To F&B or not to F&B: a hoteliers dilemma

Eloise Hanson Eloise Hanson Uploaded




International Hospitality Media (IHM), publisher of Boutique Hotel News (BHN), in partnership with AHV Associates, hosted its latest hospitality business debate this week at L’oscar London.

Following a short presentation on the performance of the hospitality industry from Andrew Harrington, partner at AHV, Piers Brown, IHM’s CEO, kicked off the discussion centred around the motion: hoteliers are notoriously poor at running profitable F&B - they should stick to what they do best and outsource their F&B operations to a third party specialist.

A special thank you to Mike Coldicott, managing director at Tricon, and Spencer Yeo, development and commercial director at Campbell Gray Hotels, who proposed and opposed the motion respectively. 

The key takeaways from the debate include:

- COVID-19 has caused short-term instability in capital markets, but once ADRs and occupancies show signs of stabilising and forward bookings start to turn up, valuations are expected to rebound and acquirers to re-emerge.

- There is a substantial amount of unspent capital available to acquire hotels, so it is worth investing in the space. 

- Hoteliers that independently develop F&B are ill-fated from conception. There is too much focus on keeping CAPEX low and therefore there’s no real commitment to making it a success.

- There is a need for proper market research that is specific to property, whereby contracting out to a specialist or operator is the way of the future.

- Hotels evolved from inns, hence the passion for F&B is inherent. This passion has become prevalent since 2008 as hoteliers are now more in tune with F&B trends. 

- The issue lies with quantifying the debate. For example, the middle-eastern demographic consider the hotel restaurant as a venue of choice, whereas in the western world (United States, Europe and the UK) the perception of F&B is distorted.

- Disrupters (UberEats, Deliveroo) are changing the nature of F&B. But how can risks be mitigated? When outsourcing a product or service, a strategy for handling mistakes is an underlying problem that needs smoothing.

- Selection is key. A brilliant restauranteur may not be well-suited to a hotel environment. Similarly, hoteliers understand their own skillset and will turn to a specialist when a restaurant is underperforming. 

Companies represented in the discussion included AKA Residences, FREO Group, Malmaison, Hotel du Vin, Meininger hotels, Stake Concepts, Roomzzz, Frasers Hospitality, Metro Bank, Proprium, Berkeley Capital, Minor Hotels (Benihana), Hotel Solutions Partnership, Travlet and more.

BHN holds regular 'Dine and Learn' events throughout the year, offering senior executives the opportunity to raise issues and find solutions with their peers and business partners in a contributory format.

For further information about our next event, email info@internationalhospitality.media, or call +44 (0) 208 340 7989.

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