Many hotels are now bringing in the services of independent restaurant operators. At the Caterer Middle East Conference 2012, experts shared their experience on how to gel two brands together to maximise the joint ventures set to revolutionise hotel F&B
Hotels need to reassess their approach to partnerships with independent restaurants, which have the potential to positively impact both reputation and bottom line, provided the brands are a good fit and that both parties play to the other’s strengths.
This was one of the major issues highlighted by industry figures speaking at the Caterer Middle East Conference 2012: Food and Business, held at Jumeirah Beach Hotel on March 19 and attended by close to 200 executive chefs, F&B directors and restaurant owners.
Both hotels and third-party F&B operators could benefit from joint ventures if the terms are right — Hilton saw a 40% increase in coffee sales overnight when it introduced Costa Coffee branding to its lobbies, revealed Simon Lazarus, senior area director F&B for Hilton Worldwide during a panel on recouping costs amid rising food prices.
At The Monarch Dubai, third party outlet Okku Luxury Japanese restaurant and lounge has steadily increased its influence to drive around 10-12,000 people through the doors of the hotel each month, said its co-founder Markus Thesleff.
“These restaurants are opening up many hoteliers, including the finance people, to see how much money can be made withF&B,” said Walter Hall, COO at RMAL Hospitality.
“I think, in the past, hotels haven’t taken the food and beverage side of things as seriously as they should have. Primarily, this has been because they have focussed on the rooms and the concept of food and beverage has been the shop window in which to sell their rooms.”
Naim Maddad, hospitality specialist at Ròya International, agreed that hotels are looking more closely at their F&B. “There are a lot of operations, particularly in mature markets, where they’ve said ‘We’re hoteliers, we can run rooms, fill the house, manage the books. We can’t cook!’ So they get the professionals in. I don’t think we’re far away from that in the local market”.
However, independent restaurants should be wary of some hotel operators, the panellists said, as many are seeing the opportunity to make a quick buck at their expense. While outlet spaces should be viewed as real estate, Hall said “a lot of people, when they are leasing places, tend to get a bit greedy on the per square metre rent. The ones that are most successful are the ones who will put a fair per square metre rent and then a revenue offset.”
Thesleff agreed, saying many hotels have approached him with a “ridiculous” base rate, as well as the revenue offset. He added that while a 10% revenue offset on food and drink is average, some have tried to push this up to 18%.
“You look at the guys who are already in that place and they’re not making money. If you have a base rate that is real and a kicker on top, and if the food works out, you have a good operator and PR, it’ll help drive traffic and you could be there for five, 10, 15 years.”
One key to the success of an independent outlet is the length of the lease, which is a good indication as to whether the hotel operator is committed for the long-run.
Thesleff said that even though many GMs and asset managers have told him he will “make his money back in a year,” he “won’t even have a conversation” about a lease shorter than five years with the option of another five.
He said asset managers spread the costs and skew the numbers by not accounting for enough staff. Hall agreed, saying the owners should help make the venture a success before taking a cut.
Article continues on next page ...