Hoteliers seek profit boost through on-site restaurants – Hotel/Motel & Restaurant Show

Hoteliers seek profit boost through on-site restaurants – Hotel/Motel & Restaurant Show – Brief Article

Robin Lee Allen

Hoteliers seek profit boost through on-site restaurants

NEW YORK – Hoteliers looking to recapture revenues lost to sluggish room sales are taking a renewed interest in their on-premises restaurants.

Once considered a mere amenity, on-site foodservice properties are perceived by their hotel managers as an important source of income, says Stephen Zagor, manager of operational consulting for Cooper’s & Lybrand in New York. And many are remaking and remarketing them to fill that need.

“In the old days rooms made up more than 50 percent of a hotel’s total revenues,” Zagor explains. “But now it’s not unusual to see rooms-to-food revenues at 50-50.”

As foodservice becomes a bigger contributor to the bottom line, hotel management companies are actively seeking ways to increase that contribution by reconcepting their restaurants, he said.

Some hoteliers hit their neighborhood streets, looking for a taste-bud niche yet to be exploited, he notes. Others downscale previously formal dining rooms, bringing prices in line with what customers are willing to pay.

Many hotels are also turning to both on-and off-premises catering, Zagor says. Unlike room service, which can be a major money loser because of labor costs and unpredictability, catering is a major money maker, he adds.

“It is the most profitable area of food and beverage, and it fills the gap from any declines in group meeting business,” he explains.

For the on-site properties that can’t be redeemed, hoteliers are recruiting independent restaurants to take over, Zagor says. The practice, widespread outside of New York, will soon become more common here, he adds.

Having an outside restaurant move in can be a win-win situation for everyone, according to Zagor. “It can get hotels out of a negative situation and create more excitement for the hotel property. And restaurants like it because the physical area already exists.” Some restaurants are also anxious for the catering business, he adds.

While reconcepting is not always successful, it is a step in the right direction, Zagor observes.

“Sometimes the market is so difficult that even reconcepting doesn’t generate a positive cash flow. But it can be very successful,” he said. “What can be more successful is a realistic approach to making money and cutting costs and changing what, in the old days, was sacred.”

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