Removing the F&B Blindfold

By Ned Barker President, Grill Ventures Consulting, Inc. | August 25, 2013

The hotel industry has come a long way since operators had to count the cars in their competitors' parking lots to gauge their performance in the marketplace. For many years the STAR report has replaced car counting with hard data and analysis. But what about F&B?

For full service hotels, F&B may account for a third of a hotel's total revenue, even more at the luxury end of the market. Yet F&B market share goes unmeasured. Until now.

Thanks to collaboration between the AH&LA and its F&B Council with STR Global, this will change soon:

  • Asset Managers will know the F&B revenue per available seat of their comp set's restaurants.
  • General Managers will be able to assess the effectiveness of banquet and catering sales initiatives with greater assurance.
  • Operators' bonuses will reflect F&B comp set penetration.
  • Revenue managers will start thinking about F&B Venue "occupancy" and F&B RevPAR.
  • Capital investment in F&B facilities will be smarter and more targeted, as comp set performance becomes more relevant.

Soon we'll be peaking from behind the blindfold, and then removing it all together. The significance of F&B performance – or even the lack of it - will be revealed in the same way that the roles of occupancy and rate have been revealed for years. And there's more. Ultimately this initiative will change the way we measure F&B internally. More on this later.

How Did Such a Sea of Change Occur?

It began with a group of hotel F&B executives who understood both the benefits for the industry and daunting tasks ahead. These were the members and leaders of the AH&LA Food and Beverage Council. In the Spring of 2010 they initiated the bold proposition that F&B could and should be reported just as occupancy and related stats have been reported for decades. Soon a task force was formed. The task force quickly reached out to STR to design and develop the report, and an important collaboration was born.

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The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.