DINING IN HOTELS TURNING WEAKNESS INTO SUCCESS
A successful hotel F&B outlet is often difficult to find. Hotels are more likely located in prime real estate, and the F&B underperforms. The independent restaurant scene has become more vibrant at the expense of hotel restaurants. The fact that the phenomenon is global was highlighted by industry leaders at the Global Restaurant Investment Forum 2015. However, flaws are able to be corrected and weakness can be turned into success
Executive Vice President, Head of Hotels & Hospitality Group, Europe, Middle East & Africa
Hotels, JLL
Hotels in the MENA: A complex environment
“In most Middle Eastern destinations, hotels have played, within the social and business communities, a role that extends beyond the function of a normal hotel,” said Chiheb Ben Mahmoud, executive vice president, head of hotels & hospitality group, Europe, Middle East & Africa Hotels at JLL, a financial and professional services firm specializing in commercial real estate services and investment management. In some instances, the role is in relation to the alcohol licensing regulations; in other instances it is due to the exclusive nature and quality of hotel facilities, and in most instances, probably due to both. Hotel dining within this environment is very distinct and different from Western countries. “Hotel restaurants in Europe or in the US either have a celebrity chef or a signature restaurant; or else they would rather keep the facilities to a minimum, as people can find many opportunities on a standalone property,” said Raja Nasri, managing partner for N4TC, a hospitality consultancy firm.
Pinpointing weaknesses
“In general, hotel operators have struggled to match changes in consumers’ expectations and trends in terms of dining experience,” said Ben Mahmoud. Many weakness points have accentuated this fact. These include concepts which do not match market needs, all day dining, coffee shops becoming a breakfast room; not a distinct destination or themed restaurant to visit. Nasri added that difficult accessibility and perching the restaurant on an upper floor, does not make it any easier for a hotel restaurant to sustain itself. “Hotels may consider some restaurants as a cost center, therefore split the loss on the overall operation,” Nasri said. Hotels fail to treat their F&B outlets as separate business units. Therefore, they do not hire specific skill sets to operate them, and do not allocate enough independence to their restaurant teams, also stressed Filippo Sona, director and head of hotels (MENA region) at Colliers International, a Us-based global leader in commercial real estate services, consulting, valuation and appraisal services. Being somewhat a prime gathering destination in the MENA, hotels try to satisfy the needs of everyone, but risk achieving it successfully. “I believe many hotel restaurants fail as a result of being too generic. They are focused on trying to be everything to everyone. They do not have a defined concept, or a distinctive theme, and generally lack an overall ethos,” said MPS Puri, CEO of Nira Hotels & Resorts, a luxury hotel chain with properties in Scotland, Italy, Mauritius, and Switzerland. The chain operates over a dozen restaurants across its portfolio. Puri explained that restaurants in hotels want to be able to give their customers the club sandwich, the minestrone soup and the caesar salad as well as a hamburger and everything else. “These types of restaurants are too broad and are perceived as being a place of convenience based in a hotel – very much like a convenience store where one would buy something to eat.”
Dining in hotels is a challenging business, with a profitability that is much lower than that of lodging. “In many instances, hoteliers settle with the objective of not losing money,” Ben Mahmoud said. From a sample of 50 MENA hotels, F&B profit is 36 percent compared to 81 percent for rooms, explained Sona. His company oversees 34 hotel restaurants in the hotels that his asset management division currently looks after; excluding