not just hotel brand to hotel brand, and operator to operator, but also the hotel F&B operation to the high street and independents.”

The company also outsourced when appropriate. Banks said: “Hilton have a lot of fabulous properties and locations globally and are very attractive for third-party brands and operators on either a franchise, lease, Joint Venture, chef franchise or chef partnership basis.  In EMEA Hilton takes a very pragmatic approach to outsourcing, we work closely with owners and if the owners are very keen on a particular brand, or a particular chef partnership, we, through our business development and outsourcing function support and introduce owners, assets and properties to brands and chefs and support them through that process.  

“Hilton also analyses the amount of F&B in the property and devise a suggested programme for owners and asset managers based on what we believe would be the successful formula for us to operate and manage. Ultimately we take a very sensible approach to our outsourcing model based on the space, the needs of the hotel and ownership requirements.”

Marieke Dessauvagie, hotel consultant at Colliers International, has the winning argument for those hotels wavering over F&B: people’s lazy inclinations, because, after all, what could be better than staying in a hotel that has a good restaurant, “then you can take the elevator upstairs and roll into your bed”. Give the people what they want.