3 Reasons Why Hotel Food and Beverage Is on the Rise

By. Rory Crawford

Eating is as critical to the human experience as finding a place to sleep.

I’ve had the pleasure of working with thousands of great hospitality businesses over the last few years. One shift I’ve noticed and heard from our customers time and time again, is the increasing focus on food and beverage within the U.S. hotel space—spending at hotel bars and restaurants grew 5% last year. I recently sat down with three industry leaders to get their perspective on growing trends, the history of hotel food and beverage programs in the U.S., and where they think this evolution is taking the industry.

Hotel food and beverage programs were a luxury, not a basic amenity

Hilton, Hyatt, and Marriott: three massive hotel brands that historically dominated the hotel market. In the past, they were solely focused on driving revenue with their rooms. Food and beverage programs were considered an amenity, not a core competency. Lokesh Singh, who has 35+ years of experience managing food and beverage for various hotels and government agencies explains the breakdown. “40 years ago, things were very different. Food and beverage was not a revenue-producing department for brands like Sheraton. If you broke even, you were in very good shape.”

When hotels did invest in their food and beverage programs, it was often in their banquet and event catering business. Dean Wendel, Corporate Director of Food and Beverage for Concord Hospitality explained how extravagant these events really got. “Going back to the Ritz Carlton in the mid 1980’s, we had large corporations were spending a lot of money on events and conferences. There was seemingly no expense too grand to pull off an event. We were doing single events going for $100k, $200k, and more.”

The U.S. hotel industry was hit hard by the 2008 economic downturn. Between 2008 and 2009, market demand shrunk by 7.5%—a blow felt by everyone in the industry, including Wendel. “Staffing got cut and changes were made to maintain the level of profits…brands like Courtyard and other select service hotels were focused on gaining the profits from rooms. Once we hit 2008, everything kind of just fell out. We had to work twice as hard to capture the same amount of business, and you had to execute flawlessly or you would lose the business.”

Almost a decade removed, things are looking up for the hotel industry. But, with time comes changing tastes and needs. In my experience working with food and beverage directors, I’ve noticed three specific trends most of all.

Third-party management companies are here to stay

Third-party hotel management companies are here to stay. For many brands looking to reinvent themselves, hiring these companies makes sense—their approach to hoteling is holistic, creative, and can be much more dynamic than legacy hotel brands.

These management companies are also increasingly focused on upscale full-service food and beverage projects. In order to compete, these management companies are creating a unique food and beverage core competency and executing their strategy across their portfolio of hotels. That way, every patron gets the same exceptional experience across the brand, regardless of which individual location they’re visiting.