NEW YORK—The hotel industry is moving one step closer to benchmarking total revenue on property.
Whereas previously the focus was strictly on rooms revenue, the recently announced Food & Beverage STAR Benchmarking Report will allow operators to more accurately evaluate and convey to owners the true drivers of revenue, sources said.
“Today, the performance of a hotel is purely measured on 60(%) to 65% of the revenue, which is the rooms portion,” said Wolfgang Lindlbauer, senior VP of food and beverage for Marriott International, during a press conference Monday at the International Hotel, Motel + Restaurant Show.
What’s missing is the F&B portion, which typically accounts for 30% to 35% of revenues, he said.
“We think that now by measuring 90(%) to 95% of the revenue and hopefully down the road coming up with (total revenue per available room) ... the owner will see the value of the entire building and what you can achieve with that building,” Lindlbauer said.
“By changing the metrics, we can change the minds of owners and asset managers … that we are more than just rooms,” he added.
The Food & Beverage STAR Benchmarking Report was developed by STR and the American Hotel & Lodging Association, using a common language that can be understood across competing properties, brands and hotel companies. STR will begin reporting general industry data as soon as they have enough data. The ability for hoteliers to identify and measure against competitive sets likely will come by the end of 2013, said Chris Crenshaw, VP of strategic development for STR, parent company of HotelNewsNow.com.
STR will collect various pieces of F&B-related data, including total catering and banquet revenue; total square footage of the catering and banquet space; total F&B venues revenue; total number of seats for the F&B venues; total customer for the F&B venues; and total in-room dining revenue.
To participate, brands must provide data feeds to STR no later than January 2013. If not enough data is reported to generate reports on a national level, the data could be limited by region or city.
Leveraging the tool
The new benchmarking report will allow operators to make better decisions that drive higher revenues across the property, presenters said during the press conference.
“It’s a tool that allows us to measure and then to make decisions to enhance our revenue opportunities for marketing and targeting certain feeder markets,” said Vince Barrett, VP of F&B at New Castle Hotels.
It will also help operators make better decisions about what types of groups or catering events to take, said Mark Southern, director of product innovation for F&B at Hilton Worldwide.
Increased transparency also will allow operators to better measure the performance of F&B directors, sources said.
And, of course, it will help owners and asset managers understand the importance of F&B in a hotel, Barrett said.
“It gives us an opportunity to challenges the ownership to say, ‘This is what we’re doing. … You need to help invest in this (F&B) operation so you can move this whole asset,’” he said.
Lindlbauer offered a real-world example from within the Marriott portfolio. The company has a 300-room, suburban hotel in the Midwest, in which the owner brought in a signature chef to develop a new restaurant concept. Within a single year, F&B revenue had tripled, hosted weddings jumped from only three to more than 40 and the property was able to pull in a lot of demand it otherwise wouldn’t have.
“ … With a tool like the STAR reporting now you would see why this hotel is performing so much better,” he said. “Today you couldn’t tell.”
As with other benchmarking tools, the Food & Beverage STAR Benchmarking Report will only work if hoteliers start reporting data.
The task is easier said than done, but Crenshaw and his hotelier peers expressed confidence during the press conference.
When STR first began collecting data in the 1980s, the company was starting from scratch, Crenshaw said. The Food & Beverage STAR report, however, comes with the backing of the AH&LA Food & Beverage Council, which comprises member hoteliers and associations.
A lot of parties are already on board, he said.
Still, Lindlbauer called for unified industry support.
“This whole tool becomes meaningless if we don’t all start reporting into it,” he said. “It’s our job now to really rally everybody.”