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Analysis

F&B: a growing division of the hotel industry

Hilton, AccorHotels and Marriott: three giant groups that have historically dominated the hotel market. In the past, they were solely focused on driving revenue with their rooms. Food and beverage programs were considered an amenity, not a core competency. Today, it’s vital for hoteliers to keep their customers by meeting their expectations with the most appropriate F&B offer possible.

Take a look at Marriott International, the world’s biggest hotel group, which continuously invests labor and resources into its F&B divisions. Its F&B direction is now looking into matching the right restaurant concept with the right guest, rather than simply pursuing a traditional and standardized template that aims to drive the highest spending.

But the biggest area of F&B investment is still events catering.

Groups, such as AccorHotels, are pursuing advances in the restaurant business with major shareholdings in prestigious groups. In 2017, the hotelier initiated negotiations to take over Potel & Chabot and acquire a stake in Noctis.

Under the impulse of new players (hostels or lifestyle hotels such as Marriott’s Moxy or Mama Shelter), a trend is emerging: to offer a casual, socializing and informal formula. Areas such as grab-and-go areas, lobby pantries and kiosks, breakfast areas, bars/lounges and preferred guest lounges are receiving more and more attention and help create a unique amenity for higher-status guests.

The Meliá White House Hotel, for example, launched The Place, which offers fresh and organic produce as well as produce that is in season presented in an outdoor market style. Guests may thus choose their own combination from among 35 side products at the salad bar or choose from among hot dishes prepared by the cooking brigade in front of their eyes.

In a more minimalist approach, Hotel Indigo launched the Soup & Juice concept, reinforcing the idea of offering products that are first and foremost healthy.

On the other hand, traditional hotel groups are breaking down compartmentalized spaces, embracing digital trends, shortening production circuits and emphasizing product quality.

One of the structural growth drivers for revenue is likely that hotel owners and general managers are allocating a growing amount of square footage to F&B within new-build and remodeled hotels.

In 2013, Holiday Inn, an IHG brand, announced the first lobby concept in Europe. This in-hotel experience transformed the traditional hotel lobby format by combining the front desk, lobby, restaurant, bar, lounge area and business center into one open and cohesive space. This concept reveals the emergence of a new breed of business travelers who are not constrained by traditional office working routines and don’t necessarily work the typical 9-5 day.

The Radisson RED brand is also a pioneer in the transition towards an architecture without barriers, initiated in F&B, which connects visitors to each other through references to fashion and art, and which has developed its catering division as a "social hive". The brand has developed its OUIBar + KTCHN concept by giving its customers the possibility of ordering their meals from their smartphone, then picking them up whenever they want.

Eat like a local

Local restaurant concepts (managed internally) are likely to gain additional placement.

“Hotel F&B strategy should begin by listening to what your customers think about your existing F&B product. Location-based social media provides rich insight into the perceptions of your menu, the ambiance, and even provides opportunities for you to go above and beyond to delight your guests” says Jonathan Barouch, CEO of Local Measure.

The Radisson Blu Hotel in Nantes recently unveiled an innovative concept with the launch of its new restaurant “A Partager.” The Chef Erwan Noblet wanted to offer his customers a gastronomic discovery based on fresh and local products in an informal atmosphere.

Digital disruption in dining

Many hotels dismiss disruption from the sharing economy’s food delivery options like Postmates, UberEATS, and Seamless, and review and booking sites like TripAdvisor, Yelp, and OpenTable.

Ana Brant, Global Director of Guest Experience and Innovation for Dorchester Hotels, has a role primarily devoted to listening to guests. She embraces the data provided by such “disruptors” to her advantage, by distilling the collective digital wisdom of crowds into insights.

The insight she gleaned, and is applying to the Dorchester Collection strategy, was that “if we want to compete in this competitive marketplace we need to realize we are not in the hotel business running a restaurant, we must be in the restaurant business. This is the key starting point.”

Thus, hotels are leveraging partnerships with delivery services to provide guests with expansive dining and services options. In 2018, Choice Hotels International announced a partnership with delivery.com in which their loyalty program members can accrue points from their delivery orders.

Room Services

Hotels are also scaling back on traditional F&B offerings such as minibars and room service, and turning to digital and technology. Recently, Amazon partnered with Marriott International to bring its voice control software to hotels. Alexa for Hospitality is offering guests the opportunity to order food and drink directly to their rooms through voice commands. Other hospitality providers are able to request an invite to the service through the Amazon website.

Innovation Labs

In 2014, Marriott International has been the first to launch an innovation lab called Canva Lab, which offers restaurants and F&B players the opportunity to exploit their innovative concept under the Marriott banner. "We have the money, space and know-how to help you get started and bring your ideas to life," says the F&B incubator.

Others were quick to follow this trend. Hilton opened its Innovation Gallery, an incubator and experiential showcase, in 2017. Upon entering the space, visitors could make their way through five experiences. The Food & Beverage Concept Studio is a show kitchen that offers an opportunity to experience and showcase the latest restaurant concepts developed by Hilton’s F&B team, along with technology to film and webcast.

In February 2018, Amir Nahai, CEO Food and Beverage for AccorHotels, put down a challenge for tEcole hôtelière de Lausanne (EHL) students to create an innovative future food and beverage experience for two of Accor's new luxury properties. And in June 2018, Meliá announced the launch of the "Meliá Challenge" together with the food business incubator Eatable Adventures. The competition is for start-ups and aims to find the most innovative solutions in Food and Beverage for improving the guest experience in hotels.

In an increasingly competitive environment, the F&B side of the hotel industry keeps changing as guests make new demands and hotels try to outdo each other with new offerings. Thus, hotel groups that don't follow the trends are setting themselves up for failure. The truth is, to be successful: you must adapt.

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