F&B Ac­counts for Big­ger Slice of Ho­tel Rev­enue Pie

The Economic Times - - Brands: Creating Desire - Anu­meha.chaturvedi@ times­group.com

New Delhi: Hos­pi­tal­ity chains are in­creas­ingly fo­cus­ing on food and bev­er­ages op­er­a­tions to boost rev­enue and drive prof­its. Most hos­pi­tal­ity chains say F&B op­er­a­tions now have a larger share in the over­all rev­enue. While F&B op­er­a­tions have al­ways been a crit­i­cal func­tion at be­he­moths like ITC and Taj, chains like Lemon Tree said F&B’s con­tri­bu­tion to to­tal rev­enue has in­creased by over 16% in the cur­rent fi­nan­cial year to about 23%.

ITC Ho­tels said its 7.3% in­crease in in De­cem­ber-quar­ter rev­enues was in part due to growth in the food and bev­er­ages busi­ness. Last year, Leela be­came the only lux­ury hos­pi­tal­ity group to ex­pand F&B op­er­a­tions be­yond its prop­er­ties and out­side In­dia by launch­ing its In­dian restau­rant Ja­mavar in May­fair Lon­don.

“Over­all, F&B con­tin­ues to have growth po­ten­tial. For ex­am­ple, at The Leela Palace, New Delhi, its two out­stand­ing in­ter­na­tional din­ing brands, Megu and Le Cirque, along with an In­dian restau­rant, Ja­mavar, and an all-day din­ing restau­rant, Qube, con­trib­ute ex­cep­tion­ally well to the rev­enue via F&B, es­pe­cially since they at­tract high foot­falls from lo­cal din­ers and gour­mands,” said a com­pany spokesper­son.

Raj Rana, chief ex­ec­u­tive for South Asia at Carl­son Rezi­dor said F&B op­er­a­tions con­trib­uted about 50% to the over­all rev­enue of its 4 and 5-star brands last year, and sees its share grow­ing this year. Carl­son Rezi­dor has also made changes to its ex­ist­ing F&B for­mats. It is trim­ming down its F&B of­fer­ings to pro­vide an all-day din­ing bar and one other spe­cialty restau­rant in its up­scale prop­er­ties from mul­ti­ple out­lets ear­lier. In the mid-scale seg­ment, it is lean­ing to­ward room ser­vice and a lounge­cum-restau­rant. For its un­der-con­struc­tion ho­tels, the com­pany is fol­low­ing a sin­gle-plate F&B of­fer­ing.

“In­stead of hav­ing a main kitchen and then mul­ti­ple satel­lite kitchens, which mean higher costs and more work­force, the lay­out of the new ho­tels is such that we don’t need satel­lite kitchens, which cre­ates more ef­fi­ciency,” said Rana.

Ab­hi­jit Umathe, as­so­ciate di­rec­tor of hos­pi­tal­ity and leisure for Knight Frank said grow­ing F&B rev­enues could be at­trib­uted to market-driven room rates. “Over the past five years, room sup­ply has been get­ting added in ma­jor cities. De­mand is grow­ing, but not as much. Room rev­enues haven’t grown. So, the only room for ex­pan­sion was in F&B,” said Umathe. “Room rev­enue is driven by cor­po­rate clients and the market. Dis­cre­tion for the spender lies in F&B. So ev­ery year, in line with food in­fla­tion, ho­tels have been in­creas­ing F&B prices. To a cer­tain ex­tent, F&B is a re­ces­sion proof busi­ness.”

For Mar­riott, while the out­look for F&B op­er­a­tions is pretty much the same as last year (F&B con­trib­uted 40-45% to over­all rev­enue), the com­pany is mak­ing some changes in its ex­ist­ing and up­com­ing prop­er­ties. “Our new ho­tels in Aero City, New Delhi and Sa­har, Mum­bai have large cof­fee shops, all-day din­ing and a huge ca­ter­ing space. Cof­fee and ca­ter­ing spaces drive huge prof­its. Go­ing for­ward, we will ra­tio­nalise the num­ber of out­lets. We will fo­cus on one or two for­mats and get them right,” said He­mant Ten­neti, se­nior area di­rec­tor of op­er­a­tions, South Asia.


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