February 1987: Hotel F&B No Longer Exclusively a Hotel Brand

 

                                                                                                       totallyPic.com

News item: Pressure to improve profits will force many hotel chains to relinquish control of their food and beverage spaces to outside interests willing to take the risk.

When the history of hedonism is written, it will make note of the Eighties as the decade in which we were shamelessly obsessed with food.

So obsessed are we with food, so conscious are we of its wealth of choices, we tire quickly of the same old stuff served up the same old way. Food trends used to have staying power; now, they are fickle, as short-lived as women’s fashions.

The fact of the matter is that consumers—even those who eat out only at fast food restaurants— demand variety and change, which makes it awfully tough for any restaurant or chain, regardless of market segment, to keep up with their appetites and cravings. Restaurant chains spend so much money and time analyzing the potential of a new product while touting it as the next best thing since sliced bread that by the time they’re ready to roll it out, demand for it has waned.

Little wonder, then, why many budget and mid-priced hotel chains are getting out of the business of foodservice: they know how to sell rooms; they don’t know how to deal with the fluctuations of restaurant concepts and restaurant management, each and every fluctuation —nuanced or palpable—a consequence of consumer fickleness. In getting out of the restaurant business, hotels leave a vacuum that chains eagerly rush to fill. Red Lobster, Burger King, Bobby McGee’s, KFC, and Wendy’s are but a few already linked to hotels.

A great many quality independent hotels and a vast number of mid-priced and luxury hotel chains (such as Marriott, Omni, Hyatt, Westin, Stouffer’s, Four Seasons, etc.) will continue to offer guests their own brand of food and beverage because they have to: their rack rates demand comparable food and beverage services. But, other hotel chains—the budgets and many of the remaining mid-priced properties—that have no business being in foodservice and ought to get out for a number of reasons, open wide the door of opportunity for restaurant chains, independents, and contract feeders to move in under leasing arrangements.

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Because of the tremendously high cost of developing properties, hotel companies are beginning to realize that designating prime space for a restaurant—unless plans are to lease it—is a waste of money and space from day one, representing a crummy return on investment.

Luxury hotels that run top-notch food and beverage productions do so because their guests expect and demand it. Their restaurants match the opulence of the rooms which, according to hotel expert, Steve Brener, will be selling for between $500 and $900 a night for a single by 1990. The cost of maintaining fancy restaurants is buried in the rack rate even if no one dines there. Luxury hotels hire and pay top salaries and bonuses to some of this country’s best chefs to run their restaurants and manage their food services.

Reflect for a moment: if hotels insist on creating and running their own restaurants, is there that much talent out there capable of staffing every hotel food and beverage department? Or, are the pickings so slim that hotels will forever be doing one of three things; raiding the competition or your restaurant for quality help; protecting what they already have by paying f&b staff outrageous salaries and perks; or thinking about leasing the space to a company or an individual willing to take a shot.

Hotels that choose the latter conclude they are better off outsourcing a function they lack the expertise to staff, market, sell, or control; and concentrating on what they do best: taking reservations, running the front desk and making beds. Why burn brainpower on a profit draining enterprise when you can expend it doing what you’re supposed to be doing: selling rooms.

Keep this in mind, too: it won’t matter if the in-house brand screams five stars, if it doesn’t make any money, investors may take a dim view of it; and, are likely to dump it and invite a high-profile celebrity-styled restaurant to take its place, a brand guests recognize and trust.

Keep an eye on trends in hotels—especially those of you running or owning independent restaurants. Because of the vagaries of the business and the crapshoot to stay one step ahead of the consumer, many hotels will bail out of f&b. As sales slump due in part to new tax laws which place an 80-percent ceiling on expense account dining, many will scratch f&b, either converting the space to something else or leasing it to outside restaurant interests.