If you’re hungry for some real F&B comp set numbers, it’s time to sit down at the statistical table. That’s because the members of the American Hotel & Lodging Association (AH&LA) Food & Beverage Council Task Force have come together to create a series of tasty standards designed to empower hoteliers to better understand their business.
Ideally, when introduced next year this Report will give hoteliers and F&B executives a better grasp on their overall business especially when it comes to comparing their numbers with other hotel F&B operations in their local comp set. Until now, many execs were starved for the type of information they could take a bite out of to see what they are doing right and the areas in which they can do even better.
“Traditionally, F&B venues have often been seen as an amenity. There is huge local market potential for F&B revenue in hotel bars, restaurants, banquet facilities and catering. This will improve the accuracy of forecasting and overall operations planning while also creating more accurate site and planning valuations that will lead to better informed space utilization and planning,” said Brad Aldrich, SVP, business development with the AH&LA
When implemented in 2013 it will be known as the Food & Beverage STAR Benchmark Report and will based on additional data gleaned from the 44,000 hotels worldwide that already report to STR. Participants will? receive the data and define their own comp set, according to those creating the new reporting system.
“This will allow us the opportunity to have a tool to measure ourselves against not just a P&L but also look at the marketplace in our comp set. This allows us to measure and make decisions to enhance revenue opportunities though marketing and targeting feeder markets,” explained Vince Barrett, VP F&B with New Castle Hotels.
Mark Southern, director, Innovation F&B with Hilton Worldwide said it will empower operators to make better decisions. “We can make decisions such as how many seats should you should have in [a] market and allows us to be better fiduciary managers of peoples’ properties,” said Southern.
Wolfgang Lindlbauer, SVP, food/beverage, Marriott International, said the performance of hotels is being measured by 65 percent of total revenue, essentially just the rooms portion and this will allow properties to get a better, bigger picture of where they really stand.
“A lot of times F&B is heavily discounted to make the RevPAR higher. By measuring up to 95 percent of revenue an owner of a management company, for example, ?will see the value of the entire building and [better understand] what can be achieved with that building. By changing metrics and focusing on that we can change owners’ minds and asset managers and Wall Street. We are a larger business, not just rooms,” said Lindlbauer.
The introduction of this measurement system comes at a time when hotels all around America are focusing more on F&B revenue. Even focused (we don’t like the terms select or limited service here) serviced hotels are looking to add some elements of F&B to capitalize on consumer trends. As hotels put more emphasis on creating interactive and lively lobby spaces, guests naturally want to imbibe and have a snack or a meal.
“More and more blended spaces are being merged into one and we were stuck with an antiquated way to measure business. This gives us a lift going forward,” said Lindlbauer.
The hope is the Report will clarify trends and give operators a better chance to see what others are up to in their neighborhood.
“This is a true paradigm shift in the way we look at our businesses. It is very common that more than half of a hotel’s employees are dedicated to F&B. This will allow operators to consider the entire output. This is a holistic way to look at the business,” explained Ned Barker, President at Grill Ventures Consulting.
Overall F&B data will include:
- Total Catering & Banquet Revenue
- Total Square Footage of the Catering & Banquet Space
- Total F&B Venues Revenue
- Total Number of Seats for the F&B Venues
- Total Customers for the F&B Venues
- Total In-Room Dining Revenue
Here is how the AH&LA and STR expect the Report to be used, in their own words:
A General Manager (and the hotel’s owner) will use the new information to gauge their local market potential for F&B. This applies to banquets & catering as well as bars and restaurants. They’ll understand how their hotel’s F&B revenues index against their competitive set(s), and this will help with budgeting, performance evaluations, bonus calculations and even determining a proposed renovation ROI analysis. The results will be more accurate budgeting with better results, improved F&B performance, and more proactive identification of future F&B renovation opportunities.
A Food and Beverage Director (or AGM, or Executive Assistant Manager) will hone in on the comp set’s F&B Venue(s) historical trends and banquets and catering historical trends. They will use this to improve the accuracy of weekly and monthly forecasting and overall operations planning. The results of better forecasting are many, including optimized scheduling and purchasing. In a longer view the new information will help an F&B Director determine and optimize their bar’s and restaurant’s working size, staffing levels, menu size and hours of operation. Their newfound knowledge of the local market will help them strategize – when to play offense, and when to play defense.
The Revenue Manager and Controller will build more meaningful reports, based on new practices that are now implemented, including counting/recording all customers in a bar or lounge – and getting a meaningful check average - or recording the restaurant’s revenue per available seat.
Given the comp set’s historical banquet and catering trends the Director of Sales & Marketing, as well as the Director of Catering, will be positioned to make better booking decisions – they will now have a greater context for evaluating groups and events. They’ll establish more targeted and focused goals. And their pricing will be more effectively targeted. The results will be the booking of higher-profit revenue and optimization of banquets and meeting space. Discounting, when needed, will be more effectively focused and targeted.
And, DOSM’s will appreciate the consistency of an industry-standard definition of function space.
A developer, with a better understanding of the F&B potential – or lack of it – will make more accurate site and property valuations. Flag and service level decisions will be easier to make and once made will prove out more often.
Designers, working with developers and owners, will have better information for commercial space utilization and planning. Presentations for design can – and should – help maximize owners’ potential return by considering projected revenue per seat for F&B Venues, or revenue per square foot for banquets and catering. They will now have an enhanced context for doing so.