Experts look at data behind hotel F&B
Experts look at data behind hotel F&B
10 SEPTEMBER 2018 7:00 AM

Experts in food and beverage and events went through the numbers behind F&B at hotels.

NASHVILLE, Tennessee—As more hotels look to food and beverage for additional revenue on property, hoteliers need to track its performance.

During the “Food for thought… Why hotel F&B?” data dive at this year’s Hotel Data Conference, Veronica Andrews, director of digital data solutions at STR, which created the F&B STAR report, took a look at the numbers for hotels across the U.S. participating in the program. (STR is the parent company of Hotel News Now.)

Here’s what the data (as of June 2018) shows.

The basics
Currently, there are 960 hotels across the U.S. participating in F&B STAR reports, and the average occupancy for those hotels is 76.9%, and average daily rate averages at $219.

“Average rate is really healthy in this segment at $219 … that might seem high, if you think about it (these are) predominately full-service hotels,” Andrews said. “Those that would have meeting space or venues, diversity amongst their market segments.”

The average daily available supply, or the visible capacity of rooms, is 405 rooms with 248 venue seats and an average of 25,500 square feet of available meeting space, Andrews said.

Andrews went through the breakdown of chain scales that make up hotels in the report, starting with luxury.

Hotels in this segment have an average of 375 rooms, 339 venue seats and 22,500 square feet of meeting space, she said.

Upper upscale was the next segment Andrews looked at.

“These are the hotels that have a lot of meeting space,” she said. “They may concentrate more on that than venue seating. They would (be in) central business districts, convention areas, as well as suburban and other markets.”

The upper upscale segment has on average 507 rooms with an average of 282 venue seats and 34,600 square feet of meeting space. There are also upper upscale big-box hotels that make up 382 rooms with an average of 225 seats.

(Source: STR)

“Growth in (upper upscale) is down when you take away the big boxes,” Andrews said. “Group demand is relatively flat year over year in the big-box arena.”

In the upscale segment, there are 202 rooms with an average of 88 seats, according to the data. Hotels in this area are usually select-service properties with a small amount of meeting space, she said.

Total F&B RevPOR
In the F&B world, total revenue per occupied room is measured, Andrews said.

“For total revenue per occupied room, we collect and consider, based on recommendations from industry professionals throughout the world … all of the revenue that comes through caterings and banquets department, the venues department and also in-room dining,” she said. “We would exclude anything that’s related to minibar and we would exclude anything that’s related to an ‘other’ F&B department.”

Andrews noted things such as vending machines fall in the “other” category.

The slide below shows that catering and banquets revenue per available seat has increased 2.9% to $0.81; revenue per available seat for F&B venues has rose 4.9% to $47; revenue per occupied room for in-room dining has decreased 2.2% to $4.37; and total F&B RevPOR has increased 2.6% to $108.

(Source: STR)

“While those metrics may stand alone, the real story is in the growth, and that’s why there’s a lot of focus on hotel F&B,” Andrews said. “You can see that catering and banquets is up, venues up dramatically, and this is representing total U.S., where in-rooming dining is (dropping), and that’s evidence of all kinds of very creative alternatives; so rather than the traditional silver and crystal and stainless, you might get on a tray for formal roomservice, for in-room dining you’re going to get all kinds of options.”

Other in-room dining options could include grab-and-go, takeout that’s delivered to the room and more.

“We are seeing a decline (in in-rooming dining), but the fact of the matter is … there are 95% of the upper upscale and luxury hotels that are still presenting some form of in-room dining revenue. So it hasn’t gone away. No matter what we read in the papers, it’s still there,” Andrews said.

Catering and banquets
Andrews dug deeper into the story behind catering and banquets and pointed out the influence group business has on this category of F&B.

She mapped the 12-month moving averages for the mix of business in hotels (shown in the chart below), from 2005 to 2018.

(Source: STR)

“Everyone can recognize here where we started out at about 52% to 43% transient to group mix, I think everybody over here can see the downturn (in 2008),” she said. “We lost a lot of group business during the recession. … What I think is really important here is what’s happening now. It’s pretty much leveled off; we’ve got 58% to 37% mix of transient to group, contract has stayed pretty much level, little dips to 3% but roughly around 4% of the overall mix is going to be sitting in contract business in these hotels across the U.S.”

Hyatt’s take
Hyatt Hotels Corporation corporate director of events Melissa Milione said her company used to track spend per group roomnight when tracking group business, but it wasn’t a reliable metric.

“You can have a piece of business where a lot of guests choose to book at the hotel down the street, but they’re still showing up for all of the events, the F&B revenue is all there. The room performance is poor, but it looks like you’ve got a good spend per group roomnight,” she said. “Any time you have groups-only business in the hotel that’s washing down this measurement, (it) makes it really hard to benchmark it over time.”

So Hyatt had to find new ways to benchmark group business and F&B revenue, which is basing the minimums being charged for meetings and events space on the amount of space being used.

“You should think of your meeting space as real estate,” Milione said. “Your sales-and-events team should think about the fact that they are selling real estate. They should not be basing the revenue decisions with their groups on the number of group rooms that they’re losing or the number of people that are attending their events.”

F&B STAR reports use this metric, which STR started in partnership with the American Hotel & Lodging Association, she said.

“Four years ago we started rolling out this reporting, and we got our hotels on board with it quickly,” she said. “Even in areas where we don’t have the best comp sets, this gives us such a great opportunity to see how our hotels are performing over a period of time, whether we’re looking at last month’s performance or a three-month basis or a rolling 12 months, for the first time ever, our directors have had a great opportunity to see if we are growing our revenue in the right fashion.”

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