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A Strategic Approach To Wine For TRevPAR Growth

Hoteliers Can Boost Revenues, Guest Satisfaction With A Solid Plan

By Larry and Adam Mogelonsky | October 7, 2022

Wine is but a subset of your overall approach to F&B, but when you look at ways to grow TRevPAR (total revenue per available room) things get quite interesting in terms of how to increase ancillary spend on a per-guest basis. This requires a strategic mindset. It makes little sense to build an extensive wine selection—or for that matter contemplate any wine purchase—without first consulting the restaurant manager, the F&B director and, in some cases, the GM.

Wine must serve the role of generating profit as well as the less quantifiable goal of heightening guest satisfaction—both bringing patrons to a dining outlet and as a reason to stay at or return to the hotel. Hence, a solid wine strategy must define the parameters for how these beverages are positioned within the property, ensuring consistency with the overall brand approach.

Here are some key considerations for the development of a lucrative plan:

  1. Target audience. The wine selection must be tailored to the hotel guest or locals depending on what markets the brand is hoping to make inroads with. Often, though, the interests of those seeking leisure accommodations, event planners and other restaurant-only patrons do not align.
  2. Catering. Per the previous hint of group guests, it’s not uncommon to have two different wine lists. One is built for by-the-glass and prestigious bottle sales with reasonable markups, while the other is designed for the tonnage of weddings, reunions and corporate retreats. Different needs call for different arrangements with suppliers. As well, note that events are often booked many months in advance, so you need to be able to present wines that can be finalized 30 days out.
  3. Theme. As the vast majority of customers choose based on type of cuisine first, the wine must be congruent with the food the restaurant offers and not the other way around. Theme is not just about expectation management—for instance, people expecting a good glass of chianti at a low-key Italian joint—but about maximizing the experience and making memories. Beyond matching to the country, a fish restaurant will typically have more whites versus a steakhouse more reds, and then you must consider wine styles and grape varietals.
  4. Local influences. Hotels must show deference to the community, both for support and to help build a unique experience. Are there any wineries nearby and, significantly, are any of them worthy of more than a token local inclusion?
  5. Pricing. You start with costs then broadly define a markup coefficient. From there you examine prices based on past sales and market psychology for variable markups. There should also be a standard process for regular reassessments to maximize sales versus profit per bottle. As it concerns premium selections, would you consider adding a limited quantity of high-priced bottles onto the list for special occasions like champagne celebrations?
  6. Private labels. Would you consider stocking a house red and house white? If so, what’s your price point and can you achieve a three-times markup? What are your cash-flow requirements to guide order quantities?
  7. Inventory. Storage costs and available space are important considerations as are revenue forecasts and turnover. Establish an appropriate dollar value for the total wine inventory along with a complete analysis of the number of labels housed. Part of this element is also the availability of supply in terms of working with reliable suppliers or wine merchants. Understand their terms and conditions, minimum order quantities and reordering speeds.
  8. Wine list presentation. What’s the menu design? How many by-the-glass options are you including? How do you print your wine list and how easy is it to update? For example, guests don’t like it when the stated vintage year is 2018 and the server appears with a 2019 bottle.
  9. Cashflow. It’s often said that the success of every business hinges on this and the same is true for any alcohol where there’s an upfront cost. Wine merchants are typically cash on delivery and you may need to purchase many more cases of wine in order to take advantage of better pricing or vintage availability. The rub is that these outflows don’t usually coincide with peak hotel occupancy or other periods of high restaurant volume.

These are a few ideas to use wine to grow TRevPAR from our latest book, “In Vino Veritas: A Guide for Hoteliers and Restaurateurs to Sell More Wine” (2022). The key word in this long-winded title is ‘more’; we assume your F&B director has all the basics covered, with this book as the tips and tricks to make your beverage revenues sing.

The principle throughout is to figure out how to increase wine sales in aggregate. If you can do that, then you can apply those lessons to any other part of your operations that will drive TRevPAR, be it spa, golf, parking, room service, gift shop, laundry or activities facilitated through neighborhood partnerships. And if nothing else, this book will deepen your knowledge of this millennia-old elixir so that every glass becomes all the more enjoyable.

Credit
Larry and Adam Mogelonsky

Together, Adam and Larry Mogelonsky represent the world’s most published writing teams in hospitality, with over a decade’s worth of material online. As the partners of Hotel Mogel Consulting Ltd. a Toronto-based consulting practice, Larry focuses on hotel strategies and operations while Adam specializes in wellness planning, technology and marketing. Their experience encompasses properties worldwide, with a primary focus on luxury independent properties. Their work includes seven books “Are You an Ostrich or a Llama?” (2012), “Llamas Rule” (2013), “Hotel Llama” (2015), “The Llama is Inn” (2017), “The Hotel Mogel” (2018), “More Hotel Mogel” (2020), and “In Vino Veritas” (2022). You can reach them at adam@hotelmogel.com to discuss how they can help with business challenges.


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