Less sleep, more eat: UK food & beverage led hotels

In a world where competition is fierce, hoteliers are now tasked with providing not only quality rooms, but also a first-rate food and beverage (F&B) offering to attract consumers who are demanding (and willing to pay for) an all-encompassing experience, rather than just a place to sleep.

In fact, an M&S Bank study revealed that millennials are prepared to fork out (excuse the pun!) an extra £1,075 to enhance the 'instagrammability' of their trip¹ – and creative F&B appears to be a large part of that. In this article, we explore the increasing popularity of F&B led hotels and share our observations on the importance of hotels not forgetting their foodie followers!

Hotels which don't have a quality restaurant offering could be missing a trick

Whereas previously hotel restaurants were seen as ancillary to the hotel itself, with some hoteliers able to survive by providing soulless meals to a captive audience, hotel bars and restaurants are now perceived as a core attraction to a hotel. A pre-pandemic study by Knight Frank demonstrated that in the rolling 12 months to September 2019, F&B contributed to 30% of revenue across all regional UK hotels, rising to 40% of total revenue for conference, golf and independent luxury hotels². It is hoped that these figures will spring back now that travel is becoming easier post-Covid.

Part of the move away from the stereotypical hotel restaurant can be attributed to the rise of 'on-the-go living' and hotel guests expecting a 'home away from home' where they can work flexibly, socialise, eat, drink and relax - a concept which The Hoxton has mastered, being as famed for its buzzing bars as its restful rooms. With this renewed focus on lifestyle, guests simply won't stay at hotels which cannot service all of their needs to a high standard: if they want to stay in the game, hoteliers can no longer afford to be 'one-trick ponies' serving up lacklustre food and relying on quality rooms alone. In this smartphone era, guests are only a tap away from apps directing them to local external restaurants– if a hotel's F&B offering is not up to scratch, guests will go (or even order in from) elsewhere. Hotels are also under increasing pressure to deliver 'social media worthy' experiences, and the ability of a great cocktail or themed afternoon tea (such as the Prêt-à-Portea at The Berkeley and the Art afternoon tea at The Rosewood) to pull in guests and non-residents alike should not be underestimated.

Variety is key when it comes to hotel F&B, as guests want a choice of cuisines and dining styles. London's The Ned (in respect of which Withers dealt with the acquisition and development) typifies such variety; home to eight restaurants ranging from diner style eateries to more formal brasseries and all-you-can-eat Sunday feasts, it also attracts local City workers with their grab-and-go salads and sandwiches from their healthy Malibu Kitchen. This is a smart use of The Ned's prime City location, with its inclusive pricing and dynamic menu increasing footfall and therefore revenue.

Raffles is to follow suit when it opens its first UK hotel in London later this year (for which Withers has advised on some of the financing elements), with a total of nine restaurants and bars, leaving guests with a difficult choice of where to eat!

Restaurant operators vs. in-house restaurants

When considering how to boost its F&B offering, a hotelier should be aware of the different models of which it might make use. Whereas some hotels prefer to retain their own branding and control, others may choose to bring in independent operators with established restaurant brands or industry knowledge.

If a hotel is not lucky enough to enjoy the space such as that seen at The Ned or Raffles, one option which creates a variety of F&B offering is to offer short-term residencies to independent restaurant operators. This is the approach taken by The Hoxton hotel in Holborn's Rondo La Cave basement wine bar which has been used as an 'incubator', featuring restaurants with the potential to become part of The Hoxton group. This flexible option takes advantage of third-party brands whilst also, due to the temporary nature of the arrangement, encouraging customers to return to the hotel, and meeting the expectations of hungry guests demanding unique dining experiences.

When appointing a hotel operator under a hotel management agreement, the hotel owner should give careful thought as to whether the restaurants are to be managed by the operator and are therefore included within the definition of "the Hotel". It may be that the operator will insist they are included but if the owner has significant leverage in the negotiations and the restaurants are sufficiently physically separate from the rest of the facilities, it may be possible to exclude some or all of these F&B outlets. It has become increasingly clear that not all hotel operators are as adept at managing such outlets as dedicated restauranteurs and owners can be justified in arguing that the operator will not add significant value.

Hotel operators as restaurant owners and restaurant owners as hoteliers

In early 2019 Accor and SBE announced plans to open over 100 Umami Burger restaurants within Accor hotels by 2026³, citing F&B as having been a major driver for Accor's investment in SBE in late 2018⁴. In some of Accor's hotels in Japan, where Umami Burger restaurants have opened, these have proven incredibly popular, with customers reportedly queuing for hours to dine at the venues.

Whilst the above hotels have added F&B to their offering, the innovative Nobu brand has expanded its offering, starting as a Japanese restaurant chain and venturing into the luxury hotel market with pioneering success. The brand now boasts a portfolio of 16 luxury hotels worldwide with 18 further hotel openings planned. Trevor Howell, CEO of Nobu Hospitality notes that the popularity of Nobu restaurants has contributed to the success of the Nobu hotels, stating: “We play to our strengths, which are F&B, complemented by a very strong customer base that is loyal to Nobu. Each of our restaurants can see 100,000 to 250,000 customers a year and even if we only pick up 15% of those diners, they will still fill our hotel beds.”⁵

Dark Kitchens 

Outside of the busy breakfast or dinner service shift, restaurants in hotels often have quiet periods in which their kitchen is not used at its full capacity. SBE Entertainment Group founder Sam Nazarian commented that most hotel kitchens are operating at 15-20% efficiency⁶, begging the question as to whether this space could be better used at quieter times by introducing dark kitchens. Dark kitchens provide food retailers with the facilities to prepare and provide delivery-only takeaway meals. Hotels are usually located in prime locations in city centres or near to tourist attractions that would be ideal to service the increasing demand for takeaway food, allowing the hotel to increase revenue from the large and often underused kitchen facilities they have on offer. Alternatively, hotels could offer their guests a variety of different or rotating F&B options from their kitchen to replace the more traditional room-service choice.  By way of example, Creating Culinary Communities (or C³ for short) is a F&B platform which takes over old restaurant, hotel or other kitchens that were previously occupied by one brand and brings in a selection of SBE brands to occupy the space. C³ has partnered with Graduate Hotels in the US to introduce Graduate Food Halls in some of its hotels to offer up to six restaurant brands from one shared kitchen to hotel guests, tourists and locals⁷. 

Key takeaways

It is clear that hotel owners and operators cannot afford to ignore the importance of F&B. Even if F&B is not part of your USP, or a way of differentiating yourself in a crowded marketplace it can still, if done well, drive footfall, occupancy, revenues and ultimately, profitability. Used correctly it can also complement and enhance your brand, whether that involves restaurant and bar space focussed on edgy millennials (such as Mama Shelters), or Michelin starred restaurants designed to appeal to global elite travellers (such as Alain Ducasse at The Dorchester).

However, it is important to remember that whilst improved F&B may seem like a panacea for improved financial metrics and visitor numbers, if it is done badly, it can have negative effects. There is always a danger that a trendy food concept can become passé, or that the celebrity chef that you are partnering with in your expensively designed Michelin starred restaurant has reputational issues which, rather than enhancing the guest experience and the hotel's marketing, acts in opposition to it. 

Either of these events can impact on your takings and ultimately on the reputation of your hotel/brand, particularly without properly thought out and drafted contracts that deal with, amongst other things: 

• fee structures/cap-ex
• brand exclusivity
• minimum levels of support from a brand/celebrity chef (i.e. minimum hours actually in the kitchen)
• targeted KPI's with termination rights for under-performance
• reputation protection and associated termination rights
• non-compete and non-solicitation
• concept changes
• employment rights/liabilities

Ultimately, whilst flexibility and innovation in what you are delivering will always be important, constant monitoring of what you are offering and the standards you are delivering are key to ensure that your F&B continues to be an asset to the experience at your hotel, rather than a hindrance.