Afterthoughts: Item! Celebrity Chefs Rescue Hotels from Loss Leader Restaurants

The hotel restaurant as loss leader, existing only as an amenity to serve guests who may never use it (or use it once, perhaps, for coffee and a croissant), no longer makes sound business sense. Increasingly today, owners, hotel investors and developers scrutinize top and bottom lines at every department of a hotel to include, not surprisingly, that of food and beverage. If they discover that a hotel-driven restaurant is losing money, they will find out why and if the answer is because no one uses it, they will do one of three things: fix it, close it or invite a chef-branded concept to replace it.

In the 24 years since this column ran, celebrity chefs and their branded restaurants and some mid- to upscale restaurant chains have taken over spaces in hotels that once were the exclusive domain of in-house restaurants created and managed by the host. The coffee shop, by the way (if there is one), is never shuttered, rarely changes ownership; it is untouchable. Guests will patronize it at least once, usually for breakfast. The restaurant is quite another matter.

In 2008, Lodging Hospitality (Restaurant Hospitality’s sister publication) asked me to interview Joe Guay, a lawyer in the Hotel and Resort Development Team of New York City-based Holland & Knight law firm where Guay is a partner. Guay is an expert in cutting deals with celebrity-styled chef restaurants for his hotel clients. Here’s some of the interview (used with permission):

Lodging Hospitality: Let’s talk about your role in attracting celebrity chefs to a hotel.

Joe Guay: What we’re seeing in the hospitality industry is that when guests go to hotels, they want that option, not just the tired, standard restaurant fare. We’re watching celebrity chefs stake a foothold in hotels throughout the country, not just Las Vegas. My job is to enable that.

Celebrity chefs rule hotel foodservice in Vegas.

LH:  A lot of hotels are throwing in the towel saying that no matter how unique their restaurant concept, how creative the marketing and promotion, a hotel restaurant just doesn’t work. True?

Guay:  No matter how talented the internal (for lack of a better word) chef you have, guests just aren’t going to eat in hotel restaurants. Option? You bring in a celebrity chef to either run his or her restaurant brand or at least to license the name and show up every once in a while.

LH:  Hotel companies outsource much of what they’re not capable of doing internally, including F&B. Do hotels know how to manage F&B; are they giving up?

Guay:  Hotels do know how to run and manage F&B; it’s just that the consumer doesn’t buy that. The demand for the branded concept in a hotel is consumer driven. It’s the age-old stigma of eating in a hotel. Guests don’t want to do that.

LH:  The whole branded restaurant concept implies that the hotel’s concept isn’t working and won’t work (no matter how great it is), that the guest is too naïve to accept the quality that the hotel restaurant provides (based on the integrity of its brand), so let’s bring in a celebrity-style chef and his brand. That’s exactly what The Four Seasons, Maui, did when investors, noting that Seasons, the hotel restaurant and one of the top-rated in the island, was losing money, so they opted to close it and invite Wolfgang Puck to replace it with yet another Spago which, if you’re to believe the reports, is making a ton of money. It worries me that guests who have the resources to spend thousands of dollars on their visits to luxury hotels will assume that the ubiquitous Spago brand or any other chef-driven brand similar to a Spago will give them the kind of dining experience equal to the quality of their room and the integrity of the hotel’s brand. 

Guay:  You have to wonder if it’s going to come full circle: that there’s going to be such saturation of celebrity chefs that it will get dumbed down and will revert to something like this: “You know, I’m going to dine at this hotel because it doesn’t have one of those celebrity branded restaurants: it’s got its own unique dining experience that I can only get at this hotel.” I wouldn’t be surprised if that becomes a trend.

Las Vegas: Thorsten Schmitt