Comment: That F&B Focus

Historically, the focus for hotel revenue has always largely been room sales. Other elements such as MICE, spas, laundry and F&B contribute to the bottom line, but certainly feature nowhere as high as rooms on the scale of importance — at least, in a hotelier’s mind.

In the Hotelier Middle East GM Survey this year, we asked the respondents to tell us what percentage of their hotels’ gross operating profit (GOP) comes from each of the following: rooms; F&B — banqueting and events; F&B outlets; spa and recreation; and ‘other’.

More than half said that more than 70% of their GOP comes from rooms. Typically between 10% and 30% of GOP comes from F&B outlets.

That ratio is perhaps reflected in the fact that only 18% of our surveyed GMs said F&B outlets are among the top three most important factors in the success of their operation.

But why not more? Surely, there is a lucrative market here to be exploited?

Just looking at the UAE, figures released by TRI Consulting earlier this year from the period August 2014 to July 2015 show that the gap in revenues between hotel rooms and hotel F&B operations isn’t as wide as you may think.

The statistics revealed that in Dubai, rooms generate on average 59.4% of total hotel revenues while F&B contributes 31.3%. In Abu Dhabi, we see a more even split: rooms generate on average 49.4% of total revenues, followed by F&B with 44.4%.

At Arabian Travel Market this year, a few Doha-based GMs told me that sometimes their rooms/F&B revenue split is 50/50, and on occasion has reversed to 40/60.

So it seems like hotels face a profit conversion challenge for their F&B outlets, rather than a sales and marketing problem per se.

That’s something that greater F&B experience and professionalisation can solve. And it’s happening, as some of the new hires in this market testify. We’ve recently heard of a few groups that have recruited dedicated F&B personnel to take charge of their properties’ outlets, and move them with the times.

We won’t reveal our sources, but certainly FRHI and Starwood are the two our intel has suggested have high-calibre appointments made or in the offing. That is great news for the local hotel sector, and we’re looking forward to finding out what these groups will be doing with their F&B.

Now, some of you may know that F&B is an element of the hospitality industry which is close to my heart. I’ve certainly kept up-to-date, during my tenure on Caterer Middle East for the better part of the last three years, on what is happening in the regional market.

What’s really impressed me in terms of hotel F&B is the willingness to take it one step further than the stereotypical all-day dining and lobby lounges.

While attending To The Table EMEA (a buyers-suppliers meetings event) this year, I heard several hoteliers outline how their restaurants are being redesigned to compete with casual dining concepts.

It’s a whole new world for hotels out there in F&B — it’s just a matter of grabbing and maximising those opportunities before the competition does.

Devina Divecha, Senior Editor - Hospitality Group
devina.divecha@itp.com
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