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Why do companies give up on customer service as they grow?

Why do companies give up on customer service as they grow?

Everyone experiences second-rate service from a trustworthy brand at some point. Some recent examples of large brands plagued with a reputation for poor service include wireless service providers, airlines, auto manufacturers and Internet service providers. One need only look at Twitter feeds to see the angst that their customers are feeling. In the airline industry, United Airlines seems to be getting the brunt of customer complaints and media coverage as of late due to the infamous dragging of a passenger from one of their flights that went viral. Now, they are once again in crisis management mode because a United employee tried to wrestle an 18th-century violin away from a passenger who wanted to carry on the rare and valuable violin but was being forced to check it in.

Apart from the odd exception, top brands are not able to retain their status as market leaders as long as they used to. As companies grow, they try their best to ensure that service standards are maintained at the highest levels possible. However, in the long run, a decline in quality of either products or customer service is one of the greatest risks. There are many reasons for this degradation. When companies shift more focus on cost savings, they may consider outsourcing offshore to cut costs. Also, as hospitality management evolves, companies that develop software may have employees that are not up to speed on the latest variations made to the software. This all but ensures they will short on helping their clients with technical issues. Large companies can also become constrained by the fragmented departments and processes they put in place to streamline operations, but these processes can backfire and actually slow down responsiveness. In a recent article in the Harvard Business Review, McKinsey claimed that disloyalty is caused by a lack of understanding of the various touch points rather than by customer dissatisfaction with a single interaction.

It takes a long time to steer a big ship

In the hotel technology industry, some big companies have experienced declines in service because they have not been able to adapt to change quickly enough. Their infrastructure is aging quickly. We live in a world of instant gratification. For a software company in the hospitality space, the delivery of reliable, knowledgeable service and support is paramount to building a successful business. Software that runs a hotel or connects a hotel to its guest needs to be working at all times. When something does occur that inhibits the software from performing correctly, there can be no delays in a resolution to the issue. Smaller hotel technology brands can be more agile, modern and responsive.

Domain expertise makes all the difference

The people on the front lines of hotel software service and support not only need to have exceptional knowledge of the software in varied configurations, but they also need be specialists on how the hotel business works. They need to be able to identify if the issue is of an operational nature or related to the technology itself. Without an adequate background and understanding of the complexities of our industry – service, and support can quickly fall apart. One survey discussing customer dissatisfaction states that a whopping 91% of its respondents complained about customer service because they had to contact the same company several times before their problem was resolved. Regardless of industry, exceeding customer expectations requires the right mix of personal service, quality interactions, and first-call resolution.

It is time that customer service returned to its roots

With customer service often being a key differentiator, companies cannot settle for declining service levels, especially in the hotel industry as high touch service is the hallmark of our business. The first step for hotel technology providers to stay on track is to determine what constitutes superior customer service, and learn how to deliver it. The next step is to be aware of industry trends and new technologies that emerge as they impact not only on the industry, but they also impact software with issues like new integration requirements, compliance and more. Finally, companies should always plan for success rather than planning for failure. If you plan for success, you will be able to ramp up your support services to address the growth of your company and thus be able to meet the needs of your customers.

No matter how big or small our companies may be, as software providers, we are part of the service value chain right down to each and every guest. By providing excellent service to hotels – we enable them to provide exceptional service to their guests. Hotel software companies need to maintain the highest levels of support to ensure that their technology does not negatively impact hotel operations or their ability to exceed guest expectations.

Source: https://www.hospitalitynet.org/opinion/4083250.html

Duty system can promote healthier attitudes towards alcohol

Duty system can promote healthier attitudes towards alcohol

The ALMR has responded to HM Treasury’s consultation on alcohol structures encouraging the Government to adopt an innovative alcohol duty system that encourages products to be sold and consumed within the supervised environment of pubs, bars and restaurants.

HM Treasury has been consulting on new bands for cider, perry and still wine to encourage incentives for the production and consumption of lower strength products. The ALMR argues that this would provide greater choice for the sector’s customers and support industry initiatives to facilitate healthier lifestyles.

The organisation has also highlighted future opportunities to reform the duty system, either through a revision of the current EU Directive or post-Brexit. This could include differential duty rates, allowing lower duty to be charged on drinks sold through the on-trade.

ALMR Chief Executive Kate Nicholls said: “New bands for lower-strength wines, ciders and perries could reduce costs for both producers and retailers and help stimulate demand for high quality on-trade drinks. Brexit provides the opportunity for a more creative look at the duty regime to further incentivise innovation.

“We have evidence to show that lower-strength products are predominantly consumed in the supervised environment of a pub or restaurant. If the Government is serious about promoting healthier attitudes towards alcohol, a tactic would be to promote responsible and supervised consumption within our venues.

“High quality products that come with a lower strength and reduced price tag could help precipitate a shift in drinking habits that aids businesses and supports the Government’s plans to promote healthier lifestyles.”

Source: http://www.hospitalityandcateringnews.com/2017/06/duty-system-can-promote-healthier-attitudes-towards-alcohol/

1,190 Independent Restaurant Owners Share Their Thoughts on Over 100 POS System brands

1,190 Independent Restaurant Owners Share Their Thoughts on Over 100 POS System brands

RestaurantOwner.com released the 2017 POS Survey Report today. The report summarizes input gathered from 1,190 independent restaurant owners from around the world regarding over 100 different brands of POS systems, focusing on several critical aspects including cost, installation and support experience, and features. The results of this survey provide unique insight into the POS system market and emerging trends, all of which are valuable to independent restaurant owners.

The average cost for a restaurant POS system has notably decreased since 2012. In 2012, the average expenditure for a POS system was just over $18,000, as opposed to $13,344, currently.

The top seven POS solutions were Aloha POS, MICROS, Digital Dining, Clover, Adelo POS, Future POS, and POSitouch. These top seven POS systems accounted for 47.5% of the market. Beyond the top seven, all other POS brands each accounted for less than 3% of the market share.

We identified a shift toward cloud-based systems and POS solutions offered by credit card processors. Clover, Dinerware, Harbor Touch, and Square were the top credit card processor provided POS solutions, accounting for nearly 11% of total market share.

Despite the increased use of cloud-based and mobile systems, less than 10% of independent restaurant owners indicated they use pay-at-the-table devices. Moreover, only 31% of restaurants reported using EMV compliant POS systems. This is particularly noteworthy considering the fraud liability shift that took place in October 2015, mandating that merchants upgrade to EMV chip technology or accept increased liability for fraudulent transactions.

Improvements in plug-and-play components, increased Wi-Fi capability, and a tech savvy labor pool are allowing many restaurant owners to opt for self-installation and remote support. As a consequence, only 74% reported using an authorized POS vendor for programming, training, and support.

Source: http://hospitalitybusinessnews.com/20170127040/1190-independent-restaurant-owners-share-thoughts-100-pos-system-brands

Level Up(grade): W Hotels Debuts Hotel Industry’s First-Ever Video Game To Celebrate The Opening Of W Bellevue

Level Up(grade): W Hotels Debuts Hotel Industry’s First-Ever Video Game To Celebrate The Opening Of W Bellevue

To power up the forthcoming opening of W Bellevue, W Hotels Worldwide, part of Marriott International (NASDAQ: MAR), is taking the hotel guest experience to the next level – literally. With the brand’s newest hotel set in the heart of one of the country’s renowned tech hubs, W is excited to press play on the hotel industry’s first ever video game, Belle the Bear, on June 15th. W fans and tech-heads alike can play their way to W Bellevue virtually on opening day, with real-life rewards for top scorers in the United States.

Gamers, guests and W fans can explore the natural beauty and tech-centric city of Bellevue, Washington, with the Frogger-style Belle the Bear adventure game. Help Belle traverse landscapes, cityscapes, inside W Bellevue. Along her journey, Belle finds herself immersed in a robotic world, encountering drones and robots, all while avoiding (and occasionally embracing) cheeky roadblocks with skillful timing. Hit a cannabis leaf? Belle will turn into a gummy bear. One too many cocktails collected? Belle’s commands become reversed.

And what’s a video game without some friendly competition? To celebrate the debut of Belle the Bear, gamers can try their luck and compete for a variety of prizes from June 15th through July 15th, 2017. The five highest scorers in the United States will win prizes, with the top scorer receiving a complimentary three-night stay in the Extreme WOW Suite at W Bellevue, roundtrip airfare for two, dinner for two at The Lakehouse, a $500 shopping spree to The Bellevue Collection, VIP tour and private wine tasting for two at Guardian Cellars and a private 75-minute seaplane tour of Western Washington, including stunning views of Lake Washington and Mount Rainier.

“Bellevue is a gamer’s city, so we thought it would be fun to tap into that energy but with a W twist,” said Anthony Ingham, Global Brand Leader, W Hotels Worldwide. “Creating Belle the Bear, a throwback game with an innovative edge, is just another example of how we are constantly looking for new ways to engage with future W fans on their own turf. Plus, it’s a fun way to celebrate the opening of W Bellevue!”

W Bellevue will open its doors to guests on June 15th, touting 220 guest rooms and 25 suites with modern design elements inspired by the Puget Sound’s heritage of lakeside living, such as an oversized fireplace and library of pulp fiction novels. The culinary offerings at The Lakehouse also incorporate local flavor, serving vibrant, farm-inspired craft cooking from James Beard Award-winning Chef Jason Wilson. W Bellevue is the first new-build project from W Hotels to open in the United States in seven years, with many more to come.

To play the game via smartphone, tablet or desktop, visit BelleTheBear.com beginning June 15th. For more information on W Bellevue, visit WBellevue.com, or join the conversation with @WBellevueHotel, @WHotels and #BelleTheBear.

Source: https://www.hospitalitynet.org/news/4083260.html

Four Seasons owner Provenance Land may sell up to 50 per cent stake to global investors

Four Seasons owner Provenance Land may sell up to 50 per cent stake to global investors

India’s hospitality industry may be one of the heavily taxed sectors in the country, but that has not deterred global investors from looking at key properties in the country.

According to a media report, Brookfield Asset Management and GIC of Singapore are vying to buy 50 per cent stake in Provenance Land that owns Four Seasons hotel and residences in Mumbai.

The deal is likely to value Provenance Land at over Rs 2,000 crore and could see Adarsh Jatia offloading between 26 per cent and 49 per cent stake, said a report in The Times of India.

Provenance Land has been constructing Four Seasons-branded ultra luxury residences at the 4.5-acre property located at Worli.

If the deal fructifies, the funds from the stake sale will be used for the company’s plans to develop branded luxury homes and offices adjoining the Four Seasons hotel, the TOI report said.

There were reports that Provenance was constructing a five-storeyed second tower with 26 luxury residences for outright sale with a price tag ranging from Rs 30 crore to Rs 100 crore, the TOI report added.

According to a recent report by KPMG, India’s hospitality sector is expected to grow at 16.1 percent CAGR to reach Rs 2,796.9 crore in 2022. The sector contributes significantly to indirect tax revenue at the state and central level which includes revenues from VAT, Service Tax, and Luxury Tax etc.

As per the GST Council’s decision all hospitality products above Rs 5,000 has been termed as luxury, drawing flak from the industry. The GST Council said along with rooms, even dining at restaurants at 5-star hotels will invite GST at the rate of 28 per cent.

Experts are of the opinion that a higher GST rate on the hospitality sector could make the country’s tourism products uncompetitive in the region. The industry also fears major events, congresses, conferences, etc. could give a miss to India in coming times.

Source: http://ehotelier.com/global/2017/06/15/provenance-land-may-sell-50-per-cent-stake/

Getting Your SWOT Analyses Right

Getting Your SWOT Analyses Right

Most of us have probably taken part in a whole boatload of SWOT analyses. Certainly, in my time, companies and staff have shared numerous SWOT analyses with me. They all seem rather basic, Marketing 101 kind of stuff. Yet, just because SWOT analyses are basic does not mean that most companies carry them out well, or that they even get them right.

In fact, most people carry out SWOT analyses very poorly, and they get them wrong, no, very wrong. Let me share with you why so many people mess up their SWOT analyses, and, more importantly, how to get them right.

Getting SWOT Analyses Wrong

In order to explain why so many companies get SWOT analyses wrong, let me describe how most companies develop their SWOT analyses. I admit that what I am about to share with you is a parody, but it is only just a parody…

Most people start their SWOT analyses with their strengths, which the participants in a SWOT analysis session typically feel pretty good about. They know that they have to admit to a few weaknesses, so they move onto that next, but nothing that would be politically problematic. At that point, the participants are feeling somewhat tired, so they pull together a few opportunities, and finish up with a handful of potential threats.

At this point, it is close to lunchtime, so the group arranges for a junior staffer to type up the results. The staffer circulates the document and places it on a company server, where it is promptly ignored until it is archived and deleted a year later. The end result of all of this effort is, to be precise, nothing.

Getting SWOT Analyses Right

So, how do we get SWOT analyses right? The answer to that question is to remember that the purpose of a SWOT analysis session is to identify the opportunities that we are going to pursue over the following year.

We should therefore, start any SWOT analysis by focusing on opportunities, and by that I mean only those opportunities that are likely to be substantial enough, and doable enough, to be worth pursuing. In practice, as we will see, we will end up spending the bulk of our time on opportunities, and very little on anything else. After identifying opportunities, we should then list any serious threats. Just as with opportunities, we should only focus on those threats that are likely to be material enough, and probable enough, to be worth considering.

My basic advice when it comes to strengths and weaknesses is to spend very little time on them in any SWOT analysis meeting. While identifying strengths and weaknesses may be an interesting exercise, it is rarely time well spent. The only reason why we spend any time at all on either strengths or weaknesses in a SWOT analysis is to make sure that we can realistically attain our chosen opportunities, and deal with any serious threats. I wish to emphasize in this context that a strength means absolutely nothing, unless it enables us to pursue a sizable opportunity or deal with a significant threat. All other so-called strengths are not actually strengths at all, but merely irrelevances.

At this point, we now have the raw material for a successful SWOT analysis. But we have to take it a level deeper if our SWOT analysis is actually going to be useful. We have to remember that “we can only do three”…

We Can Only Do Three

Steve Jobs would gather together his lieutenants each year to lay out the opportunities that Apple could pursue over the following year. Inevitably, the Apple management team would come up with a long list of potential opportunities that Apple could go after. Jobs would then say that “we can only do three”, and he would list the three opportunities that Apple would focus on over the upcoming year. What I would suggest is that if that is true for Steve Jobs and Apple than it is true for all of our organizations. Realistically, we can only do three.

We should make sure in a SWOT analysis meeting that we select the Top Three opportunities that we should go after, and the Top Three threats that we need to deal with. Because we cannot focus on everything, we should then ignore the rest for the time being.

From SWOT Analysis To Actionable Results

As in any other project management meeting, we should finish up our SWOT analysis by allocating responsibilities, milestones and deadlines for each of the three threats and opportunities.

My approach to SWOT analyses may not be quite what we have all learned in business school. On the other hand, if we go through the approach to SWOT analyses that I have just laid out, then our SWOT analysis meetings will be much more productive, and they will actually produce focused and actionable results.

Source: https://www.hospitalitynet.org/opinion/4082623.html

Just How Unique Are Luxury Hotel Guests? - By Marissa Rasmussen

Just How Unique Are Luxury Hotel Guests? – By Marissa Rasmussen

Our latest hotel report, From Search Engine to Booking Engine, in collaboration with Google, garners a view of the hotel guest’s journey over the entire path to booking. However, not every guest and their pre-booking behaviors are alike. Here we highlight our findings on the luxury hotel guest and offer ways hoteliers can influence these guests on their path to booking:

1. On average, luxury hotel guests conduct more searches than more economical segments.

A luxury hotel booking is usually a more expensive purchase, and these travelers want to make sure they are making the best decision. Ensure you are staying top of mind during these extra searches by creating ads that reassure them that your luxury hotel will create the most enjoyable experience for them.

For example, Solage Calistoga does a great job showcasing their luxury property through their ads while reassuring guests that their vacation will be a getaway.

2. Luxury hotel guests start their hotel planning much further in advance than other segments.

60+ days out, luxury travelers perform more searches than other segments. Consider how your hotel segment impacts the path to purchase so you can increase your brand’s presence at moments when travelers are likely to be influenced. For example, if you know your luxury guest will begin searching 60+ days before arrival, start impressing them with ads while they are at the top of the funnel, and continue to nurture them throughout their entire path to book.

Loews Hotels “Room You Need” campaign did a great job of reaching travelers at each stage in the funnel by using certain Instagram photos taken by guests as the basis for its print and digital ads. It was a way of showcasing real-life images of authentic guest experiences at Loews, and that’s the perspective that a potential guest wants to see.

3. Luxury hotels see lower shares of mobile searches, averaging 45% of all searches, but mobile queries are growing rapidly with 23% YOY growth.

It may not be surprising that mobile searches are on the rise since smartphones have enabled us to have information at our fingertips no matter where we are. According to Skift, 40% of global travelers use mobile devices to shop for travel. To capture these luxury travelers early on in their planning and dreaming phases, implement a multi-platform strategy: prospect and retarget users with display, mobile, YouTube, Facebook, native ads, and more.

Conrad ‘Stay Inspired’ initiative turns team members into curators of 1, 3, and 5 hour experiences

Conrad ‘Stay Inspired’ initiative turns team members into curators of 1, 3, and 5 hour experiences

Conrad Hotels & Resorts announced the launch of Stay Inspired (www.stayinspired.com), a global, brand-wide initiative that marks a cultural shift and overhauls the way the brand trains its team members as storytellers of their destinations. At each one of its 24 global properties, Conrad now offers guests who seek out inspired experiences a more customized and curated collection of 1, 3, and 5 hour experiences available through Conrad Concierge mobile app and at StayInspired.com.

Spearheading the Stay Inspired initiative is Nilou Motamed, the luxury brand’s first ever Director of Inspiration, who is responsible for developing and implementing the Stay Inspired vision and what it means for travelers. Nilou joins Conrad having previously served as Editor-in-Chief of Condé Nast’s digital food brand, Epicurious, and Features Director and Senior Correspondent for Travel + Leisure.

As Director of Inspiration, Nilou has traveled to Conrad properties worldwide to create the initial series of Stay Inspired experiences. Catering to the modern traveler’s desire to merge work, life, and pleasure, StayInspired.com now offers experiences in convenient 1, 3, and 5 hour increments, or what the brand is calling the Conrad 1/3/5. Each Conrad 1/3/5 recommendation reflects an inspired view into each destination covering food, shopping, art and design, culture, family, and adventure.

“Today’s luxury traveler wants to discover destinations where they can be truly inspired. So we are shifting how not only our concierges communicate and connect with our guests, but all of our team members,” said John T.A. Vanderslice, global head, Conrad Hotels & Resorts. “Through our partnership with Nilou, we have trained our team members and empowered them to make thoughtful recommendations within our destinations, stepping away from the standard transactional relationship between a concierge and a guest. We now have become more like storytellers.”

StayInspired.com, accessible via mobile device through the Conrad Concierge mobile app, offers a modern luxury traveler on any schedule the ability to browse activities in 1, 3, and 5 hour itineraries, or by interests. Using StayInspired.com, travelers can now save and share their Conrad 1/3/5 itineraries, access custom content in the form of photos, videos, and maps, or book a room and an experience through the hotel’s concierge. On property, concierges will be equipped with tablet devices to guide guests through the itineraries.

“Guests want to use whatever free time they have while traveling to discover something new. They want to find those hidden gems that are off the beaten path and that can’t be found in the pages of a guidebook,” said Nilou Motamed, Director of Inspiration, Conrad Hotels & Resorts. “This collection called the Conrad 1/3/5 curates content and experiences in a way that aligns with the way our guests live their lives.”

Source: http://ehotelier.com/global/2015/10/28/conrad-stay-inspired-initiative-turns-team-members-into-curators-of-1-3-and-5-hour-experiences/

Chip Eng Seng partners with Park Hotel Group to buy Maldives resort

Singapore construction and property group Chip Eng Seng Corporation Ltd will make its foray into the Maldives together with Singapore-based Park Hotel Group with the acquisition of Kodhipparu Island Resort for US$65 million. JLL was exclusive advisor on behalf of the resort owner, Kodhipparu Investment Private Limited.

park-hotels-maldives

Located in the North Malé Atoll, the resort has 120 villas and is a 15-minute speedboat ride from Malé International Airport. Set to open in second quarter of 2017, the resort is under development by world-renowned hospitality design firm Hirsch Bedner Associates, and will offer two restaurants, a harbour beach club, an infinity pool and bar as well as comprehensive spa facilities. The Resort will be managed by Park Hotel Group as Grand Park Kodhipparu, Maldives as the Group enters Indian Ocean’s most dynamic hotel market.

“As an investment destination, the Maldives provides a transparent policy-making environment and generous incentives for foreigners, including full ownership rights, legally-backed investment guarantees and the ability to fully repatriate profits. This paired with its positive economic outlook is attracting Asian investors seeking to enter the international market,” says Nihat Ercan, Executive Vice President, JLL Hotels & Hospitality Group, Asia.

“As a result, we’re starting to notice a rising trend of Southeast Asian, and in particular Singaporean property developers, who are drawn to the market because it offers high yields underpinned by healthy trading fundamentals.”

Excluding the Kodhipparu sale, the Maldives has seen more than US$120 million in investment transactions so far in 2016. Tourist numbers to the island nation reached 1.23 million in 2015, a 2.4 percent increase on the previous year according to JLL’s report Hotel Destinations Indian Ocean.

This deal will mark the ninth resort JLL has sold in the Maldives since 2012, taking the group’s resort sales in the archipelago to US$500 million and over US$600 million in the Indian Ocean region. In February 2016, JLL also advised on the sale of Zitahli Kuda-Funafaru Resort and Spa to Singapore-listed Roxy Pacific Holdings Limited.

 

Source: http://ehotelier.com/news/2016/10/10/chip-eng-seng-partners-park-hotel-group-buy-maldives-resort/

Hotel Food and Beverage Trends

In past articles, PKF Hospitality Research (PKF-HR) has labeled the period 2000 to 2010 as the “lost decade” for the U.S. lodging industry.  During this volatile period, hotel revenues remained virtually flat through two major recessions and one extended period of prosperity.  On the surface, it appears that hotel food and beverage (F&B) revenue followed a similar pattern.

To understand recent trends in hotel food and beverage departments, PKF-HR studied the financial performance of hotel restaurants, lounges, and catering departments for the period 2000 to 2010.  The information came from a same-store sample of full-service hotel operating statements taken from PKF-HR’s Trends® in the Hotel Industry database.  These hotels average 413 rooms in size, and offer multiple F&B outlets and extensive banquet facilities. Hotel data was estimated for 2010.

Total hotel food and beverage revenue decreased slightly from 2000 to 2010 within the study sample.  Measured on a compound annual basis (CAGR), F&B revenue declined 0.6 percent.  This is comparable to the 0.5 decline in total hotel revenue experienced by these same properties.  However, when analyzed on a dollar-per-occupied room basis, hotel F&B revenue increased 1.6 percent on a compound annual basis during the decade.  This is significantly greater than the 0.1 percent rise in total hotel revenue per occupied room.  During the study period, the number of occupied rooms declined 0.5 percent CAGR.

The relative stability of F&B revenue per occupied room can be partially explained by the ability of hotels to attract local patrons to their restaurants, lounges, and catering facilities.  This is especially evident during the recessionary years of 2001, 2002, 2003, and 2009 when the declines in food and beverage revenue were less than the decreases observed in rooms revenue.

Conversely, during the prosperous years of 2004 through 2007, total hotel revenues grew stronger than F&B revenues.  During these years, stout increases in both occupancy and average room rates boosted total hotel revenue.  This implies that the ability of hotel managers to raise room rates is greater than their ability to increase F&B prices.

Sources of F&B Revenue

Averaging 413 rooms, it is not surprising that banquet related revenue was the greatest source of F&B revenue for study sample in 2010.  The combination of catering revenue, public room rental income, audio visual fees, and banquet service charges accounted for an estimated 55.5 percent of total F&B department revenue.  Other sources of F&B revenue included restaurants (30.2%), lounges (5.6%), and room service (4.4%).  It is interesting to note that the combined beverage sales within the hotel restaurants were twice as great as the liquor revenue generated at the bars within these properties. Whole bottle wine sales in the restaurants partially explain this disparity.

Due to changes in the Uniform System of Accounts in the Lodging Industry(USALI) it is not possible to equitably compare changes in F&B revenue by source over the 2000 to 2010 period.  However, changes in revenue can be estimated for 2009 to 2010.

From 2009 to 2010, total F&B revenue increased 8.6 percent.  This compares favorably to the 6.5 percent increase in total hotel revenue for the study sample during the same period.  The greatest increases were observed in beverage revenue (9.4%), followed by food revenue (9.1%) and other F&B revenue (6.2%).  Other F&B revenue consists of public room rental, audio/visual, and service charge income.  Of note is the fact that the majority of growth in beverage revenue came from catering events as opposed to the hotel bars.

Expenses and Profits

Food and beverage profitability is dictated by management’s ability to control the prime costs of labor and costs of goods sold.  From 2000 to 2010, the prime costs of F&B departments in our sample averaged 64.3 percent of total department revenue.  Labor costs during this period averaged 43.4 percent, while the cost of goods sold averaged 20.9 percent.  This cost of goods sold number includes expenses associated with the other F&B revenue sources.  If you examine the combined costs of goods sold for just food and beverage sales, the average ratio rises to 29.1 percent.

Hotel departmental profit margins averaged 26.4 percent from 2000 to 2010.  In accordance with the USALI, this ratio is calculated before undistributed expenses such as marketing, maintenance, and utilities.  Once again, the depth of the recession becomes evident.  The lowest level of F&B departmental profitability was experienced in 2009 (21.6%), while the greatest profit margin was observed in 2000 (32.6%).

Haves and Have Nots

Food and beverage operations within the lodging industry have become a story of haves, and have nots.  The vast majority of new properties and brands entering the U.S. lodging industry offer either limited, or no F&B service at all.  On the other end of the spectrum are full-service hotels with multiple restaurants, lounges, and banquet facilities.  For these full-service hotels, the offering of F&B is not just a source of revenue, but an amenity used to position the property within the marketplace.

Losses within the F&B department are no longer tolerated by owners. F&B managers struggle to contain costs and grow revenues.  The ability of management to attract local patrons, boost catering revenue, and increase beverage sales within their restaurants are examples of successful tactics that have generated profitable revenue.

 

Source: http://hospitalitybusinessnews.com/2011066172/hotel-food-and-beverage-trends