Roundtable: The Big F&B Debate

Hotelier met with a panel of regional and in-house F&B directors and experts to discuss the trials and tribulations of co-existing third-party and hotel F&B concepts within a property

Meet the experts

Marc Gicquel
Director of food & beverage, Hilton Worldwide Arabian Peninsula

Gicquel joined Hilton in 2013, having previously worked for Nestlé Professional. Prior to this he had a three-year stint at Jumeirah Group between 2006 and 2009, where he was brand franchise developer and then director of development. The French national has also worked for DisneyLand Resort Paris.

Julien Besancon
Cluster food & beverage manager, Hilton Dubai Jumeirah Resort & Hilton Dubai The Walk

Besancon is in charge of 15 restaurants and 230 team members across nine outlets at Hilton Jumeirah Resort. This includes the well-known Bice. Having been in his role for two years and seven months, Besancon has been with Hilton since 2009. Prior to his current position, he was cluster F&B manager for Hilton Ras Al Khaimah.

Sascha Triemer
Vice president culinary, Atlantis, The Palm

Triemer is in charge of one of the biggest kitchen brigades in the region with the highest number of food and beverage outlets. For five years, Triemer has been in charge of the growth of the Atlantis F&B outlets and has watched them increase in number from 17 to 23. Triemer has spent 23 years in the F&B industry, 12 years in the Middle East and is currently in charge of a team of 450 chefs.

Alban Daubenton
Director of food & beverage, Amwaj Rotana Jumeirah Beach — Dubai

Daubenton joined Rotana Hotels in January 2011 as F&B director at Al Bustan Rotana, Dubai. Having transferred to Amwaj Rotana, Jumeirah Beach – Dubai in 2013, he now oversees five outlets, including franchised Benihana and in-house concept Rosso, as well as the hotel’s all-day dining restaurant, lobby lounge and pool bar.

Felix Hartmann
Director of operations, Media One Hotel

Hartmann started out at Media One Hotel, Dubai as director of F&B, a role which became director of operations last year, overseeing front office, housekeeping, F&B, culinary, security and engineering. Prior to this, he worked through the ranks at a number of Jumeirah Group properties, where he completed his stint as food and beverage manager of Mina A’Salam.

Naim Maadad
CEO, Gates Hospitality

Maadad has over 25 years’ experience in the hospitality industry, working throughout Australia, South East Asia, Japan and the Middle East with international brands such as Six Senses, Anantara, Mandara, Minor International, Jumeirah, Sheraton, Conrad, Hilton and Rixos. He is now focused on bringing exciting F&B brands to the Middle East, as well as creating his own concepts as CEO of Gates Hospitality.

James WorthingtoN
Director of food & beverage, InterContinental Dubai Marina

Worthington oversees nine outlets in his role at InterContinental Dubai Marina, which is set to open in Q2 2015. Previously he managed the operations of Rivington Bar & Grill and he has also been heavily involved with outside catering for events such as Taste of Dubai, Dubai Food Festival, London Season Debutantes World Ball and Bonham’s Gallery.

Sadettin Kaya
Executive assistant manager food & beverage — Mina Seyahi Complex

Kaya is in charge of 12 restaurants, bars and banqueting operations across two hotels, as well as Barasti Beach Club, one of the most popular venues in the Middle East, receiving more than 25,000 visitors over a single weekend. Previously, Kaya was F&B director at Westin Phuket.

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According to STR Global, total food and beverage accounts for approximately 37% of hotel revenue across the Middle East, which is probably the highest worldwide, and this is growing by 5-10% each year. In fact, Doha generates more revenue from F&B than room’s revenue, demonstrating the importance placed on profitability of F&B in Middle East Hotels.

Many hoteliers believe third-party managed outlets are the future, while others insist that since catering is the spine of hospitality, in-house concepts are vital to four- and five-star properties. Others maintain that a balanced approach is best, with new hotels often opting for a combination of in-house and third-party concepts.

At Hotelier’s F&B roundtable, regional and in-house F&B directors and experts came together in Dubai at Media One Hotel’s new outlet, Garden on 8, to discuss the opportunities and challenges faced in properties where third-party managed and in-house concepts co-exist, with topics such as profitability, expertise, staffing and payroll the order of the day.

Why has the prevalence of third-party F&B brands increased so noticeably in the region’s hotels in the last 10 years?

Sadettin Kaya: Eight or nine years ago hotels were able to generate revenues based on in-house guests. That’s not the case anymore. Now you can just leave your hotel and go next door and try something else, you don’t have to stay in your hotel.

Naim Maadad: Monopoly is a big thing as well. Ten years ago you didn’t have enough people in Dubai that would want to dine out five nights a week. Whereas today, that’s the case and it’s also about complementing your offer.

Marc Gicquel: There was much less competition at the time, less hotels and less restaurants so you opened the door and you had thousands of people coming in. Also 10 years ago there was a very limited number of operators on the market that could drive and run those types of third-party concepts. The market has shifted, there are many more good operators on the market for us to tap in to as well as more brands available.

Sadettin: There’s one more factor unique to the Middle East market, and it is the alcohol licence. In most cases international brands wouldn’t operate within a hotel because they don’t have to. In Dubai some brands coming with really great offers to operators have to be in a hotel because otherwise they can’t get the alcohol licence and because of that the hotel brands are more and more likely to have a third-party operator within their hotel. They could run the same outlet within their local or internal concept but they would not have the same success,or image, or footfall as they have working with international brands.

Sascha Triemer: I wouldn’t even be surprised if soon you see Dubai concepts that come from here, like Qbara and other concepts, going into hotels in Europe as third parties.

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Are third-party branded outlets a necessary component in a hotel’s F&B offering in the Middle East?

Sadettin: I think the question is a bit more about the Dubai market and then you go to other parts of the world, like when I was in Asia where the third-party operators are not that much in demand but in Dubai because of the market, because of the type of clientele we are catering for, people are expecting more and more brands they have heard of.

I think the question here is whether hotels need to go into third-party partnerships, or if they need to look at how they operate, how they look at the market and change their ways, and find ways to compete, or to create alternatives to these third-parties as well.

Naim: I think the statement my colleague made about Dubai wanting brands is true, but it was true about two years ago. We have proven that it’s not the only way forward.

Marc: But in this part of the world we sometimes have more F&B revenue than we have in rooms and that totally changes the equation. That’s where F&B is a key element to drive the hotel as a whole, and I think it should be a good mix between a traditional hotel operation and a trendy, fancy and efficient restaurant, whether that be an internal brand or an external brand.

Sascha: With Atlantis as a resort you are trying to keep guests within [the complex] so you try to use the influence of your global brands, which you must do to a certain point.

What lessons can hoteliers learn from third-party operators when devising in-house F&B concepts?

Naim: We should never compare our hotel restaurants with third-party leased or franchised F&B outlets — they are totally different businesses and I think what we should be looking at is how you find a vacuum and how you find the right business model for that vacuum. A GM is always concerned with average rate, RevPAR and occupancy levels. In his KPIs he’s never asked ‘how’s the restaurant doing by the way?’ Half the time he actually wouldn’t know. So I think as industry leaders we need to push the industry more and more to say ‘ok give your restaurants to a restaurant specialists and let the GMs look after the hotel’.

Marc: We have to change the way we see operations from an F&B perspective and learn from a company like Naim’s or other brands like Zuma — they are more attractive, more aggressive with marketing, they don’t rely only on in-house guests and so there are a lot of projects we’re working on for in the region in terms of Hilton. We need to stop thinking we get in-house guests so we’re fine and we don’t have to do anything, but really look at the competition and be more proactive on our service standards, our products and our communication, in social media, ecommerce — all of those elements have to be taken into account.

Sascha: What makes a third party successful? Is it that you have the beautiful hostesses there, the ambience, the whole décor, it’s not boring, it’s not stiff, you come in, the music is there. People are relaxed, people get paid more than they would in hotels so you get more skilled people in operations, especially from the front-of-house. Obviously they have a certain budget when they’re hiring more skillful people.

Sadettin: In Dubai, trends are set by standalone restaurants, not by hotels. We as hoteliers are trying to learn from them and understand why their business models are so successful. We actually all know why. You look at the whole hotel operation as one business model, but it has to be separate. GMs are only measured by their ADR, and actually when it’s about ADR and your bottom line, your F&B operation is an issue because you are running a business with higher costs compared to rooms. You don’t always have to bring in international brands, but we need to learn from them and invest to create your own.

Alban Daubenton: On the other hand, I think like anyone, at first you are always attached to a brand. You buy a smartphone and you go for Apple because you like it. Whenever you travel around the world you need your Mac. You need to know what restaurant you will go to if you go to Shanghai — you will go to a brand that you know, you will not go to a place where you don’t know the quality.

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What benefits can third parties bring to a hotel’s concepts?

Felix Hartmann: It keeps the hotel F&B on our toes seeing what the third-party operators are doing and it creates a nice competitive spirit in the building. Everyone is driving the business much more aggressively because you have internal competition now, if rightly chosen, complementing the hotel offering.

Julien Besancon: Bice and Hilton opened 15 years ago and now both brands, Hilton Dubai Jumeirah and Bice are associated, so really it was part of the variety of the F&B outlets and it also benefits the hotel and the in-house guests. So that’s an example of a successful brand.

Naim: I remember the opening of the hotel and people used to say ‘is Hilton where Bice is?’ That’s how strong the brand was. The market was different. Brands were needed on the market, whereas now our challenge is that if a brand is needed it has to be delivering. We’ve done Roberto’s in DIFC — there is no brand, there’s an individual but I think that’s where the market is moving to.

James Worthington: Having Jason Atherton’s Marina Social brings in people from outside who might not necessarily have come because they’re not familiar with the other F&B outlets. So suddenly you’ve got this revenue stream that’s coming into Marina Social and they see these other outlets — you’ve got a wine bar. So that’s how it starts layering up, and layering up, and suddenly you get a revenue base from the whole area other than the hotel. So that’s really important to have that fit where price points, service delivery is different. If they’re all doing the same thing what’s the point? You’ve got to have that flexibility in the service and in the food offering.

Alban: I agree that it’s important to get a third party, whether in a franchise or a lease. It helps you bring footfall and to get known on the market. We have Benihana as a franchise and we have people coming here and then you tell them we have other outlets, like Rosso and then they come to taste.

Do third-party restaurants and in-house concepts have crossovers with recruitment and staffing?

Marc: It is our responsibility to make sure we do train our staff so that we retain them, but the advantage we have as a big company is we tend to build a future. For example, with Hilton we have our apprentice programme, which was launched more than two years ago where we have a lot of commis in the kitchen that are going up the ladder. We offer them a future if they want to stay. We have the Lobster Ink, the Shine programme to help the F&B manager become director of operations, so we have to leverage that. But ultimately it’s our responsibility to improve them and to give them the tools to grow and stay within our company.

James: I agree, but in my experience in third-party restaurants people stay a lot longer because they can see that growth within the business. Sometimes it’s forgotten in hotel restaurants — they’ll move to another company or move to another role within the company — but you lose that intellectual property they’ve gained over those years. So retaining staff through training is essential.

Julien: On our side we have the key people of the outlet and usually the CVs of the candidates are recommended by the brand. We have a succession plan where we are recruiting the best members of staff for our prime outlets such as Bice for example.

James: If you have a restaurant that stands apart from the others in the hotel then that’s a succession plan. You have someone who’s working through the ranks in the feature restaurant or wine bar and then if they say ‘I’ve got this experience’ you can put them in there and say ‘I’ve got someone who ticks those boxes’. Then you’ve got someone internal, you’ve got succession planning, your experience level goes up.

Naim: It does cause of a lot of internal chaos among employees, if you work in one outlet that’s successful, or you make more tips. It’s about how it’s handled — ‘How come I can’t work there?’ It’s a challenge.

Julien: But to avoid this, what we do is we offer the junior team members for a couple of outlets such as all-day dining, banqueting and room service, and then with the succession plan of 18 months, 24 months, they’re moving to this prime outlet, this signature outlet.

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In general, do entrepreneurs begin in hotels before creating their own concepts?

Marc: We are more traditional in some ways but we also create the talents that go out and try their own things, and I’ve got examples from Hilton, and I’m sure there are a lot of examples from other groups. You learn to deal with a lot of things, with marketing, ecommerce, with business development, with sales, with in-house guests and trying to attract other guests. When you’ve got all of this knowledge from working in a hotel, that’s when you go out and start creating your own concepts. 

James: I think it’s your base and it is a very solid base. You’re pulling information from lots of different areas. These guys are entrepreneurial, they want to develop and grow, but the problem is they don’t come back.

Marc: They do come back, but in a different set up. They come back with their third-party brands, and we either take that franchise or we take them as a rent, so it’s win-win.

Sascha: In one way you’re all entrepreneurs but if you work in a hotel operation you’re obviously a little bit restricted because you have certain limitations. Some people are a bit more creative than others; they take their own vision and make it into a reality. Not all third-parties are successful so there’s plenty of concepts out there that are nice for two, three, four months and then afterwards their odds are down. If you look at DIFC there are some very successful brands, but then there are others that are not as successful.

Naim: All of the entrepreneurs in Dubai did come from hotels believe it or not; most of us did and a lot of us had a lot of frustrations and thought we could do it differently or better so that’s why we’ve taken a left turn and said ‘look we don’t need approvals’. Any business opportunity is about now, it’s not about six months later, particularly in a market like Dubai.

What are the key challenges of bringing third-party operators into a hotel?

Felix: We have a big nightlife component to our F&B. In nightlife, as we know, people drink and things happen, there is attention from local authorities and everyone perceives that it’s Media One but it’s not necessarily. But if you have the right operator that has experience on the local market and can deal with such challenges...

Julien: I think it is the same challenges we have for every outlet. We are following their guidelines but it is the same challenges we have for food purchase, for recruitment. There is no huge different challenge.

Marc: If the selection process is done correctly there are less challenges to an extent, specifically for rent.

Sascha: It’s the staffing and budget for both sides. One operates differently in a different location, than they do within the hotel. It’s the staffing and also the pay — if you can get someone to manage that and everyone is happy with it — but it’s challenging.

Sadettin: You have to follow brand standards. For example, maybe I work for a hotel brand and someone comes and audits the hotel and they require that you wear a name badge, but then you work with a third-party operator and the image shouldn’t be that. How do you overcome this situation? You may try to push them to follow hotel rules and regulations. Another challenge when you franchise a brand is the hotel owner pays a fee to the hotel company. If you have a franchise agreement, there’s another fee to the franchisor and the only question he asks is why he has to pay a fee twice: ‘I pay you a fee for you to create your own brands and concepts and then you’re bringing to the table a third-party where I have to pay another fee’.

Felix: It’s the price war too. They pay for a liquour licence, I add something on top for the leased outlet because I handle the alcohol. For how much do they sell the alcohol eventually? Is it going to be more expensive? Can it be cheaper (because they have to pay more for the alcohol)? It’s an important element — they don’t put a concept in that is much cheaper than my outlets, so the price element kills one of the businesses.

Naim: The biggest challenge is the gap in overall operations, positioning and equally as important I think is the challenge of finding someone that knows the local market. Someone that’s coming out of the UK today with a very successful business in Europe doesn’t mean they are going to succeed here, and we’ve seen it in prime locations, prime brands, they still manage to do not so well. So it’s about yes, sign up, but make sure they’re not coming to learn on your back. It’s about making sure you sign the right deal.

Marc: As a hotel operator, we take on a brand because we like it. Not following the standards and not keeping the integrity leads to failure. We are responsible for keeping the concept’s integrity to make sure it’s appealing and attractive for guests, so that should not be part of a standard hotel audit. Otherwise you end up turning a brand into a hotel operation, and that’s wrong. It would be very difficult to explain to an owner that they’ve had to pay a fee just to turn something into a standard hotel operation. So it’s really important that we as hotel operators, keep the brand standards of any brand we bring in.