An unprecedented number of new hotel rooms are coming to market in Australia, and many existing properties are positioning for relevance in a booming market. For the operators behind these properties, the most basic question is: What determines who thrives and who doesn’t?
Whilst the answer is complex and nuanced (if not highly-subjective), the rising importance of food and beverage cannot be ignored.
Consider the recent sale of King Street Wharf, a popular dining strip on Sydney’s waterfront. The 99-year lease sold in early 2019 for a staggering AUD$125.5m, due in large part to the fact that F&B is enjoying a high rate of growth in annual spending compared to other retail categories.
Meanwhile, the Roselands Mall in Sydney’s Southwest suburbs is currently undergoing an AUD$90m renovation intended to make it a culinary destination with a focus on authentic and local foods. This is part of a global trend (driven, of course, by millennial wallets) in which more retail space is dedicated to F&B, entertainment, and coworking.
Likewise, the global hospitality industry is responding to the promise of increased F&B relevance. A notable example in Australia is the $6m renovation to Pullman Melbourne on the Park, which included the re-imagined Cliveden Bar & Dining. Smaller-scale efforts have also garnered attention, such as Eve’s Bar at the Mercure Sydney, which made use of a modest budget to strengthen the bar’s appeal to guests and locals.
For existing hotels, simple ways to strengthen F&B are more interesting and relevant.
1. Re-examine the need for room service
For today’s guest, F&B represents a valuable opportunity to experience quality and local flavour and sadly, many hotel restaurants just don’t fit into that category. Room service revenue has for years been decreasing, mostly due to unimaginative and poorly designed menus or inedible burgers. Even when hotel room service was indispensable, the financial margins were often neutral at best.
Deliveroo, the British food delivery company, has launched a business division with a focus on corporate environments and hospitality. Australian hotels can now create branded menus for guestrooms, or have guests order directly from an app, with the cost added to the hotel bill. This is distinct from independent food delivery services (e.g. Uber, Menulog) in that hotels facilitate payments and deliveries. It eliminates the need for a kitchen while expanding horizons for hungry guests.
2. Give personality to service areas
The hotel industry has a reputation for restaurants that are plain, drab, and just not very exciting. Much has been written about this, and much is being done to change it. Exciting international designers such as Kelly Wearstler and Yabu Pushelberg have certainly raised the bar overseas and, closer to home, the rise of young, savvy designers has added a much-needed boost to the typical hotel F&B offering, with Australian designers such as LuchettiKrelle and DBQ reimagining the typical hotel offering in bold and creative ways. I am not sure we are ready yet for the HR Giger Museum Bar however this is certainly an existing way to liven up the F&B offering.
Rooftops are another asset, with previously unused space providing not only a unique aspect of the city or location but an additional revenue boost as well. A 2017 study in the U.S. city of Chicago found that hotels with a rooftop bar or restaurant experienced a per-seat revenue increase of $13 compared to those without.
3. Strengthen your offering for group events
Studies are showing that most of the revenue growth in global hotel F&B is not strictly in the serving of food and beverage, but rather in the facilitation of events (i.e. experiences). By strengthening event spaces and meeting areas, hotels position themselves as viable and desirable venues that are connected to the community. As one of my former Executive Chefs used to tell me, hotels make money in B&B – Breakfast and Banquets. As opposed to the vagaries of a la carte dining for lunch and dinner, we can generally control our costs and increase our profits with well-planned breakfasts and events.
4. Cultivate relationships with local and ethical suppliers
This may as well be an oldie, but it’s a goodie – and many hotels still haven’t done what they can to gain points through this channel. Australia in particular has a huge array of local and artisan food and beverage suppliers. Just look at the number of new distillers for whiskey or gin. Creative imports are also worthy of consideration, since experiences are what people want. This goes for the kitchen and the bar, with perhaps the most important and simple upgrade being the provision of artisan coffee and tea, in addition to great-tasting water. Too many guests check into hotels and find themselves settling for (or passing up) a mass-produced caffeine fix or scrambling for water that meets average health and wellness standards.
Finally, we need cultivate our staff. Whilst this could be Point 5, I believe it should be embedded in all of the above,
No matter how good the food and beverage may be, if we don’t have the right staff to deliver, it won’t work. We need to take our team on the journey, educate them, involve them in the decision making as to products and design, and allow them to add that final touch to any great product.
Gaining perspective on food and beverage
The optimisation of an individual hotel’s F&B offering of course involves local market factors, brand considerations, and performance metrics for the property. Strengthening our sense of the prevalent trends though will help hoteliers to understand the growing importance of F&B, and to make better decisions as we seek to set ourselves apart from the competitors. As the modern traveller seeks more and more experiences, there are exciting opportunities for us if we look.
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