Today, F&B in hotels across India has become a key revenue driver contributing anywhere between 35-50 per cent to overall revenues. However, to sustain these numbers further, hotels need to stay in tune and constantly evolve with what the customer wants By Rituparna Chatterjee
“One cannot think well, love well, sleep well, if one has not dined well,” – this 20th century saying of famed English writer Virginia Woolf seems to be reflective of today’s times where an increasing number of hoteliers have begun to view their full-service restaurants as a way to attract customers and drive incremental revenues for their business. This is a significant shift in thinking, considering that in the past hoteliers have paid little attention to their restaurant numbers by incorporating them as one line in the profit and loss report. Trends such as the rise of a more food-conscious culture with customers seeking out new and exciting culinary experiences have compelled hoteliers to think more strategically about their restaurant and dining options to attract and retain hotel guests. Themed meal experiences, innovative technology, a good banqueting concept, social media activities are some tactful strategies working well in driving today’s F&B revenues in hotels.
From the location, clientele, spending power of the guests to the brand of hotel, concept, size, investment from the owners – all help determine the number of F&B outlets in a hotel. On an average, hotels reserve anywhere between 20 to 30 per cent of their total cost for F&B, while the average development cost per outlet is around three-five per cent. A well marketed outlet is expected to recover this cost in about three-four years, however certain hotels can also take up to five-seven years which is dependent on the business levels the hotel is sustaining for those years.
Eating to success
According to STR Global, for 2013 in India, the total revenue from F&B and leisure for hotels as a percentage of total revenue was 45.6 per cent – against revenue from rooms, which was 48.4 per cent. Delving deeper into market-level dynamics, F&B spends accounted for 40 per cent of total revenue in Mumbai in 2013 compared to room revenue at 48.1 per cent. In Delhi, F&B revenues accounted for 42.8 per cent of total revenues compared to room revenues at 48.2 per cent. These figures mirror the profit and loss statements of several hotel companies operating across the country. For instance, F&B contributes around 40 per cent to the total hotel revenue in Sheraton Bangalore Hotel at Brigade Gateway. “The total contribution to the overall revenue has definitely increased over the years because of introduction of concept restaurants and innovative catering options. We are focusing on food related activities and promotions and on getting guest chefs to organise international food festivals coupled with many engagement related activities. The idea is to break the monotony of the regular experience,” opines Mohammed Khan, director of F&B, Sheraton Bangalore Hotel at Brigade Gateway adding that training of the team to deliver guest focused service is also one of the key factors to stay ahead of the competition.
The picture is quite similar for Ramada Powai Hotel & Convention Centre, Mumbai. The hotel’s F&B revenue has increased tremendously since the opening of its signature rooftop restaurant – SKKY. “We have done a lot of promotions and created unique events from time to time giving our clients a better value for money proposition. Our F&B contribution to total revenue has increased steadily from 32 per cent in 2012-13 to 44 per cent in 2014-15. We have introduced tablets for menus across all our hotels where we can keep changing our menus couple of times a year and run promotions as well. We are also curating special themed events or meal experiences to match with our changing customer expectations,” mentions Nischint Pathania, general manager, Ramada Powai Hotel & Convention Centre.
Just six months into operation, JW Marriott Mussoorie Walnut Grove Resort & Spa is primarily dependent on guests staying in the hotel to drive its F&B revenues, the same presently contributing over 35 per cent to total hotel revenue. “What seems to be driving this growth is a steady awareness about our resort in the market. We are the first five star luxury resort in Uttarakhand and offer five distinct F&B options that serve both Indian and international cuisines,” highlights Prateek Swarup, F&B manager, JW Marriott Mussoorie Walnut Grove Resort & Spa. Consumers are coming up with new rules for what they will and won’t put into their mouths. As a result their relationship with food is changing. “At JW Marriott, there is a strong focus on providing food that is not overwhelming but rather fresh and authentic. This is a reason why we focus on procuring a lot of our ingredients locally. An example of this is the trout fish we serve at the Trout House Grill & Bar that is procured from a local village near the hotel. We also have our own greenhouse on site where we grow fresh herbs and vegetables that are used in the food that we prepare for our guests. This adds a whole new dimension of serving food from ‘farm to plate’ at our resort,” adds Swarup.
Reflecting a similar growth pattern is Hyatt Pune, where F&B contributes somewhere between 40 – 45 per cent to the total hotel revenue, thereby showing a growth close to 15 per cent year-on-year.
“The revenue growth in Pune is a lot driven by the corporates. We see a healthy corporate movement in the city post lot of investment plans by various companies which is certainly a driving factor,” reasons Vimal Verma, F&B manager, Hyatt Pune.
For Crowne Plaza Greater Noida, the revenue contribution of F&B is between 35 – 40 per cent. Last year the F&B contribution was 36.57 per cent. The major contribution is from MICE and social events being organised at the hotel. “The outlets have also picked up this year in terms of covers as well as revenue due to more numbers of FIT corporate business along with the MICE contribution. All the hotel’s F&B outlets have live kitchens which encourages interaction with chefs. Feedback is also taken by the team to keep themselves in check. Apart from this, we also organise food festivals and promotions to further explore our guests’ preferences and their palates,” reveals Puneet Sharma, F&B manager, Crowne Plaza Greater Noida.
For Alila Diwa Goa, the percentage of revenue earned from F&B is approximately 30 per cent. “We have different F&B promotions which ensure an increase in the footfalls at the property. Dining in the Dark, Goan Market Nights, Lazy Sunday Lunches and Barbeque Nights are some of the food promotions, which are popular. We constantly update ourselves on the latest trends and happenings thus helping us conceptualise various promotions to suit the likings of our guests,” states Kamaljit Singh, executive assistant manager – F&B, Alila Diwa Goa.
Local flavour
In today’s competitive and constantly evolving business environment, it is crucial for hotels to stay innovative to keep its in-house guests engaged and also to capture the local market. The average guest today is well travelled, well informed and very discerning and hence when it comes to catering to the locals, hotels have to provide good local food coupled with good service and a strong concept restaurant. “There is nothing that works like word of mouth. The focus is for every guest to have the most superlative F&B experience so they may tell the world and hence we put in our best to ensure the food and service we deliver is perfectly curated and executed. We also rely on social media platforms and collaboration on special offers with local partners to attract customers from Mussoorie and Dehradun,” points out Swarup. Also innovative presentations and cuisines like live stations, unique regional cuisines, are great value for money propositions. “We at Ramada Powai Hotel & Convention Centre are doing interesting promotions from time to time to keep a freshness factor for our regulars. For instance, we recently added a sushi station in our Sunday Brunch which attracts a lot of people near our vicinity, and a live healthy juice station offering ABC combo (Apple, Beetroot and Carrot) in our morning breakfast which appeals to a lot of health conscious overnight guests,” reveals Pathania.
Based on its motto ‘Surprisingly Different’, Alila Diwa Goa introduces a concept every week at its specialty Indian restaurant, Spice Studio. For instance, under the concept – Dine in the Dark, all lights in this restaurant are turned off at dinner and any ambient light source is masked. Guests are invited to have dinner in darkness. The choice is between a vegetarian and non-vegetarian thali and the dishes on the plate are not disclosed. Guests are asked to use their sense of touch and taste to explore the various specialties through the meal. “Other than this the modern representation of Goan cuisine, lazy Sunday lunches, etc are very popular with our non-resident local customers,” boasts Singh.
Banquet rush
Indians today, whether in Tier I, II or III cities, are splurging on weddings, birthdays, anniversaries, conferences, and other celebrations with events in hotels. As a result of this, MICE and social activities have become a strong segment in enhancing F&B revenues. Enhanced food displays, contemporary food on buffets, individual servings, and specialty bar counters are steps that can help to drive this growth further. Hence it is crucial to have large banqueting or a fairly decent banqueting to drive revenues for a hotel. “I have seen many hotels redoing their floor layouts just to ensure that they have sufficient banquet space to hold events at the premises. Banqueting sometimes contributes up to 70 per cent of total F&B revenue in a hotel,” opines Khan.
Investing in quality CGS, enhancing the appearance, and innovative ideas such as theme tea breaks, theme parties and different bar setups can help hotels to gain competitive edge in their banqueting facilities. “We are continuously changing our hardware with latest technology in conferencing and providing great quality of F&B. We have made a name for providing quality banquet food which is trans fat free. Running a sustainable model is key for any operation with on ground managers being made aware of profitability and balancing. Trainings and audits have also helped us to be more focused on continuous improvements in our processes,” adds Pathania.
Mostly hotels sell their banquets for all the events, however going a step ahead and creating a new banqueting space in the same premises and using those spaces for events is yet a niche option in the market. “More of live cooking and showcasing your own F&B outlets’ menu in banqueting venues and marketing your own outlets can also help in growing your business further,” suggests Sharma.
Future forward
In future, F&B will continue to be a major revenue driver in most hotels. Creative concept restaurants, ‘feel at home’ attitude in the experience, thinking global, but acting local, authenticity, guest centric service, value for money through value for many, recognition are what is going to drive F&B revenues in the times ahead. “India is poised for a huge growth in F&B of around 20 – 25 per cent with the influx of Gen X into the workforce and increased spending power contributing to a changing culture of eating out. F&B will continuously drive to contribute or may overtake room revenues in certain markets in the future as more hotels keep opening,” predicts Pathania. Reiterating the same, Swarup states, “The unique feature of the hotel industry in India is the sheer volume of the domestic market. The future is big and all we have to do is remain relevant and evolve with what the customer wants. We also expect that over time, the concept of branded in-house restaurants will further emerge in India wherein hotels will treat them as separately managed on its own or through an experienced outside restaurateur.”