You hear it all the time, particularly from new hotel owners and operators: Food and beverage operations do not make a profit.
"Hotel F&B should be leased out" is the mantra I keep hearing. This philosophy, of course, begs a number of questions, the most obvious of which are these three:
- How will an F&B tenant make money if the "landlord" can't - especially when the tenant is paying rent?
- Why would a heavily invested hotel owner want an inter-related business with different business goals (and, possibly, incompatible clientele) in the building - especially when the owner would have minimal control over that other business?
- Here is the really big question - What, exactly, is profit?
While some people claim that hotels should include F&B facilities because they can, in theory, be profitable, I believe the profit motive should be secondary. The way I see it, the primary role of an F&B facility is to enhance the potential revenues of a hotel's Rooms Department, particularly in the case of convention and resort properties.
A good F&B operation, whether it's hotel-operated or leased out, allows more marketing flexibility - and believe me, this helps sell rooms in off season or slow days of the week. The mere presence of an F&B operation allows a hotel to appeal to more market segments, thus giving it a broader, more secure income base. A hotel F&B operation should be conceptualized with three goals in mind: first, to maximize room revenue; second, to do that profitably; and third, to appeal to non-hotel patrons.
To ensure that these goals are reached, a hotel needs to follow up with the same kind of F&B marketing and management effort in which a lessee would invest.
My company, HVS/American Hospitality Management, recently took on an assignment to do an operational overview of a mid-priced, full-service hotel. Generally speaking, this hotel is operated as a limited-service, mid-priced property with a leased F&B operation. The hotel is affiliated with a well-known national brand, it's in a major metropolitan area and it's managed quite competently. Following are excerpts from our report on the leased F&B operation, its problems, their impact on the hotel, and some changes that we felt should be implemented in order to minimize detriment to the hotel:
Our experiences in the restaurant, recently leased to a new operator, have been mediocre at best. On several occasions we noticed one gentlemen walking around dressed in a jacket - we assume he was either the manager or the lessee - while none of the employees were wearing uniforms. This creates the impression that the restaurant is a less-than-professional operation. happen. The restaurant should be provided with a list of guests (and their room numbers) who have established credit at check-in; the list could be produced by the night auditor and updated for afternoon check-ins.
On one occasion, we mentioned to our server that the restaurant was extremely cold. She informed us that the restaurant was on the same system as the hotel and that the restaurant could not control the temperature. (The lobby was warm enough, so we are unsure of the validity of her statement.) Regardless, the restaurant was extremely uncomfortable - and remained so.
On two separate occasions, we observed kitchen staff talking on the phone near the parking-lot entrance to the hotel. They were wearing dirty kitchen uniforms, were loud and obviously were on lengthy calls - they clearly had planted themselves there because they had beverages and were sitting down. This should not be allowed. Brief calls (no longer than three minutes) can be permitted as long as they are unobtrusive and the employees are neat in appearance - which wasn't the case in this instance.
